CANADIAN BROADCAST SALESCANADA’S NATIONAL RADIO SALES COMPANY

WINTER 2009

Ohio-based BIGresearch has some pretty big recommendations for Detroit’s three largest automotive manufacturers – General Motors, Ford & Chrysler. According to a recent analysis of the company’s SIMM (Simultaneous Media Usage) database

in conjunction with newly developed software from Prosper Technologies, the ‘Big 3’ should give considerable thought to re-allocating their media dollars. The study shows significant discrepancies between what consumers say is the most influential media when it comes to purchasing a car, and which media is actually favoured by the automakers. In this case television is heavily supported but according to BIGresearch, radio should be awarded the largest share of their ad budget. Take General Motors for example; they delegate 3.5% of their advertising budget to radio — a far cry from the 21.5% suggested by the research. More attention should also be given to outdoor.

“ If radio reaches 90% of the people in a week, why does it only get 7% of ad dollars?”Gary Drenik, managing

director, BIGresearch.

Of course some will dispute the notion of spending less in television and more in other areas including radio. Chris Rohrs, president of the Television Bureau of Advertising, claims foreign automakers also choose television as their number one advertising vehicle. Car

manufacturers (excluding the Big 3) attribute

more than 50% of their ad budgets to television and

less than 2% to radio. But is this effective? Not according to the analysis by BIGresearch. The argument for television as a reach medium with

visual capabilities is valid, but radio is

also a reach medium and radio’s ability to

generate visual imagery can

be very powerful. Radio is cost-efficient and has the advantage of recency, immediacy and driving website traffic. The latter strength is very valuable given consumer online research of big ticket items (especially automobiles) prior to visiting the retailer (dealer) has become an important step in the purchasing process.

In Canada, share of total ad spend versus share of daily time spent with media for radio has long been disproportionate. Adults 18+ spend one third of their media time listening to radio, but the medium accounts for only 10% of total advertising expenditures. Television in this country receives a much more acceptable portion of the ad pie relative to time spent (daily share of media = 34%; share of total advertising = 23%).

For more information please visit www.radiocbs.com and look for the article “Rethinking Radio’s Power in Automotive” listed under the R Files from your homepage.

Automotive Ad Spend vs. Prosper Media Allocation Model(% of Total U.S. Advertising Spend in 2007)

General Motors Ford Chrysler Prosper Allocation Model

Magazines 12.4% 11.9% 10.5% 15.6%Newspaper 5.0% 5.2% 6.9% 6.2%Outdoor 1.5% 0.7% 0.5% 14.6%Television 39.1% 38.9% 43.2% 17.3%Radio 3.5% 2.3% 1.9% 21.5%Internet 7.0% 6.5% 3.0% 8.5%Other 31.5% 34.5% 34.0% 16.3%

Source: Ad Age Domestic Ad Spending by Category (2007)/Measured media from TNS Media Intelligence’s Strategy, Prosper Media Allocation Model

Allocation Model: Media influence weighted by consumption and media cost for people planning to buy/lease a car/truck in the ensuing 6 months

Deloitte TMT Predictions“ As Canada and the world emerge from this recession, the TMT industry will be transformed. It will be more profitable, more flexible and even more responsive to customer needs.”

Duncan Stewart, Director of Deloitte Canada Research

D eloitte’s global TMT (Technology, Media & Telecommunications) Predictions for 2009 showcase emerging trends that

may significantly impact business. For each of the three sectors 10 predictions are documented in the report. Released January 20th, the study is based on research and input from 6,000+ Deloitte member firm practitioners specializing in TMT, Deloitte clients and alumni, industry analysts and leading global TMT executives.

The 12 most noteworthy TMT trends that will affect business in Canada include four from each sector. Two of the four from the Media segment are worth mentioning here.

1. “Putting print out of peril may require stopping the presses.”

Print has been challenged losing readers and advertisers to online, creating even more distress for the newspaper & magazine industries during the current global economic crisis. Deloitte predicts 1 in 10 will go out of business in 2009.

2. “ThedawnofWiFiradio:10,000radiostationsinyourpocket.”

Internet radio sets will prevail. Portable, WiFi radios are already available for under $100 but price points are expected to decline even further in 2009. The devices will offer consumers choice, ease of use, familiarity and ‘location-aware’ technology. “Imagine a Vancouverite in Toronto on business — able to listen to CFOX and get Vancouver news, but with Toronto ads.”

“In 2009, Internet radio may not just reinvigorate the medium of radio. It may reinvent it.”Please visit www.tmtpredictions.ca for the full reports.

