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800.275.2840 MORE NEWS» insideradio.com THE MOST TRUSTED NEWS IN RADIO THURSDAY, SEPTEMBER 17, 2015 Boost Mobile Takes Spot-On ‘Switch’ Strategy. The battle among wireless providers to steal one another’s customers has led to a major shift in radio’s top accounts in the category. In the mobile equivalent of trading places, the dollars have shifted from the wireless industry’s top providers (AT&T, Verizon) to the ones trying to bait subscribers with “switch” marketing campaigns. Boost Mobile and Metro PCS have replaced Verizon Wireless and AT&T Wireless as the two largest radio users in the wireless category, based on spot count. For the first eight months of 2015, Boost Mobile throttled its radio spots by 29% on stations tracked by Media Monitors, when compared to the same period in 2014. That moved Boost Mobile from fourth to first place in the category. MetroPCS, advanced from third to second, upping its spot count by 12%. T-Mobile moved from fifth to third with an 18% lift. Verizon, meanwhile, decreased its radio ads by 28%, moving from first place to fourth, while AT&T cut back by 29%, to rank fifth, down from second in 2014. But the largest surge in radio advertising in the wireless industry came from Sprint, which ran a staggering 74% more ads in the first eight months of 2015 (286,425) compared to 2014 (164,321). That put Sprint in sixth place based on spot count, just ahead of Cricket which boosted its play count by 9% to 184,903 to rank seventh. T-Mobile, Sprint Are Wired To Radio In 2015. The data sources may be different but the emerging trend they show regarding wireless spending on radio is the same—namely, that the action has swung from the top two titans to their relatively smaller and eager competitors. Media Monitors tracks spot counts, the Radio Advertising Bureau reports ad spending based on Miller Kaplan Arase data. Both reveal similar spending shifts. The RAB numbers showed that T-Mobile and Sprint upped their radio spend by considerable margins in the first six months of the year, compared to the same period in 2014. T-Mobile was radio’s top account in that category, per the RAB, increasing its radio spend by 45% and displacing AT&T to No. 2. RAB spending numbers showed Sprint jumping from sixth to third in the category with a whopping 310% increase. Former No. 2 Verizon Wireless dropped to fourth with a 40% decline. Radio is likely to continue to benefit from competitive battles prevalent among wireless carriers. Sprint and prepaid subsidiary Boost Mobile are waging “Slash Your Payment in Half” campaigns while MetroPCS, the prepaid subsidiary of T-Mobile, is offering more data in an effort to get mobile subscribers to scrap their current carrier in its favor. “When you think about mobile devices, you want to reach people on the go,” RAB CEO Erica Farber says. “What better place to reach an active person than through the No. 1 audio source?” In Stagnant Ad Market, Radio Makes Big Waves. Ad spending for local radio climbed 10.6% in Q2 2015, making radio one of only seven types of media—and the only traditional one—to grow ad revenue last quarter out of 22 total, according to new data from Kantar Media. The figures are based on radio stations in 36 markets tracked by Kantar Media, which represent about half of the U.S. population, and thus aren’t comparable to Radio Advertising Bureau numbers, which are culled from a larger Miller Kaplan Arase sample. Overall, total U.S. ad spending declined 3.9% in Q2 to $38 billion and by the same percent in the first half. [email protected] | 800.275.2840 PG 1 NEWS insideradio.com THURSDAY, SEPTEMBER 17, 2015 The sluggish results seem to be the new normal. For the fifth consecutive year, U.S. ad spend is lagging nominal GDP growth. In a statement, Jon Swallen, chief research officer at Kantar Media North America, called it “a streak that might have once seemed unimaginable but now would seem to be par for the course.” But according to Kantar, radio isn’t suffering like other media platforms. Local Hispanic radio also posted growth last quarter, with ad spending climbing 4.2% for Q2 2015 and up 5.2% for the first half of the year. National spot radio inched up 1.2% in Q2, compared to a year ago, while network radio dropped 8.4%. In contrast, ad spending on TV platforms dropped 4.5% in Q2, with cable down 5.1% and network TV up slightly at 1%. To help offset the sluggish ad market, Kantar notes, both radio stations and TV networks are increasing commercial loads. Radio stations added 2% more ad time, while broadcast TV networks carried 2.8% more paid ad time and cable aired 4.6% more minutes. And two-thirds of the TV networks tracked by Kantar have increased their