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Friday, August 22, 2014

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Question to Radio: Is That All There Is?

Gordon Borrell of Borrell Associates is being quoted in a number of radio industry trades today. His comments revolve around how much money radio is leaving on the table by not fully addressing clients' digital needs.

As is normal, nearly all trade press spin this positive. Most quote: " media sales as a percentage of total ad revenue currently stands at 12% for print media and 6% for local broadcasters. Imagine, 6%. Though it's not discussed how this is split between radio and TV revenue. There's no breakout on radio's revenue portion in today's reports.

Let's establish that Borrell Associates reports are the most accurate on accounting of what's happening in local markets, of any that I see - and I try to see them all. (Side note: I helped write Borrell Associates' 1st report on radio and digital, so these are items I keep close watch on.)

In 2011, according to another Borrell Report, radio took just 2.1% of local online ad dollars. 3 years later I'm going to guess that number hasn't risen to a point of being a majority of dollars for broadcasters; if anything, in my estimation, radio's share dropped.

As far back as 2004 I was calling for the radio industry to put "internet gurus in each of its market clusters" so they could help clients who showed an interest in moving money to digital. Had a "head in the sand" approach to what was happening around radio not been so firmly entrenched, the industry might be realizing digital's true potential today. Instead we see the industry continue to flail with excuses.

What follows is an article which appeared at Audio Graphics in 2011. It's titled "Radio Industry Revenue Hurdle Identified." The premise hasn't changed, which is why it continues to be relevant today.

Radio Industry Revenue Hurdle Identified

There's an article at Inside Radio you need to read. The trade magazine hightlights "...what may be the radio equivalent of heresy in 2011" with its "Market manager: Digital’s a 'mirage.'" The article is about comments from a "...manager of a big market cluster," and the words need to be heeded. They are true, while also representing a root cause of radio's problems.

"These types of persons blame everything except themselves." Here's one quote, below, from this radio manager. Please read the rest yourself. It's telling of what the future holds for the radio industry if this type of mindset holds a large "market manager" position today.

At one point he explains that "...frightened CEOs and opportunists...have hijacked our conventions with the promise of ‘The Answer’. After years of hearing their empty promises, more and more of us are collectively discovering the truth: digital is critical for branding and marketing our radio stations, but for the radio sales team, the digital sales meter is running at glacial speed."

In the shadow of a Borrell Associates report stating the radio industry took just 2.1% of local online ad dollars, here's the manager of a "big market cluster" speaking his mind - blaming a lack of online ad sales on "...frightened CEOs and opportunists."

Those CEOs have been like deer caught in headlights, frightened to inaction. As for the opportunists, blame RAB/NAB and other companies sponsoring "learning sessions." Many appearing as "experts" have not walked the walk that they talk about. Experts on radio panels came more from industry insiders and consultants giving the stage to those they knew, instead of those that know.

Let's also discuss this manager's "glacial speed" comment, a movement resulting from sales execs refusing to change so technology could improve radio. Besides what's been offered at Audio Graphics, have you ever seen a proposal to try and bridge over-the-air advertising with online metrics?

The radio industry has long held a focus on everything but generating revenue from the internet. Cutting expenses to feed ill-conceived consolidation strategies was one major issue. Another was that radio executives refused to acknowledge that the online migration by advertisers started because online advertising is accountable.

It's not cheap. That is, the low-CPM paid to internet ad networks is offset by the high back-end costs of creating an online campaign with tracking.

Radio could have drawn many millions more in revenue had the industry moved early to become the community on-ramp to online advertising. The opporunity was there.

Hundreds of companies now provide a slew of internet-based services to advertisers. But many radio managers only see online advertising as a "sell an ad on our web site" proposition. Positioned like that, of course radio can't command a high CPM; there is far too much online inventory to sell ads by impressions at profit.

The radio industry continues to ignore ad-tracking and accountability issues. Building out "search ad management" or "search engine optimizing" as a service for radio clients has never been considered, either. Constructing ecommerce sites for clients showing a desire to move online? There was a time when radio could have guided each, not away from the industry but as a more trusted confidant that offered a wider array of media services.

You want to put your finger on "why" the radio industry only captures 2.1% of local online revenue? I'll point to our Inside Radio article's subject. These types of persons blame everything except themselves. They can't possibly be doing an acceptable job as a "market manager" with such hidden thoughts - and if they are, then not enough is being asked of them as managers.

The hurdle for radio remains in its hubris in believing that the public holds a local broadcast in the same reverence as it did years ago. This may be true in smaller markets, but the majors lost "local" when they began offering less as more.

As for "opportunists" at radio industry conventions, I've heard many of them and thought the vast majority were blowing smoke.

But there was something else I thought many times after leaving those radio industry educational sessions: No strong questions were coming from the audience - and for a reason. Radio industry managers don't want change.

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