Ads on the radio waver

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No matter how you spin it, the radio revenue story remains bleak. Combined local and national spot advertising tumbled 8% in the second quarter to $4.6 billion, making for a 7% drop in the first half of 2008 to $8.4 billion, according to the Radio Advertising Bureau.

Even with a robust 12% growth in off-air advertising to $889 million and a healthy 3% climb for network radio to $567 million, total radio advertising remains off 5% at $9.9 billion at midyear.

Radio continues to be hit by a soft national ad market, with national spot dropping 11% in the second quarter. The first half is down 11% as well, to $1.4 billion.

Local advertising was only slightly better, off 7% in the second quarter to $3.8 billion and down 6% to nearly $7 billion for the first half.

While off-air advertising can't make up the difference, it is additional revenue that the industry is clinging to in this tough ad market. According to RAB, radio off-air revenue is "exceeding expectations," increasing at a compound annual growth rate of 12.3% during the past two years. RAB has forecast off-air revenue, made up primarily of online activity, to pass $2 billion in 2009.

What can radio do to turn around its fortunes? That's a popular topic among Wall Street and other observers. In a report last week, Jim Boyle, an analyst with CL King & Associates, accused radio of doing little to reverse things.

"The industry's larger groups do not appear ready to institute revolutionary changes yet in sales, programming, promotion or station clusters," he wrote. "There is a notable sense of denial of how harsh the prospects have been and continue to be. The classic CEO reply is radio is not bleeding as badly as newspapers."

RAB's figures are based on a pool of more than 100 markets as reported by the accounting firm of Miller, Kaplan, Arase & Co.

Katy Bachman is senior editor of Mediaweek.
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