So What Else Is New?

Radio isn't getting its fair share of marketing dollars and not only is that costing US money, but it's also making all traditional ad buys inefficient.

That's the conclusion of a ThinkVine study released this week.

Mark Battaglia, CEO of ThinkVine, said the miscalculations stem from brands relying on outdated marketing mix techniques or previous years' plans that don't take rapidly changing consumer behavior into account.  "Many marketers have started using big data to improve their campaigns, but very few are taking advantage of consumer data to optimize their marketing spend and determine the best media to reach their targeted audience."

The report says that instead of putting 19% of their budget to radio, it should be 26% for maximum impact and efficiency.

Sadly, radio receiving short shrift from media buyers is really nothing new.

Maybe some day, radio sellers will stop focusing on converting radio buys from one station to another and start looking outside traditional "radio money" for revenue.

Until we sell radio's effectiveness against other media, the trend will continue. 

We are our own worst enemy.

Local Radio Is Getting Close To Billing As Much As Newspaper

At least we're growing.  And, clearly, they are not.

The local radio market is growing, albeit at a more moderate pace than it once did, by expanding its offerings to off-air platforms, providing a wider range of listener experiences and advertiser opportunities, according to the firm's new state-of-the-industry report. "Local Radio Stations Profiles and Trends for 2014 and Beyond" provides a comprehensive view of the industry based on the long-term research and analysis conducted by BIA/Kelsey for its clients and the industry. 

According to the new BIA/Kelsey report, the five biggest local advertising categories for radio are: retail (18.0 percent of total radio industry revenue), financial/Insurance (17.0 percent), restaurants (14.5 percent), automotive (14.0 percent) and technology (10.0 percent). BIA/Kelsey says local radio generates over 10 percent of its advertising from these five different groups of advertisers. And, the report says local radio receives 14.3 percent of all advertising spent by finance and insurance companies and 12.1 percent of all advertising spending by restaurants.

Perhaps we should wait for RAB to issue their quarterly radio revenue trend report later this month  (here's the latest one), but I think it's safe to say this:  focusing on national business growth or online development won't make up for a lack of a solid local sales presence.

Singing In Unison With Mark Lapidus

Any radio column that concludes with the recommendation to begin practicing this simple but powerful phrase: “Starting January 2014, we will stop giving away advertising of any kind, online or mobile. Instead, we will use these precious assets to generate money for our radio station” gets a "second" from me.

The Radio World promotions writer last week created a list of long-overused vehicles for mentioning client names along with routine programming elements, but the title of the article - Put Ads In Their Proper Place - rings my chimes.

Radio has no shortage of places to drop the names of advertisers within the context of what we do and listeners turn up the volume to hear.

The key question is:  are you getting enough money for the ones you currently do?  If not, why wait until January to do the right thing?

Another "Enlarged" Title

If it seems like you have more on your plate today, as my Monday blog Today's World Class Radio Program Director showed, you are not wrong.

Now, the former managers of Entravision's 48 radio stations have new titles, as Inside Radio reports: 

Senior Vice President/Integrated Marketing Solutions

“They are literally spending 100% of their time now on sales and we have centralized all operations through our corporate staff,” CEO Walter Ulloa said.  While it’s too soon to assess its full impact on sales efforts, Entravision has logged double-digit increases so far this year.  Through the end of February there are gains across a number of ad categories, including professional services (+14%), auto (+12%), telecom (+16%), financial services (+13%) and grocery (+15%).  “It’s terrific to see these core categories growing,” Ulloa said.

Of course, they got to keep their old jobs too.

Who Do You Trust?

The stage is set for a terrific 2013, but nobody is going to hand us anything.  We live in a highly competitive world and just like virtually any other business, success will require us to be at our very best.  Our listeners and customers have nearly limitless choices.  So if our content (on-air or digital), service and execution are anything less than excellent, we will lose them.  At the same time, the opportunity to gain new customers from other media is greater than ever before.  We are a superior choice for any customer looking for enormous reach, local activation, and strong engagement at an attractive price.  No other medium can match us across these criteria.

