Revival of Bookings Ends Dry Spell for Radio Stations
By CLAUDIA PESCHIUTTA
L.A. radio is on a comeback trail, as two years of financial woes from the dot-com implosion, the recession and the after-effects of Sept. 11 appear to be running their course.
Based on data from local stations, advertising bookings for the second quarter of 2002 are pacing ahead this month of where they were at the like period a year ago. That follows a 17 percent billings increase for January and February in the top 10 advertising categories such as automotive and communications.
“All indications are that this trend is continuing and looking even better in the months to come,” said Mary Beth Garber, president of the Southern California Broadcasters Association.
The apparent turnaround, being fueled by continuing reports of an improving economy, comes after almost two years of slower sales from a confluence of events, including the dot-com slide and airlines pulling their spots after Sept. 11. Last year, local radio ad revenues totaled $836.4 million, down 8.1 percent from 2000’s record-breaking figure, according to an SCBA survey of 51 stations.
But the brighter the economic outlook, the more advertisers are willing to spend.
“There was a tendency for advertisers…for the last six months or so to wait or book slowly,” said Val Maki, senior vice president and L.A. market manager for Emmis Communications Corp., owner of KPWR-FM (105.9) and KZLA-FM (94.3).
“That’s not working anymore,” she added. “The tide is changing. Basically, the advertisers will now begin to place business a little further in advance.”
Jack Myers, editor of a media newsletter, added that, “in a tough economy, (radio) tends to be a more friendly medium with marketers. We’ve been saying that local radio would be the first medium to turn around.”
Radio, which is considered especially lucrative in car-dependent Los Angeles, offers advertisers cheaper rates and more flexibility in placing spots. Also, producing a radio campaign costs far less than creating one for television. “There’s a lot of demand on radio right now,” Maki said. “It just seems like, ‘Wow! Everybody wants to be on.'”
As of last week, May bookings at KRTH-FM (101.1), one of seven radio stations owned by Viacom Inc.’s Infinity Broadcasting Corp., were pacing 14 percent ahead of where they were at the like time a year ago, said Pat Duffy, the station’s vice president and general manager. As more available ad time gets purchased, ad rates at the station are expected to increase.
“It’s the best news we’ve had in a long time,” said Duffy, a local radio veteran. “It’s an encouraging sign and I hope it’s a turnaround.”
A Value Line report on Clear Channel Communications Inc., owner of eight L.A. stations, concluded that “the radio market appears to be stabilizing before television due to its lower rates, as advertisers shift from television to radio.” Also assisting, according to the report, is radio’s focus on retail and automotive, “industries we expect to pick up early in the broader economic recovery.”
“When you look at our Los Angeles cluster as a whole, you’re starting to see some traction,” said Charlie Rahilly, a local regional vice president for Clear Channel.
While not disclosing financial information for KPWR or KZLA, Maki said the stations are “following the marketplace,” which she believes is “definitely improving.” Demand for advertising time has gone up and will be only stronger in May, which is traditionally one of the strongest months for L.A. radio stations, she said.
Another factor: May is a sweeps month and television stations usually buy up radio ad time to increase viewership during the period. Ratings generated during those four weeks will help determine future ad rates.
May stands to be an improvement over a generally weak February sweeps period, when NBC’s coverage of the Winter Olympics commanded most of the attention and competing television stations held back on radio spending. Advertisers who couldn’t afford to buy spots during the Games also sat on their money.
“NBC had an unfair advantage in February and March because of the Olympics,” Garber said. In May, “(advertisers) have to make up for lost ground…It’s going to be their last chance to affect their yearly ranking.”
May also has two holidays that promise to generate advertising sales Mother’s Day and Memorial Day.
Given the economic ups and downs of the last couple of years, no one is ready to declare victory yet. Myers questioned whether the economy would stay on track and the improved advertising outlook in radio would hold.
“It’s a very, very tough market to read right now,” he said. “It’s tough to get a sense if the positive trends we’re seeing right now in the market are going to sustain themselves.”