Ad Revenue Slides for Radio, Magazines

More evidence of the ongoing advertising slump surfaced Wednesday with the radio and magazine sectors reporting continued revenue slides in recent months. A market research firm also predicted that Internet advertising would face slow growth during the remainder of the year.

National radio advertising fell by 20% during June compared with the same month a year ago, and local revenue fell by 4%, according to the Radio Advertising Bureau. National radio revenue was down 21% compared with the first half of 2000, with local radio revenue off by 4%.

Magazine advertising revenue tumbled 7.9% to $1.0 billion in July, the most recent month available from the Publishers Information Bureau, and was down 3.4% during the first seven months. The drops were driven in large part by sustained weakness in the technology sector, which was down 22.8% during the first half.

Jupiter Media Metrix predicted that online advertising spending will rise by just 5% to $5.7 billion this year. Jupiter Media Metrix analyst Merissa Gluck blamed slow growth rate on “marketers’ inability to evaluate online advertising effectively.”

The latest reports from the advertising industry are in line with a glum forecast issued by CMR, an advertising market research firm owned by Taylor Nelson Sofres. The New York-based company recently predicted that overall advertising spending will slide by 2% to $102.4 billion this year, down from $104.5 billion in 2000.

Despite the overall dark picture, advertising industry observers say there are relative bright spots. CMR, for example, said 2001 advertising revenue is still on pace to surpass 1999’s total advertising spending by 11.2%.

“Radio’s core business remains solid,” said RAB President and Chief Executive Gary Fries. “Radio’s foothold remains in the local marketplace, where business is currently healthier than on the national front . . . all indicators point to a turn toward positive growth for radio in the fourth quarter.”

Local radio advertising, which generated 80% of the industry’s 2000 revenue, fell by just 4% during the first half of this year. The RAB won’t release dollar totals until year’s end. But overall radio advertising grew by 12.1% to $19.8 billion in 2000, the ninth straight year of revenue growth.

The PIB reported that major advertising categories--cosmetics, drugs, apparel, transportation, hotels, food, direct response ads and home furnishings--showed increases during the first half of this year. Those gains were overshadowed, however, by weakness in the automotive, technology, financial and advertising and media sectors.

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The Radio Advertising Bureau won’t release 2001 revenue figures until early next year, but the industry enjoyed a nine-year string of revenue increases before 2001.

Total U.S. radio ad revenue, in billions of dollars:

2000: $19.8 billion

Source: Radio Advertising Bureau