With the start of a new year, each of us is awarded a fresh start.  A chance to raise our games, build on our strengths, and recommit ourselves to achieving our full potential.  Let’s steel ourselves with the determination to overcome our challenges and make the necessary changes to set a new standard of excellence in our work.  Let’s make 2013 a year of great accomplishment and pride.  

I trust David Field.

It’s a major breakthrough.  It changes the dynamic — and this is something that is going to make a lot of sense to the American public because they’re getting this for free and they’re not consuming data, so we think it’s a major step.

I trust Jeff Smulyan.

But let’s be clear about what this agreement involving certain Android and Windows phones is, and isn’t. Many smartphones already contain an FM chip (that’s the long-held belief of Emmis CEO Jeff Smulyan). But you can’t just wave a Harry Potter wand and activate that chip. It needs software to make a “tuner,” and not software you can download from an app store in the cloud. In other words, this victory will have to be realized one new phone at a time – it’s not retroactive to the one you’ve got in your pocket or purse. The Emmis Interactive-developed NextRadio app is one way to control the tuner on your next phone, but there will be others. It’s probably not a coincidence that Sprint offers unlimited data – it doesn’t “meter” usage by customers. So its economic incentives line up particularly well with broadcasters who’ve been lobbying the wireless industry. Other carriers have the meter running, and they benefit when their customers listen to radio over the Internet, using a data plan. But even so, the NAB and the other enthusiastic backers of FM chips on cellphones like Smulyan and Clear Channel CEO Bob Pittman call the Sprint deal a breakthrough, after years of talks (and sometimes ridicule).  

I trust Tom Taylor.

More than anything, I trust the Consumer Electronics, mobile dashboard, cable, satellite, internet, and phone industries to want to charge their customers - our listeners - more and more for what once was "free radio."

Ultimately, I trust that the average media consumer will want as much as they can get without having to pay for it.

You Don't Have To Have The Highest Ratings

The top ten revenue radio stations nationally, released by BIA/Kelsey yesterday clearly demonstrate that, while being top-ranked in ratings or being in a metropolis is nice to have, it's not essential to being a top biller.

Let's take two recently-released numbers that actually have no "real" relationship to one another and try to coorelate them to see what we can learn with some quick back-of-my-napkin-at-lunch calculations:

WTOP ranks #1 nationally in total revenues from market #8 DC with a 7.5 audience share and is in the top tier of three stations virtually tied in share of audience between a 7.0 and 7.5: $8.5 million per share.

KIIS ranks #2 in revenues from market #2 LA, but is only ranked #3 6+ with a 4.4. Still, KIIS is in that first tier of four Southland stations which have between a 4.2 to a 4.9. Almost $13 million for every share of total audience in the latest monthly.

KFI is #3 nationally in revenue rank, in spite of being #1 in share of total audience with a 4.9 in the latest monthly PPM data. $9.8 million for each of those 4.9 audience shares.

Also in LA, KROQ ranks 7th in national revenues with a 2.7 share of audience 6+ according to the latest month, amidst a group of seven other stations with between that 2.7 and 3.1 in the third tier of PPM-rated stations (the second tier is four with between a 3.6 and a 3.8), with a 2.7. K-Rock, for example, ranks behind Go Country, but out bills the Los Angeles country station, thanks to a big morning show, which is a magnet for young males, managing to bill an incredible $15.6 million per rating share.

WBBM FM & AM ranks behind Chicago's #1 radio station 6+, WGN (5.4) and is tied for #2-#3 with a 4.7, followed by two stations at 4.5. $10.2 million per share.

