radio poised for growth radio company name. investor question 1. “is radio maintaining or gaining...

RADIO POISED FOR GROWTH

RADIO COMPANY NAME

Investor Question 1.

“Is Radio maintaining or gaining share of the ad pie?”

Radio Revenue Trends

Recently, there has been much discussion about cable “eroding Radio’s share.”

In fact, there is no data to support a loss of revenue share in Radio -- to cable or anyone else.

Cable’s gains can be more directly attributed to losses by broadcast TV (-2.7 points) and by newspaper (-4.8).


Long-term: Since 1993 Radio has gained share -- from 6.9 to 8.0 in 2003.

Trend: Radio Revenue As Percent Of Total Ad Dollars

RADIO ADVERTISING - TEN YEAR ANALYSIS (1993 – 2003) (In Millions)

% OF

YEAR VOLUME REVENUE TOTAL

2003 $245,477 $19,603 8.0%

2002 236,875 19,409 8.2%

2001 231,287 18,369 7.9%

2000 243,680 19,817 8.1%

1999 222,308 17,681 8.0%

1998 201,594 15,430 7.7%

1997 187,529 13,794 7.4%

1996 175,230 12,412 7.1%

1995 160,920 11,470 7.1%

1994 150,030 10,652 7.1%

1993 138,080 9,568 6.9%

* Total Advertising Universal McCann reported by Robert J. Coen; Radio Revenue –RAB Data


Radio, Cable and Internet were the only media to sustain growth during this ten-year period.

Variations in radio’s share attributed to actual Miller Kaplan revenue figure used in RAB Data.

SOURCE: Robert J. Coen – Universal McCann ;2003 figures are not final;All Other includes Out-of-Home, Business Papers and other misc. media.

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003Radio $ 9,457 10,529 11,338 12,269 13,491 15,073 17,215 19,295 17,861 18,877 19,493

Share 6.8 6.9 7 7 7.2 7.5 8 7.9 7.7 7.9 7.8

TV $ 28,020 31,133 32,720 36,046 36,893 39,173 40,011 44,802 38,881 42,068 43,247Share 20.1 20.5 20.1 20.6 19.7 19.4 18.6 18.4 16.8 17.6 17.4

Cable $ 3,673 4,302 5,108 6,438 7,237 8,301 9,807 15,455 15,736 16,297 17,500Share 2.6 2.8 3.1 3.6 3.9 4.1 4.8 6.3 6.8 6.9 7

Newspaper $ 32,025 34,356 36,317 38,402 41,670 44,290 46,648 49,050 44,255 44,031 45,438Share 23 22.7 22.3 21.9 22.2 22 21.7 20.1 19.1 18.5 18.2

Magazines $ 7,357 7,916 8,580 9,010 9,821 10,518 11,433 12,370 11,095 10,995 11,765Share 5.3 5.2 5.3 5.1 5.2 5.2 5.3 5.1 4.8 4.6 4.7

Yellow Pages $ 9,517 9,825 10,236 10,849 11,423 11,990 12,652 13,228 13,592 13,776 13,914Share 6.8 6.5 6.3 6.2 6.1 5.9 5.9 5.4 5.9 5.8 5.6

Direct Mail $ 27,266 29,638 32,866 34,509 36,890 39,620 41,403 44,591 44,725 46,067 49,061Share 19.6 19.5 20.2 19.7 19.7 19.7 19.2 18.3 19.3 19.4 19.7

Internet $ 6 1,050 1,940 6,507 5,645 4,883 5,6150.003 0.05 0.09 2.7 2.4 2 2.3

All Other $ 22,135 23,981 25,765 27,707 30,098 31,579 33,570 38,382 39,497 40,431 43,096Share 15.8 15.9 15.8 15.8 16 15.7 15.6 15.8 17.1 17 17.3

Total Advertising 139,450 151,680 162,930 175,230 187,529 201,594 215,301 243,680 231,287 237,425 249,156

Advertising Volume 1993-2003


Note: The revenue figures in this presentation do not include non-spot revenue, a significant revenue factor for many Radio companies.

