It seems unbelievable (not a single A&O client does not have one), but even in spite of that "fact," radio ties with TV in percentage of total revenues coming from internet initiatives.An odd thing occurred last year amid the
relentless bashing of legacy media companies.While Yellow pages and newspaper companies crashed into bankruptcy and TV and radio station revenues hit the brakes, their online hybrids zipped right along.
Last year $12.6 billion was spent in online advertising by local advertisers. Sales were dominated by pure-play Internet companies with no ties to legacy media – the likes of Google, Local.com, Interactive Corp., Marchex, ReachLocal and many others. However, for the first time since we began tracking local shares in 2001, pure-play companies lost ground. The second-biggest shareholder, newspaper companies, effectively arrested their online share decline in 2008 after losing an average of four points per year since 2005.
Could it be that the legacy media companies have finally turned their aircraft carriers? It’s possible, especially considering that they have an important asset that the pure-plays don’t: an estimated 98,000 feet-on-the-street salespeople who have existing relationships with local advertisers and can cross-sell online advertising products. And they are adding “Internet-only” sales reps at a rapid pace. At the beginning of 2009, this sales force numbered about 9,000, up 30 percent from a year ago.
The importance of online advertising to these legacy media companies intensified in 2008. Yellow Pages companies averaged nearly 11 percent of their gross revenues from online sales, while newspapers saw 7.0 percent and radio and TV stations 3.4 percent each. This dependence is likely to climb, bringing their online ventures into even sharper focus as they find ways to give the pure- play companies a run for their money.
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Borrell says strong web growth will depend on sales structure. Radio stations had double-digit growth last year in local online revenue and a new report from Borrell Associates projects it will be another strong year for radio’s digital dollars. Overall, radio received 2% of the $12.6 billion spent in local online advertising. Its analysts forecast web dollars
will grow 26% to $277 million in online advertising. That’s still well behind newspaper, local television stations and phone directories, each of which brought in more than $1 billion in local online revenues last year.
Borrell bases its findings on data collected from 1,906 stations. Average per-station web revenues ranged from $18,322 for small market stations to
ten times as much ($183,229) in the top 20 metros. Borrell says radio station clusters have been unable to break the 1% barrier in terms of local online advertising.
“The problem with share slippage is due to the radio industry’s dependence on a form of web advertising that has gone flat — banner ads.”
Its report says stations should instead focus on higher- growth categories such as video ads, email, paid search and online directories.
Borrell renews its call for stations to hire dedicated online sales teams, saying many broadcasters are under the “delusion” that their sales teams can sell
both on-air and online. “Media sales staffs tend to migrate toward the high-priced product, where they can make more commission,” says the report, which concludes, “They also are more apt to want to give away the internet as ‘value added’ or sell it at a steeply discounted price.”
Analysts say AEs are more likely to go after existing radio customers instead of targeting new media spenders. That simply siphons advertising from one medium to another, instead of growing radio’s
share in both radio and the internet.
Gordon Borrell tells radio to “think big.” The media analyst says of all local media, radio operators continue to hold both the “greatest potential and the weakest realization” of the internet’s possibilities. Borrell says the radio could see an “enormous upside” if it would think about the web as something more than a place for air personalities’ blogs and just-played features. Research shows listeners tend to take action on the web after hearing something on radio.
Borrell tells Inside Radio, “We show that radio does a fantastic job driving internet traffic — better than any other medium, in fact. If radio station managers could just use that capability to leverage themselves into a new business, they’d be building a business that in the end might be larger than the radio business.”
What's even more disappointing is that many of the stations that do have a site don't really know how to utilize the medium. They see their site as a complete puzzle when it is in fact just one of many pieces, each of which requires the others to reach full potential.
I am shocked at how little understanding there is on what a revenue source a good website and e-marketing strategy can bring to the bottom line. It is about selling access, not about selling numbers.
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