In New York, the nation's most populous market the top rated 6+ radio station with a 7.3 share is WLTW, but they are actually being out billed by WCBS-AM which has a 2.8 share and also WINS-AM with its 3.5 share. 3.0-share WFAN is only $1.5 million behind. The 6th highest revenues in the USA belong to WHTZ, which notched a 5.2 6+ share last month. Per their latest ARB 6+ share: WLTW = $5,753,424. WCBS = $16,964,285. WINS = $12,000,000. WFAN = $13,500,000. WHTZ = $8.8 million.

Rank by $$ for each 6+ rating share in the latest monthly

1. WCBS = $16,964,285
2. KROQ = $15.6 million
3. WFAN = $13,500,000
4. KIIS = $13 million
5. WINS = $12,000,000
6. WBBM FM & AM = $10.2 million
7. KFI = $9.8 million
8. WTOP = $8.5 million
9. WHTZ = $8.8 million
10. WLTW = $5,753,424

Obviously, there are more factors involved in great revenues than just share of listening audience.

• Sell and position aggressively, command the best rates
• More commercial units per hour (news, talk and sports can carry about 30% more spots)
• BIG morning show which targets the most-desired demo
• Men matter; if you can hold onto them, you get the gold
  
• Making maximum use of all possible digital assets
• Be in a high revenue major market
• Have a very high cume (CHR and AC)
• Don't target over 55; the younger the better.
  

Do you have a different read on these stats?

Do you have a plan to grab more than your share of your market's dollars in the next year?

Radio Journalism VS PR

When two different trade media cover exactly the same story on the same day, that's not "news," that's reprinting press releases.

There's certainly nothing wrong with a competitor sending out PR each time they close a deal. Both Sirius and XM did it a decade ago. They also bought placement in movies and TV shows, all of which drove a growing impression back then that satellite radio was going to replace terrestrial radio among local business leaders.

"Local radio" is still standing and still wins the battle 10+ to one.

This is not to say that analog radio shouldn't worry about Pandora and all the emerging new media.

It's just to encourage you to tell your success stories in PR as well, while acknowledging that our value proposition on offer to both listeners and media buyers is under attack from new places.

So, what else is new?

Thanks to new media, we have two or three times the inventory to sell that we once did given all the platforms at our disposal.

1. Be sure that our clients get more than the results that expected by being better, more engagingly effective than any competing media's creative.

2. Give listeners more of what they come to us for and less of what they don't. Of course, doing so will mean that traditional "over the air" revenues will be flat to down unless we're able to aggressively raise rates, which in this economy and new media age is an immense challenge.

3. A more sustainable business model is to lower commercial loads "over the air" - making our analog products more listenable - and replace that revenue with money from all possible non-traditional sources.

Long term success requires long term thinking, and courage.

A Continuing Series: Stuff I Don't Understand

• Radio takes 15.6% of a consumer’s media day but, even under the rosiest analysis, its share of advertising dollars is just 11%.
  
  
• Only 3.17% of RBR readers say “in the new digital environment, the main competition for local Television is newspaper and just 5.13% think radio’s main competition is newspaper. If so, how come we still let them bill a third of all media ad dollars in many markets?

I'll repeat it: No One Ever Said Life Was Supposed to Make Sense

Country Music Radio Is Just Good Business

The major group radio owners with 20% of their holdings in the country format will be most profitable five years from now.

Why?

Three reasons: 1) I think regional market dominance and format diversity, primarily focused 18-49 and 25-54, wins; 2) I'm bullish on country over both the medium and long-term. The music right now is simply terrific; and 3) you can't look at a top five ranker 25-54 in most markets and not see at least one country station. And, that's how it will be for at least the next decade, I'd bet.

18 to 54 dominance will be radio's key to growing our share of media revenue in the immediate future. Newspapers have a weak readership story under age 40. We must got to stop selling against each other and focus on the huge piece of pie that print media hold. 2011's round of consolidation will hasten this development if we're smart. Our results outstrip print every time. Ad revenues will still be an 18-49 and 25-54 ball game for the foreseeable future. And, since 55-64 is such a large chunk of population, it also must be included and country is even stronger in those upper demos.