If we were to include non-spot revenue:


Inclusion of non-spot revenue: 2003 revenues increase by $833 million. Total revenue increases to $ 20,436 billion. Revenue growth increases to 2% from 1%. Radio’s share of total revenue would be 8.3%.


Short-term: Radio share has stabilized over the last three to five years.


RADIO ADVERTISING – THREE YEAR ANALYSIS (2001– 2003) (In Millions)

% OF


2003 $245,477 $19,603 8.0%

2002 236,875 19,409 8.2%

2001 231,287 18,369 7.9%

* Total Advertising Universal McCann reported by Robert J. Coen; Radio Revenue –RAB Data


RADIO ADVERTISING - FIVE YEAR ANALYSIS (1999 – 2003) (In Millions)

% OF


2003 $245,477 $19,603 8.0%

2002 236,875 19,409 8.2%

2001 231,287 18,369 7.9%

2000 243,680 19,817 8.1%

1999 222,308 17,681 8.0%

*Total Advertising Universal McCann reported by Robert J. Coen; Radio Revenue –RAB Data

Source: Robert J. Coen – Universal McCann; 2003 figures are not final; All Other includes Out-of-Home, Business Papers and other misc. media.

1999 2000 2001 2002 200317,215 19,295 17,861 18,877 19,493

8 7.9 7.7 7.9 7.8

40,011 44,802 38,881 42,068 43,24718.6 18.4 16.8 17.6 17.4

9,807 15,455 15,736 16,297 17,5004.8 6.3 6.8 6.9 7

46,648 49,050 44,255 44,031 45,43821.7 20.1 19.1 18.5 18.2

11,433 12,370 11,095 10,995 11,7655.3 5.1 4.8 4.6 4.7

12,652 13,228 13,592 13,776 13,9145.9 5.4 5.9 5.8 5.6

41,403 44,591 44,725 46,067 49,06119.2 18.3 19.3 19.4 19.7

1,940 6,507 5,645 4,883 5,6150.09 2.7 2.4 2 2.3

33,570 38,382 39,497 40,431 43,09615.6 15.8 17.1 17 17.3

215,301 243,680 231,287 237,425 249,156

Radio $Share

TV $Share

Cable $Share

Newspaper $Share

Magazines $Share

Yellow Pages $Share

Direct Mail $Share

Internet $

All Other $Share

Total Advertising


SOURCE: Robert J. Coen – Universal McCann ; 2003 figures are not final All Other includes Out-of-Home, Business Papers and other misc. media.

Radio $Share

TV $Share

Cable $Share

Newspaper $Share

Magazines $Share

Yellow Pages $Share

Direct Mail $Share

Internet $

All Other $Share

Total Advertising

2001 2002 200317,861 18,877 19,493

7.7 7.9 7.8

38,881 42,068 43,24716.8 17.6 17.4

15,736 16,297 17,5006.8 6.9 7

44,255 44,031 45,43819.1 18.5 18.2

11,095 10,995 11,7654.8 4.6 4.7

13,592 13,776 13,9145.9 5.8 5.6

44,725 46,067 49,06119.3 19.4 19.7

5,645 4,883 5,6152.4 2 2.3

39,497 40,431 43,09617.1 17 17.3

231,287 237,425 249,156


Is New Media Challenging Traditional Media?

What about new media’s impact

on traditional media like Radio?

Is New Media Challenging Traditional Media?

The most notable of new media, the Internet, was unable to sustain its predicted meteoric growth of the late ’90s in a tougher and more challenging economic environment.

Is The Internet Challenging Radio?

The “darling” of media and marketing publications, Internet’s revenues are actually just now poised to recover from their year 2000 share high of 2.7%.

2003 Internet revenue share was 2.3%.

Five-YearInternet Share Trends

Internet’s Share of Revenue’s Slow Recovery

Year Volume Internet RevenueShare

1999 215,301 1,940 0.9

2000 243,680 6,507 2.7

2001 231,287 5,645 2.4

2002 237,425 4,883 2.0

2003 249,156 5,615 2.3

SOURCE: Robert J. Coen – Universal McCann; 2003 figures are not final.

