Radio's Reign Coming To A Close?

In terms of audio, "by 2008, online advertising spending in the US is projected to surpass radio advertising spending for the first time."

An article by eMarketer " estimates that US online ad spending will reach $21.7 billion this year, while radio spending will grow only slightly to $20.4 billion."

Granted, the radio listening audience is still very large and can not be discounted. After all, the radio ratings company, Arbitron still has to make money. Surprisingly, in the study Arbitron conceded the fact that radio is less important is people's live than the Internet or TV. "Data from a number of researchers indicates that traditional radio is losing its significance in people's lives. US adults are spending more time each day on the Internet and watching TV than listening to the radio."

Given these trends, it is critical for the radio industry to adapt quickly in an attempt to fend off the market share loss to the Internet. A lot of progressive radio stations have already integrated the Internet into their broadcast through the use of podcasts and online streaming media. This type of integration gives listeners additional options. However loosing listeners may be inevitable and radio industry may see itself in the same position as the newspaper industry.

The final words of wisdom - "Marketers should not abandon radio in favor of the Web—they should combine both mediums to take advantage of the unique attributes of both."

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Cumulus Media to be Bought Out!

Just announced - Cumulus Media, the 2nd largest radio group on the U.S. will be bought out for $1.3 BILLION (including debt) by an investor group led by Chief Executive Lewis Dickey and an affiliate of Merrill Lynch Global Private Equity.

Cumulus owns and/or operates 344 stations in the U.S. The buyout comes at a time when the future of traditional media is uncertain as radio stations are starting to compete with digital media outlets.

The transaction is scheduled to be complete by early 2008 and will include a 40% share price premium over what the stock was trading at on Friday. The board has approved the transaction and has encouraged shareholders to do the same. The nation's largest radio company, Clear Channel Communications, agreed earlier this year to be taken private in a $19.6 billion buyout.

 

EBay To Begin Auctioning Radio Ads

Online auction mogul EBay will begin auctioning Internet and terrestrial radio spots from more than 2500 providers. EBay has partnered with, privately held, Bid4Spots Inc., in the midst of a longstanding and informal boycott from the Cable Advertising Bureau. MediaPost reported that this boycott was in reaction to the "...fear that it would commoditize cable advertising buys."

This new development may usher in a new era of media buying. Bid4Spots boasts that advertisers are able to buy targeted markets, demos and day parts on Arbitron-rated stations that will air following the week of the purchase. According to USA Today, the spots being offered are going to be mostly prime spots airing Monday through Friday. However, EBay's radio auctions will target "last minute ad buyers" allowing participating stations to get real aggressive with their rates. This begins to question the value of the annually purchased media plan. This may be hazardous for a participating stations who are trying to maintain rate integrity.

Big broadcasters could now be forced to bring a bunch of value added and reduced rates to the table to off-set the lower auction prices. The other side of the coin is that unused station inventory can be dealt with any way a station sees fit. Successful concept or huge mistake? Only time will tell.