There will be significant changes in how radio advertising is bought and sold over the next couple of years especially in the wake of new technologies, which is threatening the traditional radio business.

By offering such services as restaurant recommendations, movie schedules, and other features, satellite radio, digital music players and the Internet are slowly impinging on traditional radio’s iron grip on local advertising.

The iPod and other portable music devices have given consumers the ability to listen to the content they want to hear, and when they want to hear it. Satellite radio services (such as XM Satellite Radio and Sirius Satellite Radio) are offering more channels, many of which are commercial free. Likewise, Bid4Spots, Google Audio, SWMX, and PodZinger have also caught the eye of radio advertisers.

According to the Radio Advertising Bureau, radio revenue growth has been slowing since 2003. But before 2001, the industry logged four consecutive years of double-digit revenue growth.

Radio has to reinvent itself quickly, many analysts say. According to an article in MasterNewMedia.org (Podcasting and the Future of Radio Advertising): The competition coming from new media technologies like P2P file sharing, online music clearinghouses like iTunes, portable MP3 players, and the gigantic podcasting wave provide so much more for the user experience, that for radio intended as a music jukebox this is a loosing battle from the very start.

The future of radio, according to the article, lies in what many advertisers call a “new branding experience” for audible interactive media: Unintrusive, friendly and discrete, the future of radio advertising is all about creating a user experience that mixes unique theme-based content programming with a very selected and limited set of sponsors. This means that to adapt, traditional radio needs to reflect more the type of focused content delivered today.

As streaming radio (also known as Internet radio) evolves, advertisers will also be able to specifically target their ads to individuals that match a defined set of demographic criteria. This will be possible through technologies that are slowly beginning to surface.

For it to grow and evolve, radio and other traditional forms of media must learn to become a participatory and interactive medium.