Indianapolis, IN -- Erica Farber, president and CEO of the Radio Advertising Bureau (RAB), provided the following prepared remarks for the 2014 Radio Show Opening Event. The Radio Show is produced by RAB and the National Association of Broadcasters (NAB).
Hello everyone, and welcome to this year's Radio Show. It's been an awesome year and only the pit crews at the Indy 500 are more coordinated than we are. Special thanks are owed to our partners over at the NAB, Gordon Smith, John David and everyone else who worked so hard to pull it off this year.
None of us would even be here, of course, were it not for the advertisers, who continue to use our medium to underscore awareness and drive action and sales. We feel fortunate to be partnered with a group of advertisers who are so committed to their own goals and so supportive of ours.
In a little while Bob Hoffman is going to give a talk about B.S. As an advertising guru -- some say legend -- he's entitled. It's a provocative stance, and I'm sure you're all looking forward to it as much as I am. Before that, though, I want to tell you a love story.
There was a period a few years ago -- let's call it the Dark Times -- when people enjoyed heralding the death of radio. The world is all new, they cried, and radio is an old medium. PowerPoint decks featured numerous pictures of 1950s families sitting around a giant wireless -- remember the old Sylvanias -- tuning into the Lone Ranger while wearing suits and dresses and hats inside the house. Even the children.
Those of us who loved radio were worried. Was our old flame losing its luster? Would we be able to keep the magic alive? Fortunately, it turned out the reports of our death were slightly exaggerated, because we were not alone in our affection for radio.
In fact, far from it.
People love radio. They loved it in the 50s and they love it now. They love music, they love news, they love the social nature of radio, the personalities, the callers, the discussions and even the ads. The good ones, anyway. 244 million people tune in every week, most for more than a couple hours a day.
It's still the number one way people listen to music. In fact, only a few days ago the Wall Street Journal published a story discussing the fact that over 86% of Americans still listen to radio while driving, way more than any other medium. I'll happily agree with them radio remains “the king of the road.”
In another recently released study, over 70% of respondents described radio personalities as friends who they would 'truly miss if they were gone'.
Sweet, right? And more than sweet. Powerful.
New technology has allowed our listeners to fall even more deeply in love with radio. Now they can text or tweet or follow or 'like' their favorite stations, or personalities. They email, they comment, they interact. This is not just dating anymore, people. This is marriage.
And it isn't just love that makes the future of radio secure. It's also a deep and abiding affection for the technology of radio. Let's face it; we've always been a little bit geeky. From hand built crystal sets to transistors to digital, it's all just radio to us. While other industries seemed to scramble when new technology changed their playing field, we just saw more room to play.
And right now digital radio is the best game in town. It's our fastest growing revenue sector: $889 million dollars last year, and up 12% for the first half of this year. There are now over 23 million HD receivers in market, with 2300 stations broadcasting, and the technology is improving and developing every day. Currently, 35 automakers are shipping vehicles equipped with HD Radio Technology, and we all know it's only a matter of time before real time traffic and data are part of every in-dash radio experience. Cover art, song tagging... all coming soon to a car near you.
And once the drive is over, you can take it with you. NextRadio has well over 850 thousand downloads, and gets a 4 out of 5 rating in the Google Play store. Users have listened to over 10,300 different FM stations wherever they go, without dipping into their data plans or incurring charges. In fact, we're at nearly 1.1million hours of listening -- a monthly increase of over 23 percent from last month. There are currently 27 FM enabled devices with NextRadio available…and that number just continues to grow. Incredible. The comments in the app store make it clear -- radio fans are happy to take their passion to go, and now they'll never be lonely again.
While we all know that digital is radio's new frontier, we have some work to do. Our trade association partners at the IAB just released a Digital Audio Ad Serving Template and it's open for public comment. I encourage everyone to review this document, discuss it with your digital teams, understand the implications to your business and share your opinions. As is always the case in a love story, there are new things to learn and adjustments to be made. This will only help us grow to deliver what our video counterparts already do and it will strengthen our relationships and partnerships with advertisers.
So who's bringing the love this year? Some advertisers stand out. Automotive continues to be our number one category, spending more than numbers two and three combined. Research shows people are keeping their cars longer, so more maintenance --- auto parts and service companies increased their radio spend 14% this quarter. And for those who are looking for a new car, radio continues to be an important influencer in choosing where to buy it. Dealers and their vehicle brands have always depended on radio and we're happy to support them.
This past second quarter, political advertising was gearing up, as various states held primaries and contests on state and local issues. Candidate spending was the highest category, with Issue spots close behind. As general election races heat up, we anticipate increased spending in the next two months.
Spending in the beverage category was down a little bit, despite the hot summer, although Coca-Cola continues to be one of our BFFs, spending an increased 21% this quarter. Charitable, religious and non-profit advertising also increased over 10% -- non-profits have always seen radio as an excellent driver to action and donation, and that's something we can all feel good about. Our number three category for the first half was communications and cellular, up a little over 6%.
Generally spot spending was down a little at the half-way mark, although that 3% dip was more than offset by an increase of 12% and 15% in off-air and digital spending. Historically, radio spending increases in the third and fourth quarter, so we're hoping for an overall improvement by the end of the year. And as we heard from Allstate at lunch today, smart advertisers still regard radio as their workhorse: a medium that takes the brand awareness built by national campaigns, and actually moves people to measurable, locally targeted action. If I can stretch my metaphor a little, you might fall in love with a movie star... but it's the boy next door who actually takes you to the prom.
But while this is a love story, it's not a total fairy tale. As with any long-term relationship, we've had our ups and downs. We've worried about the future. We've wondered if we were headed in the right direction. But we never stopped working at it, together, and we can feel the excitement coming back. We've got a little more spring in our step these days, we're proud to say we stayed the course, and the future's looking pretty awesome.
We love radio. And together we're going to live happily ever after.
the Radio Show
The 2014 Radio Show, produced by the Radio Advertising Bureau (RAB) and the National Association of Broadcasters (NAB), will be held September 10-12 in Indianapolis. This year's show brings radio broadcasters and industry colleagues together to share knowledge, discover the latest innovations, network with industry leaders and explore creative business strategies for the digital age. To learn more about the 2014 Radio Show, visit www.radioshowweb.com.
The Radio Advertising Bureau serves more than 6,000 member Radio stations in the U.S. and over 1,000 member networks, representative firms, broadcast vendors, and international organizations. RAB leads and participates in educational, research, sales, and advocacy programs that promote and advance Radio as a primary advertising medium.
The National Association of Broadcasters is the premier advocacy association for America's broadcasters. NAB advances radio and television interests in legislative, regulatory and public affairs. Through advocacy, education and innovation, NAB enables broadcasters to best serve their communities, strengthen their businesses and seize new opportunities in the digital age. Learn more at www.nab.org.