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MUMBAI: Total spending on online advertising is expected to nudge past spending on radio ads in 2007, and by 2008 Internet ad dollars should exceed radio spending by a considerable margin, says a new report issued by eMarketer.
The report, “Radio Trends: On Air and Online,” says ad spending on the Web should net out at $21.7 billion this year, versus the $20.4 billion that is expected to be allocated by brands to radio. But while the Web`s growth trajectory is expected to stay steep in the near future, radio`s growth is expected to be rather anemic. eMarketer predicts that online advertising will reach $28.2 billion next year (an increase of 30 per cent), radio will take five years just to reach just $22.6 billion in ad spending. At that time, online advertising will account for a nearly twice as many dollars – constituting a hefty $44 billion market, predicts the report.
However, radio is not necessarily threatened by the Web, says the report and that the radio business should benefit considerably over the next several years as stations invest in Web streaming of radio broadcasts and driving revenue via their own sites.
“While advertising spending is growing rapidly online, it is not necessarily at the expense of radio,” says eMarketer senior analyst Ben Macklin, who authored the report. “There seems to be no reason why this market cannot find a new lease on life and benefit from the growth in the online sector. Advertisers should not abandon radio in favor of the Web, but combine the two to take advantage of the unique attributes of each.”
Meanwhile, a Radio Advertising Bureau report says that radio broadcasters are doing their best to offset the declines with non-spot sales, the majority of which is Internet-related inventory. Revenue from non-spot activity was up 12 per cent in the first half of the year to $711 million, accounting for 6.8 per cent of total revenue and healthy enough to boost radio sales for the first half of the year from the negative column to flat.
Non-spot revenue even surpassed network revenue, which grew 3 per cent to $551 million. In contrast, local sales, radio`s core business, declined one per cent to $7.1 billion and national dropped two per cent to $ two billion, RAB figures say.