Source: News Blaze, January 2009; Deloitte

Source: Advertising Age, December 2008; RMB Foundation Research 2008

Best Sellers in 2008L ast year it was Celine Dion, this year AC/DC tops the music charts

as the number one selling artist in Canada. AC/DC of course had the number one selling album, Black Ice, which was released

worldwide October 20th, 2008. Coldplay (Viva La Vida) and Metallica (Death Magnetic) follow with the number two and three positions for both artist and album sales. Combined the top 10 artists sold just over 3 million albums in 2008. Overall album sales for the year declined 8.5% from 44.4 million units in 2007 to 40.6 million units. Digital track sales continue to grow (albeit at a slower rate) with an increase of 58% from 25.8 million units in 2007 to 40.7 million units this past year. However, this was still not enough to offset the reduction in physical sales for the year. Digital album sales represented 10% of total album sales.

Of the genres listed in the Nielsen report, Jazz experienced the largest decrease in album sales from 2007 to 2008 (-33%). Sales of Rap, Country and R&B albums also declined, by at least 20% for each genre. In comparison, Metal only lost 4% of sales from the previous year.

“According to traditional marketing theory, companies can gain market share in a recession by maintaining or even increasing their marketing spend and moving into the space vacated by frugal competitors.”

It’s no news that we are in a recession and for many the word alone instills panic but for others it creates opportunity. Toronto-based Claymore Investments

plans to spend more on advertising in 2009. President & CEO Som Seif says

“we’re going to be pretty aggressive…cutting our overhead expenses as much as possible…so we can actually use [the savings] to spend in marketing.” He continues, “…if you’re only marketing when things are good you are going to lose customers.”

Radio, it seems, is poised to weather the storm without too much turmoil. According to ZenithOptimedia’s projections, radio will see nominal growth in 2009 “but will be among the first to benefit from an economic recovery and will quickly return to growth mode.” The good news is that ad spend for radio is expected to increase year-over-year during the recessionary period. Newspaper received the worst diagnosis of the major media with negative growth expected during the next 2 years. Television did not fare much better but will receive a boost from the Winter Olympics and World Cup Soccer in 2010.

2008 Top 10 Selling Artists Artist # of Units Sold

1. AC/DC 557,0002. Coldplay 418,0003. Metallica 404,0004. Nickelback 279,0005. Jack Johnson 254,0006. Celine Dion 234,0007. Taylor Swift 233,0008. Guns N’Roses 221,0009. Madonna 215,00010. Il Divo 214,000

2008 Top 10 Artists – Radio Station Airplay Artist # of Detections

1. Rihanna 91,0002. Hedley* 88,0003. Avril Lavigne* 86,0004. Bryan Adams* 83,0005. Nickelback* 81,0006. Paul Brandt* 76,0007. Finger Eleven* 75,0008. Alan Jackson 75,0009. Toby Keith 74,00010. Rascal Flatts 70,000

2008 Genre Album SalesGenre # of Albums (000) % Change

Alternative 6,670 -15%Classical 1,340 -14%Country 2,687 -23%Jazz 936 -33%Metal 4,338 -4%R&B 3,014 -22%

Rap 1,601 -27%

Note: Titles may appear in more than one genre.The Nielsen Company 2008 Canadian Music Industry Report was provided by Nielsen SoundScan Canada and Nielsen BDS for the 52-week period December 31st, 2007 through December 28th, 2008.

ZenithOptimedia Projected Canadian Ad Spend* 2009 2010 2011

Television $3.30 b $3.32 b $3.35 b (-0.3%) (+0.6%) (+0.9%)

Newspaper $2.42 b $2.36 b $2.36 b (-3.1%) (-2.2%) (0%)

Radio $1.57 b $1.63 b $1.72 b (+0.9%) (+0.2%) (+5.7%)

Magazines $696 m $715 m $740 m (-1.5%) (+2.6%) (+3.5%)

Out-of-Home $455 m $474 m $504 m (+1.6%) (+4.0%) (+6.4%)

Internet $1.80 b $2.07 b $2.38 b (+20%) (+15%) (+15%)

Total $10.2 b $2.07 b $2.38 b (+2.2%) (+3.2%) (+0.9%)

*All figures in U.S. dollars

Source: Marketing Magazine, January 2009; ZenithOptimedia

It’s not all doom and gloom.

CANADIAN BROADCAST SALES • 45 St. Clair Ave. W., 5th Fl. • Toronto, On M4V 1K9 • tel 416-961-4770 fax 416-960-9067

The list of top 10 selling digital artists (based on digital track sales) differs significantly. The top three are Rihanna, Britney Spears and Madonna. Other than Madonna only 2 others appear in both lists (Coldplay & Nickelback).

On January 6th, 2009 Apple Inc. announced that *DRM-Free music would be available through iTunes. This is good news for consumers who previously were prohibited from playing tracks purchased through iTunes on any other manufactured portable music player or alternate device. As well, with DRM-Free files there are no restrictions to the number of CD’s that can be burned. Apple also promises higher audio quality.

*DRM=digital rights management

Source: eMarketer