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Driving Revenue-Generating Strategies Through Information and Insights� - NAB Show 2014

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Tom Buono, CEO, joined a panel discussion at the 2014 NAB Show entitled: "Lunch and Learn: A Discussion on Radio’s Four Significant Issues" to share valuable advertising revenue trends and projections that will help you prepare for the future and make critical decisions.
Transcript:
  • Driving Revenue-Generating Strategies Through Information and Insights (What Radio Execs Dont Know Can Hurt Them) Tom Buono CEO & Founder, BIA/Kelsey April 2014
  • 2 Proprietary and Confidential. Copyright 2014 BIA/Kelsey. All Rights Reserved. Developing sales, operational and acquisition strategies through market sizing, competitive intelligence, business planning and actionable data: MEDIA Access Pro Integrated view of markets, ownership, revenues and competitive and comparative information on the media industry on a local level Investing In Radio Publications Market-by-market investment reference guides, delivering five-year market level projections for over-the-air and online revenues Obtain a 3600 view of the television industry: State of the Industry: Radio Comprehensive report detailing the current situation in the radio industry, from challenges to opportunities, transactions, new sales strategies and digital solutions BIA/Kelseys Specialized Radio Services Evaluate ad revenue opportunities across multiple dimensions: market, media and business category: Media Ad View Every market ad spending forecasts that track ad trends and channel adoption by media and business categories; 94 business categories across 12 media Identify the marketing trends of advertisers and buying habits of consumers in today's mobile, online, social environment: SMB Research Local Commerce Monitor: Insights around advertiser behaviors and media choices Consumer Commerce Monitor: Insights around consumer buying behaviors and trends Secure financing BIA Capital Investment banking firm specializing in serving the communications, media and technology industries
  • 3 Proprietary and Confidential. Copyright 2014 BIA/Kelsey. All Rights Reserved. Overview of Presentation Insights from Advertisers and Consumers Understanding National Advertising Trends Drilling Down into Local Advertising Markets Conclusions
  • 4 Proprietary and Confidential. Copyright 2014 BIA/Kelsey. All Rights Reserved. Insights on the Changing Advertiser and Consumer
  • 5 Proprietary and Confidential. Copyright 2014 BIA/Kelsey. All Rights Reserved. Question 1: How Many Different Media does the Typical SMB Use?
  • 6 Proprietary and Confidential. Copyright 2014 BIA/Kelsey. All Rights Reserved. The Answer is AVERAGE NUMBER OF DIFFERENT MEDIA USED FOR ADVERTISING & PROMOTION Source: BIA/Kelsey LCM Wave 17 (Q3/2013); LCM Wave 16 (Q3/2012). BIGGEST LOSERS (IN SMB USAGE): Directories Cable TV Newspapers Outdoor
  • 7 Proprietary and Confidential. Copyright 2014 BIA/Kelsey. All Rights Reserved. Question 2: How Active are SMBs with regards to Social Media?
  • 8 Proprietary and Confidential. Copyright 2014 BIA/Kelsey. All Rights Reserved. Very Active and its Increasing Source: Local Commerce Monitor (LCM Wave 17), BIA/Kelseys ongoing study of the advertising behaviors of small and medium-sized businesses (SMBs) Social is becoming a more significant aspect of their business
  • 9 Proprietary and Confidential. Copyright 2014 BIA/Kelsey. All Rights Reserved. Question 3: How Satisfied are SMBs with their Radio Spend?
  • 10 Proprietary and Confidential. Copyright 2014 BIA/Kelsey. All Rights Reserved. Some are Very Satisfied 36% of Radio SMB Advertisers rate their performance on radio as either Extraordinary or Excellent
  • 11 Proprietary and Confidential. Copyright 2014 BIA/Kelsey. All Rights Reserved. What do we know about the typical SMB Advertising on Radio ?
  • 12 Proprietary and Confidential. Copyright 2014 BIA/Kelsey. All Rights Reserved. Of this Group (that advertise on radio) A net 49% expect to increase their advertising spend over the next 12 months 48% frequently track their business leads 44% use Radio as their channel to purchase on-line ads 62% have a loyalty program They get 26% of their business from daily deals and promotions
  • 13 Proprietary and Confidential. Copyright 2014 BIA/Kelsey. All Rights Reserved. Consumer Behavior is also Changing SOME RECENT FINDINGS: Consumers use a wide variety of both traditional and digital media to find and shop for local services and products This behavior parallels the fragmentation seen in use of media by small businesses. Consumers are making more appointments online for services like auto, beauty, and healthcare.
