The Radio Barometer
by Frank W. Kelley
Can Radio predict the future of the U.S. economy?
I'm no economist, but experience selling and managing Radio stations in both large and small markets has shown me that local direct advertisers often have a better handle on predicting recessions and expansions some five to six months before they become reality.
If you're selling radio time, you might have noticed that some advertisers start cutting back on their schedules even though the economy is booming. Several months later, the economic news takes a downturn and the politicans start howling about a recession. The reverse is also true; local advertisers start increasing budgets while the economy is in the doldrums. Five to six months later, the economy is booming.
I can't tell you why this happens; why local retailers seem to discern good times and bad times in advance, but they do. While managing stations and monitoring revenue trends, I could usually tell when things were going to improve and when they were going to go downhill.
Of course, this indicator is not foolproof and one could make the argument that an individual station or cluster is not representative of an entire market, let alone the national economy.
However, now that I'm not involved in the day-to-day operation of stations, I've noticed another phenomena that reinforces the predictive ability of Radio.
In any market, listen to the first or second-tier talk stations, or music stations that carry a syndicated format. If they're filling their local breaks with PSA's instead of revenue-producing commercials, it's a good indication that local direct advertisers aren't buying. This doesn't work with low-rated stations, but the market leaders should be selling their time...especially during peak demand (Thursday-Friday drive time) and during high seasonal demand.
This past Christmas, I was surprised to hear some of the top stations airing public service spots in their prime programming — a good indicator that the economy isn't doing well. The problem is, this indicator has been present for several months already. If the Radio barometer is correct, the economy is due for a downturn around March or April 2008.
Here's hoping I'm reading the barometer incorrectly. But watch this space for an update in early spring 2008.
by Frank W. Kelley
Can Radio predict the future of the U.S. economy?
I'm no economist, but experience selling and managing Radio stations in both large and small markets has shown me that local direct advertisers often have a better handle on predicting recessions and expansions some five to six months before they become reality.
If you're selling radio time, you might have noticed that some advertisers start cutting back on their schedules even though the economy is booming. Several months later, the economic news takes a downturn and the politicans start howling about a recession. The reverse is also true; local advertisers start increasing budgets while the economy is in the doldrums. Five to six months later, the economy is booming.
I can't tell you why this happens; why local retailers seem to discern good times and bad times in advance, but they do. While managing stations and monitoring revenue trends, I could usually tell when things were going to improve and when they were going to go downhill.
Of course, this indicator is not foolproof and one could make the argument that an individual station or cluster is not representative of an entire market, let alone the national economy.
However, now that I'm not involved in the day-to-day operation of stations, I've noticed another phenomena that reinforces the predictive ability of Radio.
In any market, listen to the first or second-tier talk stations, or music stations that carry a syndicated format. If they're filling their local breaks with PSA's instead of revenue-producing commercials, it's a good indication that local direct advertisers aren't buying. This doesn't work with low-rated stations, but the market leaders should be selling their time...especially during peak demand (Thursday-Friday drive time) and during high seasonal demand.
This past Christmas, I was surprised to hear some of the top stations airing public service spots in their prime programming — a good indicator that the economy isn't doing well. The problem is, this indicator has been present for several months already. If the Radio barometer is correct, the economy is due for a downturn around March or April 2008.
Here's hoping I'm reading the barometer incorrectly. But watch this space for an update in early spring 2008.
Frank W. Kelley managed successful Radio station clusters in multiple markets. His company develops computer software for Radio as well as other industries.
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