Radio Adjustments Needed to Move Online
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"The weakness in total US ad spending in recent years has not been shared equally among media types." (Gordon Borrell/Borrell Report-Sept. 2008)
Think about that preceding sentence before we move on. How the radio industry has fared in its jump to the internet is wrapped in these words. (You may guess my emphasis is that radio is not getting enough of local online ad spend, and you are right.)
For the moment, let's share a couple of points from Borrell Associates' latest report, introduced last week at The NAB Radio Show.
"What's a Web Site Worth? Valuation Metrics for Local Web Sites" is Gordon Borrell's way of telling you that there can be a healthy increase in your radio station's value by establishing an online presence.
Though revenue will fluctuate depending on the effort your team applies to maintaining it, a web site will lift value in almost all cases. Quoting from the Borrell report: "The median values for newspaper Web sites in different revenue brackets range from nearly $500,000 to almost $30 million; for TV sites $500,000 to $9 million; and for radio sites $250,000 to nearly $6 million."
Research that Borrell Associates produces is widely read and respected. Knowing that, digest this graph:
Does it seem there's a disproportionate payout to radio from the internet?
I've known Gordon Borrell since he first began producing these reports about local online ad revenue. I don't know of any other person, inside the radio industry or out, who operates with such a high degree of passion for getting things right. In light of that, the above graphic should cause you to wonder what it is that radio is missing.
With all the advertising dollars currently placed with local online web sites, why is it that radio shows such a low percentage of share? What can your station do today that will lift its market share of local online revenue?
There are many more questions needing answers, but I'm going to stick with the two above because each can be addressed by you within 24 hours.
Why Such a Low Percentage?
Of the two, this is the easiest to answer. The radio industry tried carrying its radio mindset online. That didn't, and won't ever, work. Not being able to make the mental leap from a geographic market where "X" number of stations made up the pool of choice to a worldwide web with millions of destinations, the radio industry never found a reason for being online. It always had trouble generating repeat visits.
On air, radio presents a program that is among a limited number of programs in the same format, in a given market. Stations split the local audience in ratios equal to the quality of programming.
Online, a radio station sits amid a sea of web sites - each offering a portion of what your typical station web site tries to serve its audience. Local/national news, local events, pictures of "Hot Moms" or "Babes," and lists of what band is where are all items a person can find elsewhere online.
Worse yet is that radio never grasped the importance of high search engine rankings. This "Who needs to advertise elsewhere?" thinking is also evidenced by the drop-off of radio station ads on television.
Radio industry execs never thought that being ranked in the top ten for any keyword search could be important, but here's how important it is. Our RadioRow is ranked #1 & #2 at Google, Yahoo, and MSN Search for the keyword "rap radio stations" (for example). In the last thirty days, this keyword sent 1,785 new users to RadioRow.com. In that same time, nearly 49,000 persons were directed to RadioRow by search engine referrals. All of it is free advertising.
Lifting Your Market Share of Local Online Ad Revenue
It's easy to explain why the radio industry is getting such a low percentage of local online ad spend. Discussing what actions you may take to remedy this is not that hard, either. Here are two simple methods that you can walk into a client's office and offer this afternoon. Your web master should be able to install this within minutes; if not, get yourself another web master who knows what the internet is about, because your current one doesn't.
There isn't anyone who designs web sites that doesn't know of Google's deep involvement in web master tools. We'll only need two of those tools for this, and you will be able to create more revenue or (at the very least) regain some of the advertising revenue that has moved online to search engine keywords.
Nearly every business large enough to advertise on the radio has a web site. Many of them, though, are not large enough to have someone on staff who can improve interaction between their web site and visitors. Your web master can be that person. Through simple placement of Google generated code on a (client's) web site, you may offer services that accomplish what's described below - a testing of approaches towards selling a product on a web site.
Notice there are four options listed in this picture: the original, and combinations 1, 2, and 3.
After 47,582 images of this advertisement were served, it was very apparent that combination #3 was delivering a 0.38% rate of response. That was a 650% improvement over the original ad, and a 4% higher response than its closest combination (#1).
No special training was required to set up this test, which took about 45 minutes to install and only a few days running to gather data.
This demonstrats that the radio industry has an opening to move into online testing of components in a client's web site. Install, evaluate, improve - three simple steps that can become a new revenue source for any radio station. I guarantee that the profit margin for this service can be upwards of 75%, if you position it properly.
In this second example of how to lift online ad revenue, let's turn attention back to search engines. Keyword ad buying is becoming an inescapable reason why local online ad revenues are not going to radio. Yet keyword ad buying, as efficient and easy as it is, still is not understood by the majority of your clients. The quandry is whether to introduce them to it and become part of this new solution, or to wait until your client uncovers the ease of buying local keywords and moves on without you. My suggestion is to get involved, now!
What follows are two examples of placing a local keyword ad buy for an imaginary chain of 15 pizza shops in Cleveland, Ohio. Cleveland is notorious for being a divided city, split East and West by the Cuyahoga River. What you see are two local keyword ad buys for "pizza Cleveland," "pizza Cleveland Ohio," and "pizza shops Cleveland Ohio." (You can add hundreds of derivative keywords to this, but that's for another lesson.)
This graphic represents my telling the Google search engine that I only want these ads to appear within a 5-mile radius of this pizza company's main area of coverage, Cleveland's South Side.
This next graphic shows how, with just 6 clicks of the mouse, I isolated the most densely-populated regions where this pizza company has stores. Note that all of them are on Cleveland's East side. The pizza shop's ads will appear only to persons doing a search from this area.
Radio is a local media. But, as it tries to move itself into tomorrow, the radio industry needs to realize there are now other forms of local media that offer pinpoint targeting at a far lower CPM.
You as a radio station operator may not be able to control the flight of advertisers to these new local media, but you sure can prevent it from being a total loss.
Gordon Borrell's observation that "The weakness in total US ad spending in recent years has not been shared equally among media types" does not have to continue with radio losing to print and TV.
If you start to act now and begin to offer services that your past advertisers are proved to be moving towards, radio can again start building local revenue.
That radio industry revenue must come predominately from over-the-air radio advertising is a mindset you have to shake - especially if you want to move your radio station into the future, and online.
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