  • 14 Proprietary and Confidential. Copyright 2014 BIA/Kelsey. All Rights Reserved. Understanding Nationwide Local Advertising (The Pie is Bigger and the Competition is a Changing)
  • 15 Proprietary and Confidential. Copyright 2014 BIA/Kelsey. All Rights Reserved. Radio got 11.3% of the Local Advertising Spend in 2013 We estimate Radio generated $15 Billion in Local Advertising in 2013, with a little over $500 million, coming from on-line/interactive Radio out of a Total Local Market of $133.2 Billion. Direct Mail 27.2% TV 15.2%Newspapers 15.8% Radio 11.3%Print YP 3.4% Online 9.1% Out-Of- Home 5.6% Magazines 2.0% Cable TV 5.3% Internet YP 1.6% ERPM 1.4% Mobile 2.1%
  • 16 Proprietary and Confidential. Copyright 2014 BIA/Kelsey. All Rights Reserved. But, Online Advertising will Exceed Radio Advertising by 2017 We estimate Radio will generate $16.9 Billion in Local Advertising in 2017, with over $900 million coming from on-line/interactive, out of a Total Local Market of $152 Billion. Direct Mail 24.6% TV 15.1% Newspapers 11.5% Radio 11.1% Print YP 1.5% Online 11.7% Out-Of-Home 6.0% Magazines 1.7% Cable TV 5.8% Internet YP 1.9% ERPM 1.9% Mobile 7.1%
  • 17 Proprietary and Confidential. Copyright 2014 BIA/Kelsey. All Rights Reserved. The Local Advertising Pie is Increasing, but Only on the Online Side $105.3 $106.3 $104.5 $106.4 $104.9 $105.9 $27.9 $31.7 $36.2 $40.7 $46.6 $52.7 $0.0 $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 $140.0 $160.0 $180.0 2013 2014 2015 2016 2017 2018 Traditional Online/Digital US$Billions Note: Numbers are rounded. 2013-2018 CAGRs: Total Media CAGR 3.6% Traditional Media CAGR 0.1% Online/Digital Media CAGR 13.6% $138.0 Note: Numbers are rounded. $133.2 $140.7 $147.1 $151.5 $158.6
  • 18 Proprietary and Confidential. Copyright 2014 BIA/Kelsey. All Rights Reserved. Local Radio is Strong in Key Verticals Local RADIO advertising is diverse, generating over 10% of its advertising from five different verticals: Retail (18%), Financial/Insurance (17%), Restaurants (14.5%), Automotive (14%) and Technology (10%) - VS - DIRECT MAIL dominates ad spend by local retail advertising, garnering over 43% of total retail advertising in 2013 Despite declines in NEWSPAPER circulation, local advertising on Newspaper was $21 billion in 2013, representing 15.8% of total advertising and second only to Direct Mail TELEVISION still dominates the local Automotive advertising vertical, as well as the local Government/Political/Religion (GPR) vertical BIA/Kelsey Media Ad View Plus Forecast
  • 19 Proprietary and Confidential. Copyright 2014 BIA/Kelsey. All Rights Reserved. Online Ads are Accelerating in Key Verticals ONLINE local advertising will exceed $1 billion in 2013 for six different advertising categories. Top two: TECHNOLOGY ($2.1B) RETAIL ($1.8B) ONLINE and MOBILE are the top growing ad channels. By 2017: REAL ESTATE will increase its online ad spend to 40.8% AUTOMOTIVE dealers will focus on video, spending 11.4% of their $2.4 billion online ad budget on video display Quick service RESTAURANT category (subset of restaurants) will increase its online spending from $434.4 million to $618.6 million
  • 20 Proprietary and Confidential. Copyright 2014 BIA/Kelsey. All Rights Reserved. Drilling Down in your Local Advertising Market (Where the Rubber meets the Road)
  • 21 Proprietary and Confidential. Copyright 2014 BIA/Kelsey. All Rights Reserved. The Las Vegas Example: The Market Market Rank: 42 Population: 2.0 million 30% Hispanic/10.9% Black/10.2% Asian 435,000 men, 419,000 Women Age 25-54 Retail Sales: $30.5 billion
  • 22 Proprietary and Confidential. Copyright 2014 BIA/Kelsey. All Rights Reserved. Las Vegas Radio Competition 46 commercial stations; 31 FM, 15 AM 20 stations considered viable $76.1 million in Radio Revenue ($4.3 million on-line) 4 Groups account for 77% of revenue (Lotus-23%, CBS 20%, Beasley 18%, Clear Channel 16%)
  • 23 Proprietary and Confidential. Copyright 2014 BIA/Kelsey. All Rights Reserved. But, That is only part of the Story There was $940 million spent on Local Advertising in Las Vegas in 2013. Radio got just 8.2% of the Total Spend. This was less than the Nationwide average of 11.1% and Direct
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