Radio IsPredominantly Local

Radio plays an increasingly important role to national advertisers. However, an analysis of its traditional revenue core points to further strengths.

Source for local revenue on the following slides: Universal McCann as reported by Robert Coen

Radio’s Local Share Grows

Local Revenue from 1993-2003

Total spending was up 60.5%. Radio’s share grew from 12.5 % to 16.1%. Newspaper’s share declined: 50.5% to 40.5%.

Sources: Universal McCann as reported by Robert Coen

Local Strength is Long-Term

Local Revenue from 1993 to 2003

Radio increased 106%.Newspapers increased only 34.3%.Cable grew 206%, but cable revenue was

minimal to begin with.

1993: Cable - $1.1 billion Radio - $7.5 billion

Source: Universal McCann as reported by Robert Coen

Q1. Radio’s Prospects

“Our company’s projections for Radio may be higher than others but the local advertising component can’t be overlooked, or the fact that radio pitches a captive audience spending more time in cars, not less.”

Peter WinklerManaging DirectorPrice Waterhouse Cooper/Entertainment & Media Practice


“Is Radio maintaining its listener base?”

Q2: Audience Trends

Veronis Suhler Steven’s 2004 edition of “Communication Industry Forecast and Report” presents Radio as the #1 single medium in “Hours per Person Using Consumer Media” at 1,013 hours in 2003.

Hours Per PersonUsing Media

Q2: Audience Trends

Radio listening, as stated by RADAR*, has witnessed consistent increases in time spent with the medium, a pattern that Veronis Suhler projects will continue even as new media continues its growth.

*RADAR includes non-rated ‘C’ and ‘D’ county listening, unlike statistics frequently quoted based on Arbitron continuously rated markets only.

Hours Per PersonUsing Media

Q2: Audience Trends

Factors like increased commute times, the number of people who commute by car alone, the effects of women in the workplace and the fact consumers are out of their homes 65% more than two decades ago all reinforce a positive outlook for Radio listening.

Q2: Audience Trends

Add to this the fact that Radio lends itself to simultaneous usage with other media and while performing a multitude of tasks and leisure activities at home or elsewhere.

It becomes clear why forecasters are bullish on Radio … today and in the future.

Q2: Audience Trends

Even as Radio and other mature media lost some share to new media (Internet, electronic games, IPOD, DVRs), Radio displaced broadcast TV’s rank in actual hours spent with media.

American consumers now spend over one quarter of their media time with Radio.

Veronis Suhler Steven’s 2004 “Communication Industry Forecast and Report”

Q2: Audience Trends

Broadcast TV’s “missing” young males (18-34-year-olds) has been a highly charged and well-publicized issue in the past year, adding to advertisers’ concerns as they approached the ’04 TV upfront.

Q2: Audience Trends

Radio tune-in, or cume, is stable: 94-95% range.*

High levels of tune-in indicate Radio is reaching the majority of the population each week; the challenge is increasing TSL, especially in youth-oriented demos.

*Source: Arbitron; Continuously measured markets

Q2: Audience Trends

The Radio industry is far from complacent, however, and continues to seek content and programming innovations that will engage its younger listening audience.


“Is clutter a serious problem for Radio?”

Q3: Media Clutter

Advertisers are struggling: they need to “break through” to consumers on one hand and control ad expenses on the other.

Q3: Media Clutter

Clutter is a full media issue,not unique to Radio. Pressures have also come to bear on TV, print, and even the Internet.

No media sector is unaffected. Radio has responded proactively.

Q3: Media Clutter

Radio’s Dual-Edged Sword:

Radio has a “captive audience” factor unlike other media, giving advertisers access to ‘proximity to purchase’ messaging.

Q3: Media Clutter

Radio’s Dual-Edged Sword:

That unique quality also makes commercials and spot loads more conspicuous than in other media.

Q3: Media Clutter

Radio spot loads are similar to or lower than television.

Newspaper editorial ad/content ratio is higher than electronic media.

