Digital continued to be Cumulus Media’s growth driver in fourth quarter 2023, albeit at a slower pace (+5%) than before. Along with making up 18% of total company revenue in the quarter, digital is also stimulating more over-the-air ad business, CEO Mary Berner said Tuesday.
Digital “provides us with new ways to capitalize on our longstanding radio relationships,” Berner told analysts during a conference call to discuss Q4 results.
The company breaks out digital by three revenue streams: digital marketing services, audio streaming, and podcasting.
Last year, digital marketing services revenue grew 13% with one-third of customers new to the company. In addition, the number of clients for Cumulus Boost nearly tripled since the beginning of 2023. That’s a subscription-based product that offers website design, reputation management and search engine optimization. “That rapid acceleration reflects the fact that Boost serves as both an entry level product, giving us the ability to serve customers whose budgets are yet too small to support a radio campaign, while also increasing our competitiveness with our larger customers,” Berner explained.
Digital marketing services has become “a powerful lever for our traditional radio base,” she added. Radio customers that use the product buy 40% more of it than non-radio buyers. Of course, that’s in part since radio buyers have larger marketing budgets to spend. But it also speaks to “the power of integrated radio with digital to deliver superior ROI,” Berner said. Moreover, local radio broadcast clients who also bought digital marketing services spend more on radio with Cumulus year over year than those who bought broadcast radio only.
NFL Boosts Streaming Revenue
Meanwhile, streaming audio revenues rose 16% in the quarter, due in no small part to Cumulus picking up the streaming rights for NFL games it broadcasts via Westwood One. Streaming the NFL games delivered “significant audience growth and generated millions of dollars of incremental revenue,” Berner said. Another contributor to the double-digit rise in streaming revenue was a third party fixed rate ad sales contract for some of its station streaming inventory. The contract recently expired. Although Cumulus will take short term hit in streaming growth rates as a result, Berner said taking back its station streaming inventory “is the smart move strategically.”
Local Podcasts Starting To Pay Off
Coming off a year in which Cumulus saw its podcast business shrink, the company says it is seeing an improving national ad market while its multiyear effort to grow a local podcast business is taking root. “This area of emphasis is starting to pay off, and we are monetizing them quite well,” Berner said. “The strategy there with having our sales organization sell a full suite of podcast, digital marketing services, and streaming and broadcast all together as an integrated buy is serving us well, because it ties our advertisers closer to us. And it gives us a lot of stickiness and longevity.”
Two years ago it announced that it had quietly launched hundreds of local podcasts leveraging its 406 radio stations in 86 markets. Beyond creating new revenue opportunities, executives have said it comes with little additional cost since the talent are typically already on the Cumulus radio station payroll.
“That was kind of a nascent effort, local podcasting, but as of Friday, we now have 11 local podcasts on the Apple charts,” Berner told analysts. “But just as importantly, it is helping to propel our radio business,” she added.
Cumulus Media’s podcast business had a rough start to 2023, as it was hurt by weakness in national advertising sales. But while podcast revenue overall declined eight percent year-to-year, Berner said there was a “positive trajectory” in the business. While sales were down in the first half, its podcasting revenue grew during the second half of the year.
‘Some Encouraging Green Shoots’
For all their local focus, most of Cumulus’ podcasting revenue still comes from national marketers and despite more last-minute bookings, Berner said that they have seen stronger spending in ad categories like insurance and consumer packaged goods. “We are seeing some encouraging green shoots,” she told analysts.
However, the growth in digital could not compensate for what Berner called “negative macro headwinds” and the loss of political revenue in the quarter. Driven by steep declines in spot and network radio ad sales, total revenue at Cumulus Media fell 11.9% to $221.3 million during the fourth quarter of 2023, compared to $251.3 million one year earlier. Total broadcast radio revenue declined 18.2% to $153.5 million from $187.6 million as both the company’s local radio station group and its Westwood One network continued to face the harsh advertising environment.