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AG News: 3/5/2010

Radio Industry Quandry: Dashboard Irrelevance

We are currently seeing quotes from radio industry CEOs as Q4 and full-year financial reports are issued. Nearly everyone's words are wrapped around the phrase, "We're glad to see that 2009 is over." Perhaps these folks are misreading what 2010 has in store.

The latest news showing the future is in RadioTime's announcement of the creation of an in-dash tuner for internet radio. BMW's Mini-Cooper will have it as an option in 2011. What's cool about this is that the added attention required with a hand-held device for tuning into an internet station in the car today has been dissolved. Selecting a station is now as easy as the broadcast industry's tuner.

The RadioTime Tuner comes shortly after an announcement by Pandora of a deal with Ford to place an integrated voice-command Pandora-specific tuner in the Sync system. Notice how both are aimed squarely at the youth market; Mini Cooper and Sync are hot items in the under-30 crowd. (Notice how Bob Struble, iBiuity's CEO and mastermind of HD Radio, outright dismisses the impact that Pandora's move has on the radio industry.)

Irrelevance on the dashboard is the new war. For those having doubt, think of the above as equivalent to the under-the-dash FM receivers that began the great AM/FM transition. If it were the only war, the future could look brighter with just better programming, but....

Another item failing to get attention in the radio industry trades concerns comments in Q4 reporting that upwards of 85% of revenue is now generated locally. A short while ago local was generating 65%-75%. Double this up with the problem that national ad buys are not just dropping as a percentage of revenue, but rates are going south, too.

The radio industry needs to address ways of increasing revenue streams per station to make up for the decline, yet we're not hearing much about diversifying in this area. There are mentions that revenue from the internet is growing for radio, but that's mostly from the placement of ads and not from the creation of anything consumers or advertisers are willing to pitch money towards.

To recapture lost ground, additional services that go beyond simply exposing a message can be developed for advertisers. Reporting processes that give a dollar-by-dollar account of campaign performance and testing ads for response ratios (online and off) are examples of new revenue streams that could be employed.

Falling CPMs were predicted many years ago. That no executive in the radio industry paid attention runs parallel to the head-in-the-sand approach to business these CEOs have used over the past decade.

Pandora and Sync. RadioTime and Mini-Cooper. HD Radio and what? Which do you think delivers the most excitment to consumers? I'll be generous, pick two.

The irrelevance mentioned, as it concerns the dashboard, is not just for the ears of radio listeners locked in their vehicles. It's also for the ability to reach ears that have, until now, been forced to accept a consolidated industry's cutbacks in program quality. Our "irrelevance" also speaks to an advertiser's desire to use broadcast radio - which is shifting - relative to the need for advertisers to associate with what's "hot."

The first businesses to advertise on FM were those that most closely associated with the people wanting to hear radio in FM. Youth. The first advertisers using internet radio to reach folks in the Mini, or through Ford's Sync, will do so for the same reason.

CPMs on broadcast will continue down, while rates charged on the internet side will climb.

Going into 2010, I've not heard any radio industry CEO speak about one of the few options left for the radio industry - fighting dashboard irrelevance in both consumers and advertisers. This goes far beyond programming now, and the transition has definitely begun.

From: Joel Denver
President & Publisher

Hey Ken:

Bob Struble, speak to reality? LOL!

The real message is that the stations who have a real brand will still get a bookmark in the car radio tuners of the future. Work on the brand now -- or be dust later!

No longer about radio -- it's your entertainment/localism values.

No localism on Pandora. but can be entertaining.

I can listen to Pandora and then go back to terrestrial stations -- they both provide different experiences -- and when Pandora ads spot cluters ... they'll be even closer!

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President, Audio Graphics
Ken Dardis
Online Since January 1997

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