Internet clutter is another source of advertiser and consumer irritation.

Q3. Media Clutter

In April, 2004, global media agency Mindshare released its most recent TV clutter study.

It states that in 2003 all three major networks broke the 15-minute barrier for non-program content in prime time.

Mindshare as quoted by Adweek, April 2004

Q3. Media Clutter

Over 60% of Internet users have a low tolerance for more than two ad units per Web page and hold less favorable opinions of the advertiser’s product when within a “cluttered page.”

Burst! Media 2004

Q3. Media Clutter

No significant studies regarding Radio clutter have been underwritten by the agency or advertising communities.

Q3. Media Clutter

However, lengthy Radio spot loads are a more recent phenomena than television clutter, coming into play in late ’99 and 2000 during the dot-com boom.

Q3. Media Clutter

“Spot loads went up a lot during the late ’90s and not much at all since then. The clutter issue with Radio has been an overreaction by the ad community.”

Jeff Smulyan, CEO, Emmis

R&R, 7/14/04

Q3: Media Clutter

Numerous major Radio groups - Cox, Emmis, Entercom, Infinity, Greater Media, and Susquehanna among others –

have maintained tighter spot loads standards since the mid to late 90’s.

Q3: Media Clutter

Other groups –most significantly Clear Channel –recently committed to reduce spot loads and utilize innovative inventory management systems to maintain effective inventory and pricing.

Q3: Media Clutter

“Clear Channel radio stations are significantly reducing the amount of commercial and promotional inventory carried. We’ve heard listeners and advertisers and are improving the Radio experience for both.” John Hogan, CEO Clear Channel Radio

The New York Times, 7/19/04

Q3: Media Clutter

“We’ve been reducing inventory loads … experimenting with reduced loads and putting more pressure on the inventory. And it’s paying off.”

Joel Hollander, President/COO

Infinity Broadcasting,

RBR 7/21/04

Q3: Media Clutter

“Our Company continues to be a low-inventory operator, and our primary focus is on … renewing clients. We applaud the commitment of … Radio companies … to hold down spot loads.” Peter Smyth

President/CEO

Greater Media


“Can Radio companies work together to advance the Radio industry?”

Radio Working Together

The Radio Industry has a long history of joint initiatives. The project with the most heritage is in its 14th consecutive year:

The $100,000 Radio Mercury Awards - Over 30 Radio companies since 1991 honoring the best in Radio commercial creative.


In recent years Radio companies have joined forces on the following initiatives:

Electronic Data Interface

American Association of Ad Agencies

The Radio Ad Effectiveness Lab

The Radio Growth Initiative Fund


Electronic Data Interface for Radio

(EDI)

The RAB/Radio EDI Task Force (2000)

Over 50 radio Companies, networks, reps, industry vendors and media partners working together to “Electronify” and enhance Radio’s back room processes.


Radio EDI

In April, 2004, the Radio’s national rep firms launched a joint EDI effort:

RadioInvoice.com


RAB Board/AAAA Buying and Selling Task Force (2002)

Supported by the entire RAB Board of Directors, the task force’s common goal is improved communication between Radio buyers and sellers, insuring that business processes are universal and sustainable.


The Radio Ad Effectiveness Lab

“RAEL”

Formed in 2001

Funded by the Radio Industry


The RAEL Mandate:

Improve industry understanding of how Radio advertising works.

Increase advertiser/agency confidence in Radio as an advertising medium.


Since its inception, RAEL has published three White Papers, two client proprietary Case Studies, and a newly released “Guide to Commercial Testing Services.”



A consortium of over 30 Radio companies is underwriting a full marketing strategy on behalf of the Radio industry.


Growth Fund Commitments:

$3 million on new consumer research through RAEL in ’04-’05 alone.

Enhanced direct contact with major advertisers and their agencies.

Ad campaigns targeting media decision makers.


“Radio is pursuing Accountability with a Vengeance.”