Radio groups with single digit country holdings outside of the top five, highly ethnic, metro markets had better know how to tell the 18-34 story!

Only reason I can think of NOT to invest in the growth of, buy and hold, country stations: it's definitely NOT a quick-turnaround format. But, it is loyalty, which continues very strong -- which most other formats lack and media buyers are looking for. That makes country a wonderful long-term investment well into the 21st century!

The demos that make that reality - 25-44 - are already heavily listening to country today in all but the most ethnically-diverse metro markets.

Pandora: Profits And Prophets

I will leave it to Mark Ramsey and Jerry Del Colliano to post daily sarcasm-laden advice to terrestial radio.

Instead, as you wait for "Hear 2.0" and "Inside Music And Media" blogs to load on your other browser tabs, I'd like to humbly direct you to Jim Edwards' blog (Pandora’s Business Model Looks Like a Suicide Pact).

Pandora is locked into a Catch-22: The more users it has, the more advertising it can sell against those pairs of ears. But at the same time, the more ears that are listening and the longer they listen, the more songs they hear and the more Pandora must pay out in music license fees. The company seems to realize that its business model, for the next 18 months at least, is a mutual suicide pact between its music costs and its revenues:

Content acquisition expenses increased $16.5 million due to increased royalty payments driven by increased listener hours and by higher revenue.

While we had net income in the fourth quarter of fiscal 2010 and the second and third quarter of fiscal 2011, we expect to incur losses on an annual basis through at least the end of fiscal 2012.

Meanwhile, good ole fashioned local radio reaches more than nine of ten Americans every week and has solid profits on a station by station basis in all market sizes.

Someone may get rich owning Pandora in the near future (can you spell LinkedIn?), but the company's viability in the short or even medium term remains a question mark.

"Scale" can be a good thing ... as long as you're not scaling an immense wall of growing debt, and your operating costs aren't accelerating faster than your revenues.

Maybe I’m Missing Something (Or, Are YOU?)…

I just heard from a GM of a dominant cluster whose multi-format non-duplicated cume reach in this large market is as close to 100% of the area’s total population as you can get.

All of their radio stations have been nurturing email databases since the late 1980's/early 1990’s when they were faxing to businesses from an at-work database, built with direct mail and telemarketing.

They've done it all, over the years.

Now, in an effort to jump-start a “daily discounts” revenue program in hopes of competing with Groupon, Living Social and others locally, they are buying a mass email list that reportedly contains every email address in their metro.

This list is several times the total metro population.

Unless the initial contact with this huge list is extremely well-designed it’s going to be seen as just more spam by the vast majority of the folks who receive this invitation to sign up for a second or third daily deals email on top of the ones they already find in their spam folder.

Assuming that each of this company’s stations has 20% of their cume in their email and at home/at work address (perhaps even txt databases) and they’ve been consistently maintaining those relationships both on air and in regular direct relationship/loyalty marketing over time, they have an active relationship with some one-fifth of the area’s population.

These folks (hopefully!) know their brands, their personalities and welcome the communication when they receive it. 

Doesn’t it make more sense, albeit to a smaller group of people, to offer deals and discounts to our friends rather than just adding to the volume of spam that anyone else who buys those same total market email lists are sending out too?

Won't our radio stations get measurably better response rates from our "fans" than the competing deals programs will?
 
If the need to buy that big email list comes from a dollars-driven desire to quickly get up to speed because the station’s databases have been lying fallow and unresponsive or, even worse are next-to-nonexistant and are only a small, single-digit percentage of the total unduplicated cume of the cluster, maybe the marketing managers of these radio stations have been missing something that can't be fixed by buying a list, no matter how well-targeted.

If, by now, you don't already have an active, responsive database which can't be quickly cloned by someone else, you are suffering from a widespread mass media disease: a lack of engagement, no carefully-constructed reputation among your listeners for compelling content and attention to much more that just trying to hawk the radio station’s latest attempt at making money from them without first adding true value that builds true affinity.

