• by Erik Sass  @eriksass1, February 25, 2013

Local online advertising revenues for broadcast radio stations and groups are showing solid growth.

A new forecast says they will increase 14% this year. Borrell Associates sees total local online ad revenues for radio increasing from nearly $371 million in 2012 to more than $420 million in 2013. The report was commissioned by the Radio Advertising Bureau.
 
In fact, in a survey of 1,075 radio stations conducted in January, 17% said they expect online ad revenues to increase 30% or more. That follows a strong performance last year when radio’s total online revenues increased 22%, outpacing the overall local online growth rate of 20% -- prompting Borrell to predict that radio is “turning the corner” in digital ad sales.
 
Radio stations are becoming less dependent on traditional online ad formats, reflecting the declining effectiveness of display advertising, identified by just 22% of radio stations as their main source of online ad revenues -- down from 32% in 2012.

Borrell sees an increasing reliance on other online ad formats, including social media, email, audio, and video. Streaming audio ads contributed 20% of total online ad revenues.

The Borrell study also identified a relatively small group of radio stations and groups that are outpacing the rest of the industry by a huge margin, generating anywhere from three to 32 times as much online revenue as their peer-group average. The disparity is striking: Over half the radio stations and radio clusters surveyed reported online revenues of less than $250,000 in 2012, while an “elite” group of 3.4% reported online ad revenues of $3 million or more.
 
While online ad growth is much-needed good news radio business, it’s worth noting that radio’s share of local online ad spending will actually shrink, per Borrell’s numbers -- which have radio taking 2% of $18.7 billion local online ad dollars in 2012, but just 1.7% of a total $24.5 billion in 2013.

The predicted growth rate of 14% for radio’s local online advertising this year lags an overall local online ad growth forecast of 30.8%.
 
Online ad revenues will also remain a fairly small part of the radio business overall: Combining Borrell’s forecast figures with separate figures from the Radio Advertising Bureau, online advertising’s share of total radio ad spending may come to just 2.5% in 2013 -- up from 2.25% in 2012.