A Lesson From WOXY on Internet Radio
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By now internet radio station WOXY.com's closing is old news; September 15 marks the day when it goes silent. Given that this station has many times been used as an example of quality online radio, perhaps we should look at what has taken its life - to learn from an exiting pro.
We know the root of the problem is money. But, what is it that prevented this very hot independent internet radio station from bringing more money in than it was spending? Looking at other elements of its online existence, you learn where the pitfalls are.
Heralding the quality WOXY programming won't be done here. Others have spoken on this subject. The few times I listened, a mix of music and banter was playing that (in my opinion) was not extraordinarily great, but it was certainly better than the song-after-song formats delivered by most online stations - and good enough to gather attention from a number of publications. So, we take from this Lesson 1: Good programming doesn't guarantee business survival.
WOXY was said to have had a following: "At its peak, approximately 100,000 visitors a month came to the site" is quoted from a farewell article in The Cincinnati Enquirer. Online, though, 100,000 a month is only an average of 3,300 a day. It doesn't add up to much when you are chasing down advertisers that need to have a national distrbution system or web site in place to properly use internet advertising. These folks are looking for millions of eyeballs.
Pull another quote from the Enquirer's article: "[General Manager, Bryan Jay] Miller estimates that only 25 percent of the station’s audience is in Greater Cincinnati and Northern Kentucky. More than half (57 percent) is national; 18 percent is international."
There are two points you can draw from this: 1) How is a media buyer supposed to get their money's worth from such a geographically-diverse audience? 2) The best WOXY can do is "estimate" this breakout, which makes its accountablity as reliable as a broadcast station using Arbitron. (The figures are fairly close to the geographic audience layout of RRadio Network, which has numbers generated from many online station surveys.)
In viewing WOXY's media kit you'll see a few graphs on its audience, but there's nothing there that can't be said by any other online radio station. An example: "Who are WOXY.com listeners? How about young, hip, well educated, tech savvy influencers who are serious about their music?" WOXY may have had excellent programming, but it offered nothing to make its audience stand out to advertisers.
The most effective means of selling advertising is to show an advertiser that they will reach people who can spend money, and that you have enough of these people to matter.
Here's a very general rule of thumb that I use: If 100 people are reached, one in that group will look for more information; for every 100 that "look," one will buy.
Delivering 100,000 people each month, which are split geographically in the percentages described above, doesn't give an advertiser hopes of reaching enough of an audience to generate sales. So, here's Lesson 2: An online radio station is only capable of selling a portion of its audience, and it needs to highly define who those people are.
General Manager Bryan Jay Miller says: "We’ve proven to be good at producing very, very, great radio. What we struggled with is the business aspect." This "business aspect," though, is what the vast, vast majority of online stations lack too. In part due to this:
Selling ads goes much deeper than contacting a potential client. It also
includes using tools to facilitate the sale of ads; tools like search engines
to improve image and audience, data to reinforce your audience's qualities,
equitable rates, and partnerships to increase online reach.
In WOXY's case, these were all weak.
Search Engines
AG readers know my mantra - you must rank high in a search engine's returns, across multiple keywords.
The reach and frequency that SEs provide reinforce the brand and, over time, are as effective as any advertising campaign. WOXY's placement is not strong under the following keywords:
"modern rock radio station"
Though Google and Yahoo! offer WOXY high returns,
it doesn't show up in the first 100 on MSN Search.
"alternative rock radio"
Google - adequate (22)
Yahoo! - near 100
MSN Search - not there
"rock radio"
Yahoo! - near 100
Google and MSN Search - not there
"rock radio stations"
Google - in the 60s
Yahoo! & MSN Search - not there
It appears that WOXY was not aggressive in its attention to search engines, which makes it dependent on word of mouth to increase audience. In the highly competitive world of internet radio, that's a mistake.
Data
There's a sparse offering of data about the WOXY audience on its web site, media kit, and rate card. However, "sparse" is not good enough when data is king and accountability is the cry. Radio lives by its numbers online and off, and the people who spend money advertising want to have enough data to justify the spend.
Gathering, collating, and using data in the sales process is mandatory.
Did WOXY use enough data in the sales presentation? It's not apparent.
Reasonable Advertising Rates
Online radio ad rates are deplorably low. Only a handful of web sites are able to charge enough to generate a comfortable profit margin. In online radio the CPM has settled around the $1.50-$2 range.
But, look at the rates WOXY is requesting and you'll see why initiating a deal was difficult. To add angst to sticker shock, nowhere on the rate card page is there data to justify "why" an advertiser should pay what's requested.
Partnershipping (I made up the word) to Profit
WOXY built its reputation on being an independent radio station. Unfortunately, it equated being independent with being an island.
To survive online you must team up, coalescing the strong points of each partner. Only in very rare instances will a web site have enough "je ne sais quoi" to make it on its own.
So, what can an online radio station do to survive? What is needed to separate an advertiser from their money? Here are the six items that have been written about here many times:
1) Understand that, with few exceptions, an online station's audience is not large enough to induce multiple advertisers (and you need multiple advertisers to make profit). Independent online radio stations must aggregate audience.
2) All online radio stations need to promote the industry, to build credibility for online radio. Only then will media buyers begin to look at the standout radio station or group of stations. This has been the largest failure of online radio.
3) Work the search engines and radio portals. According to RRadio Network data, 45% of the audience use these to locate stations.
4) Become active in gathering audience data, using it, and promoting it. Not many online radio stations are involved in gathering information about the listener. Fewer still promote the data to paint a quantified picture of listeners. Relying on Arbitron and Edison Media Research to supply this information means there are huge gaps in frequency, and no industry control over what data is gathered.
5) Partner with whomever you can. How many radio stations are featured on music web sites or sites created by musicians? Just a guess, not many! What about shared links with stations of compatible formats? How often have you seen this? My guess again, not often. If a station wants to remain on its own, the chances of generating enough listeners to pay the bills is slim to non-existent.
6) Set advertising rates in line with current trends. A few years ago CPM dropped, hard, for online radio. The reality of today says that the industry will never see a rate equal to what its broadcast cousins ask. Sad, but you can't fight it.
$1.50-$2 CPM is being bought. Ask more, and you're out.
My files are filled with names of independent online stations that have gone belly up. None has shown the promise of WOXY.com, but most have shown the same streak of independence that would not allow them to join with others.
Online radio stations are either going to step into the business side of advertising or they will wilt off in due time. To continue operating the industry on emotional claims of offering better music and programs will only thin the ranks faster.
Learn from WOXY's exit. Then make the changes needed to operate your online radio station within the expectations of the media buyers and audience - because neither group is going to change for you.
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