Increasing the volume of spam in your city, attaching your brand name to it, without tending to content-based relationship and loyalty marketing first probably can make you a few bucks in the short term, but you better have another scam to sell next year and the year after that, because your radio station brand will mean less and less each time you do it.

BCAB 2011 Wisdom

"People don't want to be friends with a toilet paper. Be more than a BRAND. Think gestalt and discovery. No one waiting to hear from you. Be real, compelling, personal. Stop broadcasting to a mass. Start listening. We only change when things stop working for us. You can profit from change" - John Parikhal

"There are no boring stories only boring story tellers. To master the digital world: Adhere to the principles of powerful storytelling. Entertain and inform whether it is live or on-demand. Keep in mind that shows that are downloaded may not be heard right away. Expect that when there's news of an immediate nature, or a big break in a story, people will still go to their radios, TVs, and computers with the expectation that you will give them the most immediate up-to-the moment information." - Valerie Geller

"Stay as current as you can with all the new media technology toys, but keep in mind that human stuff still always relates best. A station I work with got more hits and viral buzz that anything they ever did with listener photos in a "dog-human lookalike contest." - Daniel Anstandig

"Radio at its best is good people doing extraordinary things." - Paul Ski, CEO, Rogers Media/Radio Group

"Never make a key decision when backed into a corner under duress. There's ALWAYS a creative solution." - Anthony von Mandl, quoting his father

What a terrific meeting! I thought last year's was the best ever. Now, I must revise that opinion up one year.

Really, my ONLY disappointment was when I asked what the group heads were planning to do to grow top line in the coming year and it seemed like they all agree that 3% up this year is good.

Maybe it is when you're trying to move a behemoth, but I had hoped someone would challenge us to get rates up by getting beyond selling against one another to the same "buyers" and aggressively targeting new media business.

That's what the whole convention was about, and I was wondering if any of them would be so inspired that they'd see more revenue potential as a goal beyond pacing with the economy as a whole.

Figures Lie

Competitive revenue estimates have always been a very tricky game, since some owners refuse to report and others exaggerate or minimize what they do share with the auditing firms.

One thing is for sure, though, in the Inside Radio readers poll estimates for 2011. The recession is over for radio and spring flowers are already starting to bloom.

"Digital dollars are growing in importance for many stations, but their impact on the bottom line remains fairly small according to most readers. Four-in-ten say digital and interactive revenue will represent just 1%-3% of 2011 billings. One-in-five (21%) predict they’ll account for 4%-6% of ad revenue with 13% predicting they’ll be worth 7%-10%. Just 5% of respondents expect 11% or more of 2011 revenue at their station or cluster to come from digital. Perhaps the biggest surprise is the number who thinks online is still a revenue dud: nearly one-in-five (19%) say digital/interactive will account for less than 1% of their billings this year."

As we move forward into the year, I hope those percentages go DOWN, not UP.

Here's why:

Half of Inside Radio readers responding to our year-end survey said their station or cluster’s revenue goal is mid-single digits or higher. More than one-in-five (22%) say their goal is 10% or higher compared to last year, with nearly three-in-ten (28%) facing a 2011 goal that’s up 6%-10% over 2010. Roughly one-third of readers (31%) say their revenue goal is up 1%-5% this year with 12% budgeting for a flat year. Revenues did recover more quickly than some expected in 2010 and that may be one reason why 5% of readers who took our survey said they expect revenue to decline this year. The industry was fairly split on 2010. Slightly more than half (53%) said their station or cluster reached its revenue goal last year, with 47% saying they missed the target.

If the most optimistic and productive half of the Inside Radio readers do hit their goals and traditional revenues go up for the top half of stations between six and ten+ percent, that could make their percentage of revenues from online and NTR activities drop, even though total dollars from all sources go UP.

