INSIDERADIO
August 18, 2015
The political party conventions for Election Day 2016 may still be a year away but the party has already started. National elections will draw the lion’s share of attention, but almost half of election dollars will be spent at the local level, according to a report issued Tuesday by Borrell Associates. Of the total $1.186 billion forecast to be spent on radio from 2015-16, two-thirds ($787.77 million) will come from state and local contests and one-third ($399.04 million) from national contests. Broadcast TV won’t be nearly as dominant in state and local political contests the way it is for national races. "Newspapers, out-of-home, radio and telemarketing all have healthy shares," the report says. But with only three governors to be elected in 2015, the majority of the local action for radio and other local media this year will come at the state level or lower—races for state assembly seats, mayors and city councils, school boards, county offices and ballot issues. "Local politicians who once spent most of their time choosing colors and slogans for lawn signs are now scripting radio and TV spots," the firm says in the report, adding that radio and even TV time are now viable options for many local candidates. At $111.08 million, ballot issues will account for the largest amount of state and local political ad dollars earmarked for radio this year, followed by city/local races ($71.09 million) and state assembly races ($70.79 million). But with 77% more contests in 2016—and more money being spent on each one—local political ad spending in 2016 will double 2015 levels, per Borrell. Radio is forecast to grab 10.1% of those ad dollars with the largest amount once again coming from local ballot issues ($184.33 million), city/local elections ($161.61 million) and state assembly matches ($159.93 million).
Brands Love The Sound Of Radio In Co-op Deals. Co-op advertising programs in North America will total $36 billion this year, potentially affecting about 12% of all ad spending. Yet despite the rapid growth in digital media, co-op programs still heavily favor traditional media. And more than seven in ten brand managers use radio as part of their co-op programs, according to new research from Borrell Associates. The survey showed that 71% of managers of big national brands said their offerings include radio, putting radio in a second-place tie with direct mail among 12 media surveyed. Newspapers came in first at 82%, while digital marketing co-op ranked fourth at 69%. Offered by most large brand advertisers to their local business partners, co-op programs split the costs of advertising between the local retailer or distributor and the brand manufacturer. Although large brands still favor traditional mediums, a majority of local businesses (61%) prioritize digital advertising over newspaper (56%), direct mail (53%), radio (45%) and cable TV (35%). But local co-op is a growing line for radio. The number of local businesses surveyed who said they use radio in their co-op programs grew from 36% in 2012 to 45% in 2015. The numbers are part of a new white paper from Borrell and technology company Netsertive, which culled numbers from online surveys of brand managers and local business owners, along with telephone interviews and an analysis of advertising data.
With Updates, AM May No Longer Be Band On the Run. Efforts to revitalize AM radio may soon be moving off the back burner at the Federal Communications Commission. In a recent blog post, commission chairman Tom Wheeler said he would recommend that the agency adopt "several proposals" first discussed in a 2013 AM Radio Revitalization proposed rulemaking that "will further enhance the viability of the AM broadcast service." Wheeler didn’t provide any specifics but he added, "This comprehensive set of actions modernize our rules to keep them in line with the public interest in an ever-changing marketplace, and will help to ensure the continued vitality of AM radio." Broadcasters are anxious to see exactly what Wheeler has in mind. At the NAB Show in April, he effectively took the wind out of the effort’s sails by sidelining a proposal widely supported among the radio industry to give AM owners their own window for a shot at securing FM translators. But last month, Reps. Pete Olson (R-TX) and Gene Green (D-TX) asked Wheeler to "promptly advance" the AM revitalization proceeding, including the opening of an AM-only window for FM translators. In his blog post yesterday, Wheeler said he would formally ask about further suggested updates to the revitalization effort. He gave a shout-out to commissioner Ajit Pai, who has made improving AM radio a top priority, and former acting chairwoman Mignon Clyburn, who got the ball rolling in 2013. The original 2013 proposals also included a modification to the daytime and nighttime community coverage standards, elimination of the so-called ratchet rule and new AM antenna efficiency standards. It also floated the idea of allowing stations to use new technologies designed to reduce AM operating expenses.
With Agency Deal, More Sales On Horizon. In what could be a win for radio advertising, independent ad agency Horizon Media is launching a new shop with Korean automaker Hyundai, a big radio buyer in many markets, as a marquee client. Canvas Worldwide, a separate, independent agency, will be a joint venture with Hyundai-backed agency Innocan, according to a report in AdAge.com. Signing Hyundai, with its $700 million in U.S. business, gets Canvas off to a strong start. It’s not a stretch to expect the new agency to use radio in its buying plans, as Horizon CEO Bill Koenigsberg is among the most radio-friendly executives in the ad industry. Horizon invests heavily in radio advertising for many of its clients, including a major upfront-style, $100 million deal last year with iHeartMedia for Horizon clients to advertise across the company’s radio, digital, out-of-home and events assets. At the time, Koenigsberg said he expected clients to be clamoring to secure the iHeart inventory. As brands look for new ways to maximize their ad spending, other radio companies could offer similar multiplatform deals. Horizon’s launch of Canvas comes at a tumultuous time in the advertising industry. Some of the world’s biggest brands, including Proctor & Gamble, Unilever and Johnson & Johnson, are reviewing their ad spending, and about $26 billion in marketing budgets is on the line. Creating Canvas amid the reviews gives Horizon, the last standalone shop, a chance to win a larger share of business, or, at least, bring new accounts into the family. "Marketers are looking for a clean slate, new opportunity for invention, new creativity," Koenigsberg told AdAge.com. "I believe that with the success I’ve had with Horizon I can build another entity with a strong global partner to create two of the best-in-class agencies in the world."
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