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General Market Expectations and Conditions The LAEDC (Los Angeles Economic Development Corp) financial wizards July 18, 2007 report say the Southland's economy is stable and is cautiously good for slow, moderate growth in 2008, and is in better shape than most of the rest of the local economies in California. Local industries with the best growth prospects over the next two years include professional, scientific and technical services (which include accounting, law, engineering, computer software design, and scientific R & D), health services, and leisure & hospitality services. International trade will also provide support, with an increase of 6.3% to 16.75 million containers handled in 2007. "Laggard" industries in the region will include residential construction, durable goods manufacturing, and finance and insurance in 2007. The quarterly UCLA Anderson Forecast, released June 15, 2007, projects slower growth, but no recession for 2008, blaming a weakening housing market for a slower economy but also adding that it should not be enough to prompt a recession in the Los Angeles area. We avoided a grocery strike and settled a bus driver strike, but we are still staring at possible strikes in the shipping/dockside and Hollywood entertainment industries, either of which could negatively impact the overall local economy. The market won't have a great economic base, but it will probably be a stable one, especially if the strikes are averted. Events in 2008 With Probable Effect on the Advertising Arena The Summer Olympics in Bejing and the elections will have monumental effect on the advertising canvas in America and in California in 2008, but especially in Southern California. - Olympics - August 8 - 24, 2008, but the Olympic torch run begins in April, along with endless sponsorship opportunities and attempts at garnering coverage.
- Elections - We get three of them in 2008:
- Presidential Primary February 5, 2008, political rate window opens December 22, 2007 for broadcast media. This will carry at least one and probably three major ballot issues as well, each backed by tens of millions of dollars. The Direct Mail flood will ensure a profitable year for the Post Office and will seem like an extension of the Christmastime workload. TV news will be wallpapered with political ads. It won't seem like January - broadcast availability will see tremendous pressure.
- Statewide Direct Primary Election (non-presidential) June 3, 2008. Broadcast window opens April 19, 2008. And an opportunity for more ballot issues.
- General Elections, Presidential Election November 4, 2008, broadcast rate window opens September 5, 2008.
Los Angeles Radio 2008 For YTD May 2007, Radio is pacing slightly behind YTD 2006, while spot TV is even and newspaper continues its sizeable decline in revenue and share, down nearly 24% compared to YTD May 2006. We see those trends continuing until about 3rd quarter, when the infusion of political money will begin in earnest (if not sooner). We project 2007 radio revenue will be even with 2006. We are still seeing local media dollars shift to online spending as agencies and retailers frantically try to figure out how to monetize their websites. We anticipate that efforts by the RAB, the SCBA and the radio stations will convince advertisers of the multi-platform capabilities of radio, and that revenues will once again expand. After a down year in 2007, we project local TV will achieve another record year (from political spending alone) in 2008, that Newspaper will continue to decline in revenue and that Radio will have a healthy 2008, spurred by political spending on TV (the dearth of TV avails generally translates to radio revenue) and on Radio, outpacing 2007 by about 2.0%. PPM The primary change for Radio comes with PPM, the introduction of electronic measurement of audience usage. PPM rolls into the market in January 2008 and becomes the only ratings currency in April 2008. While PPM measurements differ from diary results, analysis of existing PPM markets demonstrates that the core listeners, the ones that account for the majority of listening to any station, exhibit virtually the same usage patterns in PPM as they did in the diaries. The primary exception is the 9% of listeners who overstated their usage to 25 hours or more to a single station. The other significant changes are that more people listen to more stations than the diary method uncovered, and that the listening done by employed and upper income individuals has been understated by the diary method. The results of these discoveries on planning and buying methods are yet to be determined for Los Angeles, but essentially we believe that what made a successful radio campaign in diary measurement still makes a successful campaign when expressed in the somewhat different currency of PPM. It is like going from Euros to dollars, or kilograms to pounds. Same weight, different expression. So if it takes 150 TRPs to accomplish a goal under diary measurement, it will take only 125 or 110 TRPs to get to the same place under PPM. It will mean new software and new perspective, but few new planning and buying techniques for at least the first six months. But it will be different. What categories should we watch for in 2008 These are the Radio and market wide spending trends we expect in 2008: - Tourism will continue to climb as a major revenue sector for the Southland, spurring continuing growth in the Amusement/Theme Parks/Museums category. This was a major growth category for Radio in 2007 as share of local spending had shifted in Radio's favor by over 40% by mid-year 2007, and we expect it to hold in to 2008.
- Entertainment is the core of the Southern California economy, and the Concerts/Movies/Theater category will continue to expand. It was another great growth category for radio in 2007 and will be again in 2008.
- Health and Personal Fitness categories will continue to increase spending and radio will get a generous portion of those dollars.
- Professional Services will continue with probable double-digit growth and has moved into the top ten spending categories.
- Spending by Auto Dealers/Dealer Groups/Manufacturers/Rentals will continue to decline as the domestic manufacturers wrestle with their lagging sales and major problems. The non-domestic (this nomenclature is ludicrous since they are nearly all made here) manufacturers have continued to use or increase their use of radio. Many have come to see the capability of radio to drive people to their websites.
- The Grocery/Convenience/Liquor category will be under pressure as Tesco (largest grocer in the world) moves into town. They don't advertise, but their presence will drive the need for others to do so.
What will the spot environment be like in 2008 - There will be fewer avail slots but more alternative opportunities to connect to the Radio brands - websites, events, multi-advertiser promotions, podcasting units, etc. Radio is the original product placement medium. It also transfers seamlessly to the internet. Unlike text/picture media and video, Radio loses none of its qualities or brand identity as it streams on the internet.
Changes in the Marketplace
This gets an entire document of its own (see attached). What makes Radio unique among media is its ability to react - often instantaneously - to demand from its customer base, the listeners. The amount of change in the market in 2006 and YTD 2007 attests to that. Radio will continue to morph into whatever format and form the listeners need. That's why it is still a growing medium some 75 years after its on air debut. That's especially true in car-crazy, usually out-of-home Los Angeles. August 2, 2007 |
