Will Internet Kill the Radio Star?

AUGUST 28, 2007

Unfortunately, for traditional radio operators, someone is touching that dial.

"Internet radio, satellite radio, podcasting, high-definition radio and mobile audio services are revolutionizing a radio industry that had remained virtually unchanged for a century," said Ben Macklin, eMarketer senior analyst and author of the new report, Radio Trends: On Air and Online. "Traditional radio is rapidly being subsumed into a new, broader sector called 'audio.'"

One key indicator of the change is advertising.

"Few factors are more important in analyzing media trends than looking at where the ad dollars are going—or not going," Mr. Macklin said.

By 2008, online advertising spending in the US is projected to surpass radio advertising spending for the first time.

eMarketer estimates that US online ad spending will reach $21.7 billion this year, while radio spending will grow only slightly to $20.4 billion.

Of course, the radio audience is still huge. According to Bridge Ratings, terrestrial radio commands a weekly cumulative audience of nearly 283 million Americans.

Nevertheless, data from a number of researchers indicates that traditional radio is losing its significance in people's lives. US adults are spending more time each day on the Internet and watching TV than listening to the radio.

Figures from Arbitron and Edison Media Research also show that Americans regard radio as less important in their lives than TV or the Internet.

"It is for this very reason that the radio industry must quickly and comprehensively come to terms with how to adapt to this changing environment," Mr. Macklin said.

Mr. Macklin also has advice for advertisers.

"There are in fact many synergies between radio and the Internet, and for the most part they complement rather than compete with each other," he said. "Marketers should not abandon radio in favor of the Web—they should combine both mediums to take advantage of the unique attributes of both."

To find out more about how digital and interactive technologies are altering the distribution of audio content, please read the new eMarketer report, Radio Trends: On Air and Online, today.