Monday, June 25, 2012

Little Digital Revenue Growth Is "News," BUT Not Our (More Positive!) Analog Ad Revenue Prospects (Again)?

"Terrestrial radio broadcasters are seeking additional revenue streams through the introduction of digital radio and online radio, which expand listeners’ options. However, those technologies are not expected to add significant revenues in the near future."  -- PriceWaterhouseCoopers Global Entertainment And Media Outlook 2012

Online radio advertising is predicted to reach $802 million within the next four years, satellite radio ad revenues will grow 9.5% to $116 million.  (Note:  the outlook is not so rosy for satellite radio in Canada)

While PWC goes gaga over digital media, get some perspective on all this by re-reading
Did you realize that interest in radio is growing among media buyers?

Did you realize that radio ties television in growing interest?

Probably not. It’s apparently a secret.

A new survey of media buyers found that 25% of agency buyers are more focused on radio than they were last year, a 31% increase.

Not only did interest in radio increase, it equaled the increase in spot TV!

Given the persistence of the “Radio is Dead” meme, you’d think it ought to be big news. But it’s not.  The news was buried in a single sentence in the last paragraph of a 1000 word press release that focused almost entirely on the battle between television and digital.

The study, ostensibly a comprehensive look at agency attitudes across media, barely touched on radio.

Check out the press release and a MediaPost story that completely ignored radio.

Perhaps radio got buried because the study was done by Strata, a division of Comcast that sells software to buyers. Comcast has plenty of horses in the TV versus digital race, but nary a one in radio.

But perhaps radio got buried because the business is doing a lousy job selling the value of radio.


Jerry Del Colliano said...

Advertisers increasingly want digital and radio is giving them streams of their on-air product. By year’s end, expect stations to post bigger losses than they expected in revenue despite auto and election year help.

Advertisers want shorter ads and want to pay less. They continue to reject paying a unit price and continue to hold out for cheaper short spots. This is a sign that the spend will be going down – slightly at first, more significantly when it picks up steam.

Selling what radio calls digital along side of on-air is suicide. Buyers are forcing lower rates for the on-air spend and strangling radio salespeople with their own rate cards. Separate sales staffs are essential for avoiding the inevitable erosion of radio rates at the hand of digital. And that’s not going to happen.

Separate on-air content is the best way to build two solid revenue streams. The air product sold by one staff. The separate digital product (meaning content not ever airing on a radio station but created by the station) sold by an entirely different group. No discounts. No tie-ins. No joint promotions.

Event marketing is the missing element. Radio stations and, for that matter, separate online content sites operated by radio owners can build annual audiences around live events. Concerts, fairs, workshops, etc. They repeat annually. Stations need a separate sales staff and experienced professionals to plan and execute the events for outside sponsors who will pay a premium to get access to a highly desirable target audience. Every radio operator in a given cluster should run one event of this type per month (12 annually). Start quarterly, go semi-annually and then monthly. The revenue upside is huge. If you want some strategic help to get started, bring your staff to work with me for a day in Phoenix.

Radio will become a wasteland for short commercials. Very few groups cap the number of units they run per hour. Cox used to. Hubbard still does. But now panicked radio operators will think they have no choice but to accommodate buyers by running more shorter commercials and establishing an hourly maximum number of commercial minutes.

Inside Radio said...

Small pricing gains posted in June. For the first time since the launch of the SQAD-Inside Radio CPM Tracker, month-to-month pricing trends were identical as June CPMs tracked even with those posted in May.

CPMs across all markets were up an average 4% in June compared to one year earlier.

In top 25 markets, ad sales were being made at slightly higher CPM increases than across the industry as a whole.

SQAD’s analysis of buys based on their reach showed no difference in CPM increases based on whether the buy was placed “deep” on a larger number of stations (a “high” buy) or whether it’s fairly shallow (a “low” buy).

SQAD figures are based on data from 282 local markets, as well data from national spot radio, where it captures 75% of buys placed.

General Manager said...

Katz was always good to me in markets where I competed with Clear Channel.

Although there is an art to reverse engineering a schedule so your stations in the demo eat up all the grps leaving the cross town cluster just enough money to bring in the buy at the requested CPP using the lowest rate that you know they'll accept.

When you arm Katz with that pre-built schedule instead of rates, the results are better.