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News From Audio Graphics:
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Radio and Response-Based Buying |
Making the move to an online media mindset is difficult for anyone selling traditional media. I fought it. It goes against everything learned concerning media's main responsibility (besides public service) to gather an audience. In learning about search keyword buying systems I realized I didn't want to be paid only if the customer responded. (These were the early years. My intent was to uncover what the competition was doing.)
During my broadcast career CPM was king. But now there are many millions of dollars lost as clients move to the internet's cost-per-click keyword ad buying. Consequently I've changed, which is something you'll also need to do. Search engine keyword ad buying and other forms of display advertising are getting a reputation for helping a campaign's efficiency.
We're all aware of the increased percentage of ads moving online. In First Half 2006, 48% of revenue was CPM-based, and 47% was based on performance - cost per click, action, response (whatever your term is). In FH 2007, online CPM ad buys dropped to 45%, and the performance category rose to 50%. That which they call "hybrid deals" remained at 5% both years.
There are indications of response-based ad buying popularity, and this is why the radio industry needs to create some form of response-based ad package. In First Half 2006, 40% of online ad revenue was generated through buying search engine keywords. It gained 1% for FH 2007 (to 41%). Banners were 21% both years. Around $21 billion was spent with online advertising in 2007.
I couldn't find stats to reflect more current/detailed data, except to uncover this from an Interactive Advertising Bureau press release: "Q4 2007 revenues totaled approximately $5.9 billion, making it the highest quarter ever reported and representing a 13 percent rise over the third quarter of 2007 and a 24 percent increase over the fourth quarter of 2006."
eMarketer predicts online ad spending will reach $42 billion by 2011.
Any way you cut it, online advertising is increasing. Unfortunately, according to the latest from BIA Financial Network, radio industry revenues are doing the opposite.
Which brings up that subject of "change." Response is now the definition of "success" online. Fight it if you want, but the cost for reaching a group of 1,000 persons is dropping. Radio will eventually need its cut of the internet ad delivery market to succeed.
On the over-the-air side, radio also needs to reconstruct how it defines success for advertisers, and find some way to charge for response to campaigns.
We've become an instant gratification society; clients are saying, "Show me response, now!" This is good for internet advertising, but bad for selling radio - unless the radio-sales mindset changes.
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Comments may be published.
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From: David Frerichs
Radio NRI
The current excitement about direct response forgets two things. First, radio brings tremendous value in branding. This effect may not motivate an instant purchase, but creates positive prejudice during a future buying decision. Second, people need to hear a message multiple times before they act. If radio gives up those values and starts selling purely on response, we are leaving money on the table and hurting the overall value of radio (whether online, terrestrial, sat, or 3G mobile.)
From: Ken Dardis - What you present is a major reason why we see diminishing revenue
for radio. No one mentioned that radio should give up its current sales packages, only
that it adds to them. You can sell branding and frequency all you want, but advertisers
are beginning to prefer buying response.
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