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

Driving Revenue-Generating
Strategies Through Information
and Insights
(What Radio Execs Don’t 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/Kelsey’s 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
Overview of Presentation
• Insights from Advertisers and Consumers
• Understanding National Advertising Trends
• Drilling Down into Local Advertising Markets
• Conclusions

4
Insights on the Changing
Advertiser and Consumer

5
Question 1: How Many Different
Media does the Typical SMB Use?

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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
Question 2: How Active are SMBs
with regards to Social Media?

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Very Active and its Increasing
Source: Local Commerce Monitor” (LCM – Wave 17), BIA/Kelsey’s ongoing study
of the advertising behaviors of small and medium-sized businesses (SMBs)
Social is becoming a more significant
aspect of their business

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Question 3: How Satisfied are SMBs
with their Radio Spend?

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Some are Very Satisfied
• 36% of Radio SMB Advertisers rate their
performance on radio as either
Extraordinary or Excellent

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What do we know about the typical
SMB Advertising on Radio ?

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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
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
Understanding Nationwide
Local Advertising
(The Pie is Bigger and the Competition is a Changing)

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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%

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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%

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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
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

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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

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Drilling Down in your
Local Advertising Market
(Where the Rubber meets the Road)

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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

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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%)

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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 Mail got 26.2%
TV got 17.7%
Newspaper got 14.9%
Pure On-line got 9.2%
Mobile got 2.2%

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Radio’s spend is projected to grow to $86.7 million
in 2017 (slight decline to 7.8%), as the local Las Vegas
Advertising Pie grows to $1.1 billion, and
Direct Mail declines from 26.2% to 23.9%
TV declines from 17.7% to 16.8%
Newspaper declines from 14.9% to 10.9%
while
Pure On-line increase from 9.2% to 12.0%
and Mobile increases from 2.2% to 7.3%***
and More Importantly…

25
Drilling Down into Verticals…
Radio Advertising’s $9.8 million in Las Vegas
Automobile Advertising in 2013 represented 8.0%
of the $123.0 million spent in Local Advertising
Cable TV
8.8%
Direct Mail
12.2%
ERPM
0.6%
Internet YP
0.6%
Magazines
2.1%Mobile
1.2%
Newspaper
17.4%Online
8.2%
OOH
1.9%
Print YP
1.0%
Radio
8.0%
Television
38.0%

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And that…
as the Auto Spend grows to $137.7 million in 2017,
Radio’s share is projected to increase to 9.0% ($12.4 million).
Cable TV
10.6%
Direct Mail
8.8%
ERPM
1.0%
Internet YP
0.8%
Magazines
1.8%Mobile
5.0%
Newspaper
11.8%Online
13.1%
OOH
2.1%
Print YP
0.4%
Radio
9.0%
Television
35.7%

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Plus,…
for some reason Las Vegas is not a good market related
to Automobile Advertising since Radio as a whole got 11.4%
in 2013 and this is projected to grow to 13.1% in 2017
Cable TV
8.1% Direct Mail
9.3%
ERPM
1.0%
Internet YP
0.8%Magazines
1.2%
Mobile
4.9%
Newspaper
12.8%
Online
13.0%OOH
2.3%
Print YP
0.4%
Radio
13.1%
Television
33.1%

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There are Some Key Verticals to Watch
The decline in Newspaper circulation and advertising
in Las Vegas creates a real opportunity for the local radio
stations to develop sales strategies.
2013 2017
Automobile 17.4% 11.8%
Health Care 14.7% 11.6%
Real Estate 19.2% 5.7%
Retail 18.9% 14.1%
Restaurants 8.8% 7.1%

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And Online Spending is Exploding for
Certain Other Verticals in Las Vegas
Search
40.4%
Video
Display
9.5%
Other
Display
7.7%
Classified/V
erticals
42.5%
2013: $3.5 Million
Search
39.5%
Video
Display
13.6%
Other
Display
5.4%
Classified/V
erticals
41.5%
2017: $5.5 Million
Full Service Restaurants

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Conclusions
• Changing Consumer and Advertiser Behavior and
Advertising Trends in Other Local Media will Identify
Opportunities and Threats in the Different Business Verticals.
• National Trends are interesting, but Radio Executives must
drill down into what is happening in their Entire Local
Advertising Market (not just the Radio Market)
• Armed with this knowledge, strategies can be developed
and your Sales Force mobilized and positioned for
consultative sales in Targeted Business Verticals.

Thank You
Tom Buono
tbuono@biakelsey.com

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

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