Robert Liodice, President

Association of National Advertisers

“The Advertiser Magazine, 6/04


“Putting the needs of the client first has long been a way of doing business for Susquehanna. This innovative ‘Sales Performance Guarantee’ represents another tangible means for us to demonstrate that commitment to our valued clients and to our industry.”

David Kennedy

President/COO

Susquehanna Radio Corp.


“I am very encouraged by the fundamental improvements that are starting to be made throughout much of the industry. We are raising the bar on customer service and accountability … accelerating the rollout of HD Radio, launching new, innovative formats, and reducing commercial clutter.”

David Field

President/CEO

Entercom


“Is anybody saying anything good about Radio?”

Bad News MakesGood Headlines!

Look beyond the headlines.

Radio has many fans extolling its strengths as an advertising medium.

Here are comments from just a few:

Research Consultant Quote

“Radio does drive sales– case studies show markedly improved sales by adding Radio to the media plan or increasing Radio budgets.” Sunil Garga, COO,

Marketing Management Analytics, referring to

MMA case studies on ROI.

Interep Symposium, 6/22/04

Advertiser Quotes

“When you take advantage of Radio’s unique strengths – efficiency, targetability and creative flexibility – you can do anything from selling a specific product to building a brand. Radio gives us an unbeatable combination – targetability and efficiency.” Matthew J. Dee, Dir., Advertising Production

Wendy’s International

Advertiser Quotes

“Pfizer is committed to using Radio as a medium to build our brands now and in the future. Radio helped build our brands into household names… We match our brands with stations and programming that truly deliver the brand’s objective and target audience.” Jeni Cramer, Media Manager,

National Radio

Pfizer

Advertiser Quotes

“The cool thing about Radio is that it allows us to interact and connect to the consumer.” Daryl Evans, VP of Advertising

and Marketing Communications, Cingular Wireless

Advertiser Quotes

“What I love about Radio is that it’s helped us achieve some really big results with not-so-big budgets. Radio has helped many of our clients grow into household names. When you do Radio right, it’s very sexy.” Ernie Roth, President and

Creative Director

Furman Roth Advertising

Advertiser Quote

“Radio, we felt, allowed people to interpret their best picture, their own perfect image. We believed we could tap into the magic of our customer’s imagination without words.

Radio hit the sweet spot” Brad Flatoff, VP of Marketing

Sargento Cheese

Advertiser Quotes

“Radio is much more intimate than other media. It helps develop a personal relationship with the brand. It gives you

the time to do something wonderful. It’s storytelling that draws you in.” Robert Skollar, EVP

Executive Creative Director

Grey Worldwide

Advertiser Quotes

“The first year we used Radio, its challenge was to equal what TV had produced the year before in the way of store traffic – and Radio beat those numbers! The results were spectacular!”

Michael Gretzinger, VP Management Supervisor, Daily & Associates

(regarding El Pollo Loco restaurants)

Advertiser Quotes

“Radio gives AT&T the flexibility to blanket the country while simultaneously pinpointingmarkets with the strongest potential forAT&T.”

Karen MilkeMedia DirectorAT&T

Advertiser Quotes

“Campbell’s soup success with radio drives home the point that Radio can respond to events and produce results. That’s the beauty of Radio -- you can get a message on the air quickly that is relevant to the consumer TODAY.”

Kim VaseySenior Partner/Director of RadioMediaedge:cia

Advertiser Quotes

“I believe the antennae for Radio, as it applies to the media mix, is about to go up.”

Dave LeitnerSegment Media SolutionsSONY

Radio: Poised for Growth

“In summary, these documented facts refute the myths: The Radio industry has been, is and will continue to be poised for growth and is a stable and integral force in the advertising and media industries.”

Gary Fries

President/CEO

The Radio Advertising Bureau

Radio Poised for Growth

This presentation was compiled

for the investment community

by the Radio Advertising Bureau

on behalf of its member companies.

radio poised for growth radio company name. investor question 1. “is radio maintaining or gaining...

Documents

radio share

radio revenue trendsrecently

radio revenue trendsnote

internet revenue share

radio revenue trendslongterm

radio revenue trendsshortterm

revenue figures

loss of revenue share