commercial loads compared to last year, with five up to 20 minutes per hour in primetime (including network promos). Mixed Digital Picture: Get the online ad stats at InsideRadio.com. On a List of Decliners, Only Drug Spend Rises. Among the top 10 advertising categories, only one—pharmaceuticals—increased its ad spending in Q2 2015, according to a Kantar Media report. Pharmaceuticals, the no. 8 overall spender on U.S. media, increased its expenditures 13.2% in Q2 2015 to $1.48 million, compared to Q2 2014. Those increases are fueled by the introduction of several new drugs and an uptick in advertising for medicine to treat diabetes. Meanwhile, spending by retailers, the top overall advertiser category, decreased last quarter by 7.1% to $4.11 million. While overall consumer spending is showing improvements, Kantar notes that retail sales have been sluggish. That is pushing down ad spending, with department stores, which include discount retailers, cutting ad expenditures more than 15% last quarter. Automotive, the no. 2 overall advertiser, shaved spending by 1.4% to $3.44 million, with dealers trimming spending by 1% to $1.37 million. However, several local dealer groups increased spending, including double-digit rises by CarMax, Volkswagen local dealerships and Honda dealer associations. Other notable categories showing declines were: Telco (down 3.3% to $2.11 million); Financial services (down 6.9% to $1.67 million); Restaurants (down 10.4% to $1.55 million); and Insurance (down 4.4% to 1.33 million). Extended Play For Radio Groups On Pre-’72 Response. Radio’s three largest groups have been given more time to respond to lawsuits claiming their stations and online streams haven’t obtained performance rights licenses or paid performance royalties for pre-1972 recordings. CBS Radio has until October 12, while Cumulus Media and iHeartMedia have until October 14 to respond to complaints filed by ABS Entertainment in mid-August in the U.S. District Court for the Central District of California. The U.S. District Court for the Southern District of New York has granted similar extensions. Court filings show the broadcasters’ legal teams plan to coordinate their cases in the California and New York courts. CBS and Cumulus intend to bring a motion challenging the sufficiency of the complaint. Based in West Memphis, AR, ABS Entertainment owns the rights for a batch of pre-’72 recordings made by Al Green, Ann Peebles, Otis Clay and other artists. It’s seeking a trial by jury, injunctive relief and monetary damages, accusing the broadcasters of violating state civil code, misappropriation and unfair business practices. ABS has requested class-action status on behalf of “similarly situated owners of sound recordings,” namely those recorded before 1972, for which there is no federal copyright protection. That’s why right-holders such as the Turtles and the major label groups have turned to state courts to fight for compensation for the public performance of their older recordings. The Turtles received favorable rulings in California and New York but were rebuffed in Florida. [email protected] | 800.275.2840 PG 2 NEWS insideradio.com THURSDAY, SEPTEMBER 17, 2015 Ad Insider: Smooth Ride In 2015 Auto Sales. The National Automobile Dealers Association says that so far, 2015 car sales have been running wide open. The typical dealership has produced a 6.6% gain in total sales, and a 9.1% increase in net profit before taxes. Through June, the average dealership has produced $25.522 million in total sales, compared to $23.939 million through June, 2014. Total gross profit (defined by the NADA as including the cost of goods sold, but not selling, general and administrative expenses or advertising) rose from $3.232 million to $3.417 million, a gain of 5.7%. Subtracting total expenses of $2.769 million (a 5.0% increase over last year), net profit before taxes showed a 9.1% increase from $594,532 last year to $648,811 this year. The average dealership actually showed a larger percentage increase in revenue from used vehicle sales, a 7.6% improvement. New vehicle sales did, however, produce significantly more dollars at $14.454 million, which translated to a 6.3% increase over new vehicle sales in last year’s first half. Service and parts department sales also were up, showing a 5.6% increase. Advertising expense was virtually unchanged as a percentage of total sales at 0.99%—in last year’s January-June period it had been 1.00%. The typical dealership spent about $252K in advertising in the first half, compared to $238K last year….Here’s news from another big advertiser category: Anheuser-Busch InBev has approached SABMiller about a takeover that would create a monster in the global brewing business.