Kagan forecasts 5% revenue growth for radio in 2022 | story | Panda Anku

Thanks to the ongoing recovery from the pandemic and a surge in medium-term political ad spending, the US radio ad business is expected to grow 4.8% to $12.32 billion in 2022, excluding network and off-air revenues. That’s according to a newly released forecast from Kagan, the media research unit of S&P Global Market Intelligence.

Kagan’s forecast is that radio’s core local spot advertising market will grow 5.0% to $8.83 billion in 2022 and 3.0% to $9.10 billion in 2023, with growth rates “leveling out and then declining slightly to $9.03 billion over the remainder of the forecast period through 2027. Thanks to a surge in political spending from the midterm elections, national radio’s advertising revenue is expected to grow by 3.0% to 2.07 billion 2% in the remaining years of the forecast period to 2.00 billion US dollars by 2027.

Digital gains 6%, off-air grows 4%

Radio’s digital assets are the brightest spot in Kagan’s new prospect. It forecasts digital gains of 6.0% in 2022 and 4.8% in 2023, followed by growth of 4.3% to 3.8% for the rest of the 2024-2027 projection period. “Radio station owners continue to invest in streaming, podcast and digital marketing initiatives, with digital revenue expected to grow to $1.73 billion by the end of 2027,” the report said. Fueled by the return of live events, off-air revenue is forecast to grow 4.0% in 2022 and 3.0% in 2023 and “should remain a solid segment for the radio industry over the long-term and into the end of 2027 Reach $2.42 billion.”

Kagan’s latest full-year outlook for radio & TV says radio’s recovery is expected to be “short-lived and partial” as national advertising continues to shift from radio to streaming audio and podcast alternatives. The report finds that radio advertising is predominantly local, with a focus on the auto, retail, travel and entertainment categories – all of which were badly hit by the advertising declines in 2020-21.

Your mileage may vary

But it’s anything but a one-size-fits-all forecast. “Some markets have been less affected by masking and social distancing rules than others during the pandemic, and station owners in those areas should fare better based on our market-level forecast,” said Justin Nielson, lead analyst and author of the report. “Additionally, radio owners must compete with multiple streaming audio and on-demand options for music and talk,” he says, adding that the new hybrid or permanent home office economy has reduced commute times during peak car radio hours .

“Radio’s lower advertising costs, local audiences and relatively high return on investment compared to other media will keep it relevant, although digital investments point to future growth opportunities as the spot advertising market for radio is expected to decline over the forecast period,” reads in the report .

When local and national spot advertising revenues, including digital, are added together, radio station revenues are on track to increase at a compound annual growth rate of 1.06% between 2022 and 2027 in the assessed markets, Kagan says, with the not rated markets down 0.36%.

Total radio revenue, including national and local spot, digital, off-air and network revenue, is expected to grow at a compound annual growth rate of 0.78% over five years from an estimated $15.47 billion annually 2022 to $16.09 billion at the end of 2027 will be largely unchanged.

Based on Kagan’s radio market-level advertising projections, the five fastest growing US markets through 2022-2027 are the compound annual growth rates: Dallas-Fort Worth (+1.40%); Seattle-Tacoma (+1.39%), Boise, ID (+1.38%); Salt Lake City-Ogden-Provo (+1.37%); and Atlanta (+1.36%).

The new forecast expects the entire US broadcast industry to generate $36.47 billion in advertising revenue in 2022, up 12.9% from $32.31 billion in 2021 , with the local side of the spot ad business being stronger than the national side for many broadcaster owners. Kagan’s 2022 projection breaks down to $24.15 billion from television channels — including national and local core spots, political and digital/online — and $12.32 billion from radio channels, including national and local spot and digital channels, excluding network and off-air.

According to Kagan, his individual radio market forecasts are based on estimated population growth in each core-based statistical domain as provided by Nielsen. The estimates in the model also reflect market-level economic factors, the shift from traditional advertising spend to digital and mobile, and recent trends in radio listening.

Read the full report HERE.


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