E-marketers may fail to report it that way in the coming year, but wouldn't THAT be a delightful thing?

Multiple Points Of Failure

As The Wall Street Journal reports that newspapers reached a “tipping point” in 2010 and ad revenues were bigger for the Internet than papers, Tom Taylor adds that radio had its own moment a year or two ago, when its total revenues were surpassed by online and Radio Ink’s December 6 Eric Rhoads editorial notes that newspapers once a upon a time had classifieds, paid subscriptions and ad dollars to run their business from. Then, Rhoads cautions that radio’s “single point of failure" - advertising dollars - could dry up as a new trend develops and advertisers no longer want traditional ads.

The 2010 spending for Internet ads will finish $3 billion higher than for newspapers ($25.8 billion versus $22.8 billion). Newspaper ad spending (separate from classified and other revenue sources) likely dropped 8.2% this year and could fall another 6% in 2011. By comparison, radio revenues were running 5% ahead of 2009 through the first three quarters of this year, so it’s tempting to ignore the Radio Ink publisher’s plea that radio increase our research into finding new ways to generate revenue that are not reliant on the current model of being paid to run commercials.

For most of us worker bees who don’t have the power to make the courageous investments it takes to build branded web and theater-casts, product/app sales, event and digital/mobile strategies or other ways of leveraging our audiences for new sources of income, it may seen that the average employee’s only option is to move from an employer who fails to see the risk of having a single potential point of failure to one with more vision.

However, that overlooks each individual’s role in creating meaningful content which drives usage and enhances the brand.

Make sure your name stands for relevancy which drives daily usage.

Failing to stand out from the pack is every “average” radio personality’s most dangerous single point of failure.

Behind That Wheatstone "Technology Gap" Study

Of the 10 revenue generating technologies the study measured, streaming a station’s radio signal over the Internet was seen as having the most potential. Having a website that interacts with listeners was second, while streaming multiple channels of programming was third.

When respondents were asked which of the 10 technologies their radio organizations are now deploying, streaming was the top pick by far. For six other technologies (listed below), each requiring capital investment, respondents reported group owned stations as implementing them at a substantially higher rate than stand-alone stations:

• Having a website that delivers video: Group owned, 43.1%; stand-alone, 26.8%
• Promoting stations with a mobile phone app: Group owned, 43.1%; stand-alone, 22.8%
• Streaming multiple channels: Group owned, 38.5%; stand-alone, 20.3%
• Broadcasting in HD Radio: Group owned, 36.9%; stand-alone, 19.5%
• Websites that create musical discovery: Group owned, 27.7%; stand-alone, 17.9%
• Broadcasting multiple HD Radio channels: Group owned, 26.2%; stand-alone, 10.6%

What's holding the smaller broadcast companies back? (duh) MONEY.

For the remaining three technologies, which do not require capital investment (using social media to win more listeners, creating a website that interacts with listeners, and creating podcasts) responses for stand-alone and group-owned stations were comparable.

“This study comes to the radio industry at a critical time. As traditional ad revenue has declined, radio organizations are experimenting with new technologies that will add revenue by enabling them to deliver programming through a variety of new channels.” -- Wheatstone Vice President Andrew Calvanese

Evaluating the new radio business models is not easy. “Part of the difficulty is they are all baby models at this point, and they are all different. Different organizations are following different models: Some people are making money from streaming, others from local events, still others are making money from banner ads. Not everyone is good at following these paths. Radio could end up becoming multiple industries, because [individual] broadcast groups [could] have less in common with each other than they do with companies in other industries.” -- Mark Ramsey, president of Mark Ramsey Media

With the exception of streaming, stand-alone stations are falling behind group-owned stations in using revenue generating technologies that require capital investment. Group-owned stations are pulling ahead by a ratio of about 2:1.

Long term, as revenue builds from these new technologies, stand-alone stations could find themselves challenged to compete economically. (grab the study report here - pdf)