You probably saw the headlines coming out of the NAB Digital Radio Show: Digital is the future! Most growth will come from digital! Digital dollars growing six times as fast as traditional dollars! Our survival depends on digital!
According to one report:
Investing in exclusive digital content and ramping up sales efforts could increase the percentage of industry revenue derived from digital assets to 10-15% within five years.
You better stop making payments on the Benz.
The truth is that a lack of vision and sales integrity has cost radio far more than it will earn from digital for the foreseeable future.
The graph shows the latest BIA/Kelsey radio revenue projections for broadcast and digital. The company expects radio to come in at a little over $14 billion. Of that total, the company expects that nearly 97% will come from broadcast.
Take a moment to let that sink in.
Digital revenue for radio this year may be over five times what Pandora bills, yet only 3% of radio’s revenue will come from digital. Five years from now BIA/Kelsey expects digital to reach 5%. Imagine!
The only way digital will reach 10-15% is if broadcast revenues absolutely crater.
If broadcast revenues plummet to (say) $8 billion then boosters can celebrate digital’s victory of double digit growth while broadcast groups figure out how to cover a decline of $6 billion of revenue.
The disparity between broadcast and digital revenue is so great that for digital to make up for a broadcast decline of just 1%, digital has to grow 33%.
Growing broadcast revenue by less than 4% generates more revenue than all the money radio makes on digital.
Unfortunately, The Digital Radio Show didn’t have any sessions devoted to the evils of pricing for share, the destructive impact of PPM, or radio’s absence of sales leadership and vision.
Far more lucrative for NAB to sell Info Sessions to those who want to peddle a digital dream.