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With Digital Transforming Local Ad Sales, Audio Gains Ground

Local advertisers have tripled their ad spending on digital media over the last five years, creating new opportunities for radio stations to sell digital products, including podcasts and streaming audio.

Local media outlets took in $10.5 billion worth of digital advertising last year, according to the new “Annual Benchmark” study from Borrell & Associates. And while radio trails local TV and newspapers in total digital dollars, radio stations earned $900 million from digital ad sales last year, compared to TV stations, which earned $2 billion in digital ad revenue, and newspapers, which billed $3.8 billion, the report said.

While radio’s digital take pales in comparison to the $9.1 billion stations earned from core ad sales, digital is a bright spot. The Borrell report noted local traditional media companies, including radio, have made strong commitments to selling digital, with 80% of local media’s 60,000 sales reps now offering clients digital products.

As consumers turn to digital platforms for audio and video, it’s essential that local broadcasters keep pace with content and ad offerings, or they risk being left behind, President Gordon Borrell noted. “As digital media morphs from a ‘read’ medium to one that reaches viewers and listeners, broadcast media are starting to feel the heat of disruption.”

For radio broadcasters, podcasting is a key component to harnessing this shift, and to increase their share of both ears and ad dollars. With one-quarter of Americans now listening to podcasts weekly, per the latest Infinite Dial study, a growing number of advertisers are experimenting with podcast advertising, including local marketers. Borrell forecasts that local businesses will spend $720 million on podcasting and streaming audio this year, up 22% from a year ago. Over the next five years, that’s expected to increase 74% to $1.25 billion.   

“We already see advertisers sampling podcasting here and there, but it's still a relatively unknown product offering at the local level. Within two years, it will be more mainstream, though still quite small,” Borrell told Inside Radio.

Of course, radio stations -- and all local media organizations -- are going up against digital giants like Google, Amazon and Facebook, which dominate online advertising. That includes local markets. In a note of caution, the Borrell report says: “Facebook has become the most popular marketing channel for local advertisers.” But, with digital audio’s popularity on the rise and radio’s proven staying power, radio sellers have more digital tools in their arsenal than ever before, including podcasts and our growing menu of digital marketing services.  

Written by Paul Altman