Web Ad Spending To Eclipse Radio In '07

U.S. Internet advertising spending is poised to overtake radio advertising for the first time, providing a reminder that broadcasters need to be more aggressive in their embrace of online opportunities.

U.S. radio ad spending is expected to inch up 1.5% in 2007, to $20.4 billion, short of online ad expenditures of $21.7 billion, which will be up 22% from last year, eMarketer senior analyst Ben Macklin said in a report.

Over the next several years, radio station Web sites and online audio advertising "will be the principal drivers for radio advertising growth,'' Macklin said.

But he doesn't think that growth will add up to much. He expects the sluggish radio advertising market to continue experiencing slow growth, climbing to an estimated $22.6 billion in 2011, when online ad spending is expected to surge to $44 billion.

Terrestrial radio companies like Clear Channel Communications (nyse: CCU - news - people ), CBS (nyse: CBS - news - people ) and Cox Radio (nyse: CXR - news - people ) still retain massive audiences, but consumers are spending less time listening to radio than they do surfing the Web or watching TV.

In addition, only 17% of U.S. consumers consider radio the "most" essential medium, down from 26% five years ago, according to a study released earlier this year by Arbitron and Edison Media Research.

For many advertisers, the choice between radio and non-radio online ads won't be an either-or proposition, Macklin said, pointing to studies showing that consumers often listen to the radio while consuming other media and that a mix of terrestrial radio and online ads can be far more effective than online ads alone.

"There are many synergies between radio and the Internet and, for the most part, they complement rather than compete with each other,'' he said. "Advertisers should not abandon radio in favor of the Web but combine the two media to take advantage of the unique attributes of each."

Those might sound like encouraging words for the radio industry. But as Macklin's estimates show, these new opportunities don't appear likely to kick-start the radio industry out of its doldrums.