From Borrell: Much More Than #4

No doubt you've seen the trade press on a webinar last week anchored by researcher Gordon Borrell celebrating the 20th anniversary of the appearance of the first banner ad.

The prognostication presentation came as a result of a survey of 2,102 Small and Medium Business managers conducted in August & September 2014 combined with an analysis of Borrell’s database of marketing expenditures covering 3,000 U.S. counties.

Borrell wanted to know:

• Is the Golden Age of Advertising coming to an end? 
• What will the media company and ad agency of the future look like?

In spite of the fact that the "big" reason for the study had only a little to do with analog media and much more to understanding the priorities of SMB operators as it relates to digital marketing budgets, there is no denying that Gordon and his team predicted along the way:

• Half of the 15,433 radio stations currently on the air will cease to exist. 
• “It will be the weakest stations we believe that will disappear, reemerging in the form of promotions.” 
• "Local advertising as we know it disappears, but it reemerges in the form of promotions,”
• New dashboard technology will cause long-term listening erosion for FM/AM radio. 
• “Inevitability” of radio-enabled smartphones.
•  “All of these businesses out there have the medium at their disposal to go direct to consumers.”
• Sales reps won’t sell ads but help educate local businesses on how to create and perform promotions.
• 95% of advertising will be bought and sold programmatically by 2024

Since A&O&B friends Mark Ramsey and Tracy Johnson have already written prescient thought-pieces on what we need to do about #4, I'd like to focus on another very positive radio story contained in Borrell's data:  24% more of these SMB executives credit radio with providing them with new customers than television does!

“Radio tends to have a very strong beat on promotions.  All of these businesses out there have the medium at their disposal to go direct to consumers.”  -- Gordon Borrell

My take: allowing media buyers to convince us to move away from direct local, regional and national selling person to person toward numbers-based programming buying will devalue radio.  

In the short run, it may save up to 30% of gross revenues by lowering cost of sales, but if radio polishes its immediate bottom line while failing to invest in face-to-face presentations of our ROI strengths vis a vis all other competing media, it won't even take ten years for Borrell's pessimistic prognostications to become self-fulfilling.

A full analysis of the results can be found in “2014 Digital Marketing Services Outlook” on the Borrell website.

Time To Toss Borrell's New Report In The Trash?

My first look last week at "The Future of Legacy Media: With 5 Years of Digital Disruption Ahead, What Happens Next?" set my hair afire.

Nice chart, but the researcher seemed to ignore radio's move to PPM measurement five years ago as a possible cause in "time spent" going down!! 

They completely missed, it seems, that the move also helped radio's reach more than double as "phantom cume" was finally accurately captured with the evolution from memorability measurement to actual usage.  Borrell equates "value" with "time spent," ignoring other factors like radio's cume growth and very competitive cost. 

Medialife's Diego Vasquez read it last week and recaped radio's headline:  As long as cars are made with radios, there won’t be much decline in radio industry ad volume, but there won’t be much growth either. Unless the federal government decides to grab bandwidth, the industry will stay about where it is for at least the next five years.

Now that an appeals court has struck down the FCC's Net neutrality rules, Borrell had better rethink their forecast.

Analog radio and IBOC digital radio:  while we all wait to see how much the giant companies who control our digital bandwidth want to charge everyone for it, legacy audio media's slogan for now and the foreseeable future remains "listen all you want... it's free."

Does Selling Local Digital Make Any Sense?

If you attended CRS 2011, I don't need to introduce you to Shelly Palmer.  His keynote which placed terrestrial radio in context with all the emerging techno gadgets, websites, mobile devices and media consumption trends, if you missed it last year, is worth downloading.

Never a boring speaker, always challenging conventional wisdom, Shelly is doing it again this week in the wake of last week's Madison Avenue Advertising Week:

I asked him how much he thought he should spend to create a website that would increase his business. “I don’t know,” he answered. “The one I have was free.”

When I reiterated that his free website was probably hurting his retail business rather than helping it, he asked me for some free suggestions that he could implement for free that would … yep, you guessed it … get him to the front page of Google.

This is a real conversation that actually took place. I’ve changed the owner’s name, but other than that, this is exactly how it went. Let’s review:

• A retailer with two doors, one in Manhattan and one in Brooklyn.
• A website that was created for him as a promotion by a template-using website company with the hopes that he would eventually pay.
• A business owner with absolutely no clue how advertising, marketing, sales and PR work in the 21st Century for local retail businesses in his vertical.
• A business owner with zero aptitude and zero headcount to implement even the simplest technological solution.

This week, I have seen about 20 pitches from companies offering hyper-local and location-based solutions targeting local advertisers. Next week I will probably see 10 more. Hasn’t anyone spoken to Harry?

There is no incremental local retail advertising to be had. The money simply isn’t there. If a local company is big enough to advertise, it is already doing it. If it is not big enough to advertise — there’s a reason. The myth of local advertising is that it exists at all. It simply does not.

Local online advertising a myth?

That will come as a surprise to Borrell Associates, which in early September reported:

1. Local online advertising is growing 21% this year.  If your operations are growing more, you’re gaining share.  If not, you’re losing share.
2. Our forecast might shock you.  It calls for 30% growth for 2013.  While it’s a bit early to issue accurate forecasts, our surveys of local advertisers indicate that this rate of growth is likely. If you find this hard to swallow, perhaps the information on page 3 will help.
3. Local media companies should be aiming for a 15% to 20% share of online ad spending in a DMR.  The upper limit is 42%.

However, percentages aren't the same as real dollars and when you start with the estimate that terrestrial radio will bill something like $15 billion in 2012, and you look at the measly portion of total revenues digital is contributing in that same Borrell report it begins to look like Palmer is on to something.

Wouldn't it make more sense to chase after a larger share of the 97-99% piece of our pie, let alone the swiftly-shrinking newspaper ink money, and permit the lemmings to trumpet digital growth?

Start showing your local merchants copies of Shelly's perspective and then share your "radio gets results" testimonials from their local competition using your station successfully right now.  Finally, pull out this video.

Believe it; champion it.   Local advertising is not a complete myth as long as we understand our medium's real strengths and teach those local prospects with budgets too small for the internet that by using today's radio we can help them grow no matter how many doors they own, even just one.

If we fail to do it while chasing pennies instead of dollars, we'll be responsible for making Shelly Palmer quite correct in a very few years.