Audio Ad Sales Grow 2.4% In First Half, Led By Digital And Podcast Revenue.

Story by Inside Radio

The audio slice of the U.S. advertising pie expanded in the first half of the year, according to ad giant Magna. Digital was a big reason, but perhaps more significant was broadcast revenue grew too in Q2, leading the agency’s analysts to conclude the more solid financial footing of reorganized iHeartMedia and Cumulus Media means broadcast radio revenue has “finally stabilized” after several years of declines.

Magna’s analysis of the radio market shows total broadcast ad revenue increased for the third consecutive quarter, climbing 0.7% during the April-June period. That’s mostly due to a 0.6% gain in national and network sales while local ad billings remained flat with a year ago.

The best news is that digital sales surged ahead 12% to $1.5 billion during the first six months of the year. And as a result, Magna estimates total industry revenue increased 2.4% compared to a year ago to $7.8 billion for the first half after showing no growth in either 2017 or 2018.

Radio’s performance is even better when compared to the other traditional media. Magna says local TV ad sales were off 3.6% in the first half when factoring out the impact of political and Olympic spending. Publishing was down 6.7%. Out of home media was the best-performer among traditional media, with its revenue up 7% in the first half.

Podcasting is one of the sources of radio’s growing digital revenue. “As a quarter of all Americans are now listening to podcasts weekly, more and more major consumer brands are taking notice and starting to include podcasts in their audio campaigns,” says the firm, which recently issued a report on the fast-growing podcast industry. Magna says because of those national brand ad dollars, it expects podcast ad revenue to climb 27% in 2020 to $850 million.

Numbers Rise In Fall Update

Based on an analysis of media owners’ financial reports, Magna estimates the U.S. ad market accelerated off of last year’s gains and grew 7.6% to $107 billion during the first half of 2019. It credits especially strong growth rates in the finance, retail and travel categories. The Direct-to-Consumer (DTC) brands that power podcast revenue also spent more.

“Digital media ad sales matured, as expected, but continued to grow close to 20% year-over-year, while editorial media performed better than expected thanks a recovery of radio, and out of home in full swing,” said Vincent Létang, EVP Global Market Intelligence and author of the report.



It’s enough of a tailwind heading into the second half, when even more spending occurs, for Magna to revise upward its outlook for the full year. It now forecasts total U.S. ad spending will increase 6.3% in 2019. That’s more than a point above the 5.1% growth rate it projected in June. “The U.S. ad market had a great first half thanks to a strong economic environment as well as media innovation and a dynamic technology vertical,” Létang said.

The Highs And Lows Of 2020

Based on the strong first half spending levels in 2019, Magna now predicts 2020 will also bring more ad dollars to media vendors. It estimates 2020 growth at 6.2% for the overall U.S. market. That’s up from the 5.8% growth rate it projected in June. Yet it also thinks the audio business has its work cut out for it if companies want to hold onto the current growth trends. Based on the current data, Magna is forecasting audio ad spending will decrease 1.5% in 2020.

How close that estimate is to reality may rest on how much radio pulls in from the $5.5 million that Magna forecasts will be spent on political advertising next year. If accurate, it would become another all-time high in political spending.

Those political ads should help soften the impact of an expected economic slowdown, says Magna. It notes that a recent survey of economists found most think 2020 won’t have the sort of economic growth rates of 2019. “But they are not forecasting a recession, despite the nervousness of some investors looking at the threat of trade wars and international tensions,” says the Magna report. Nevertheless it says that slowdown might take a toll on how much advertising is done in several key sectors, like automotive, retail and finance. “Fortunately, 2020 is the strongest year in the four-year cycle of events that typically drive extra ad spend and incremental ad revenues,” it adds.

In terms of where political ad dollars will go, Magna expects local TV stations to remain the top recipient although campaign strategists are ramping up their use of social media, digital video and search.
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