Report: Local Online Radio Ad Spend Nearly Doubles

Local advertising spend on online radio Web sites increased 94 percent from 2003 to 2004, but there’s plenty of room for growth, preliminary results from a Borrell Associates study show. The figures indicate radio stations’ sites grew ad revenue from $17 million to around $33 million. They bode well for new initiatives reportedly underway at Clear Channel Communications and Infinity Broadcasting.

Infinity recently began streaming audio content on the Web sites of a number of its news/talk stations. Many news reports indicate Clear Channel will provide downloadable content in the form of podcasts (define), as well as live streams of Internet-only concerts. Both companies intend to seek advertising support for their online programming. How much money can they expect to gain? Borrell’s report finds individual stations generated from $500,000 to $1.5 million from their Web operations last year.

The growth rate for online radio ad spend is dramatic, partially because it’s starting small. Newspapers, by contrast, which controlled 48 percent of local online ad spend in 2004, generated $1.3 billion in revenues. Local TV stations, meanwhile, increased their total online ad revenues to $105 million last year, a 40 percent increase over 2003.

The remaining 38 percent of local online ad revenues is split by the big national players, including Google, Yahoo, and Autobytel, among others, said Gordon Borrell, president and chief executive of the Virginia-based research firm.

Newspapers are doing so well online because they’re leveraging their traditional strength in classified advertising. Real estate, automotive and help-wanted advertising accounted for 70 percent of newspapers’ share of online local advertising in 2004, the bulk of that coming from help-wanted ads.

In 2005, Borrell Associates expects local Web sites to grow advertising spend 46 percent to $3.9 billion, with the largest share continuing to go to local newspapers.

The full 30-page report, entitled “What Local Web Sites Earn,” will be released Wednesday, March 30. Its findings are based on an online survey of 2,070 local media properties across 30 data points.