The headline can be taken in two ways:
1) As an employee you want to reach "star" status and receive compensation befitting your talent;
2) On the end of selling radio to generate revenue, you aim to increase the amount that businesses give you to reach listeners.
Only a few score of people are at "star" status within the radio industry today. Few individuals command high salary. So I'm not going to discuss making money for radio personnel. Take your shot, and good luck.
On the other side, RAB annual revenue reports start with 2007's $21,310 billion
, which was 2% lower than 2006 (placing that year's annual radio industry revenue at a peak of $21,745 billion). Spot revenue [revised] has continued downward
"Not to frighten, just wait until that digital dashboard starts to replace broadcast station buttons."
BIA/Kelsey just released a revision of its radio revenue forecast. Through it we see how the radio industry is heading towards a $14.3 billion 2012 - a projected 34.1% drop from 2006. Considering there's a new revenue source that wasn't being counted back then, digital, the ominous cloud is even darker.
You may blame the drop on our economic downturn, but there are many more reasons why it exists and why advertiser interest in over-the-air campaigns will not come back.
Spot clutter rose to where it had a negative effect on a commercial's effectiveness.
Production directors are swamped to a point where they don't have the time
to produce quality commercials.
Even though a greater portion of commercials are from national buys
(and agencies), the quality of writing & production is still mostly poor.
Talent - on air and in the production room - has been nearly swept clean
of top-dollar people because they are too expensive.
No farm system supports the major players.
A variety of options to reach an audience are now used by businesses.
Having pointed to the obvious, let's jump into what the radio industry can do to bring back clients. The big clue is that digital continues to grow. What follows shows where to look for increasing radio revenue in 2013.
While we continue to hear how changing broadcast dollars to digital dimes is feared, I'll lay out a theory that it's not digital dimes the radio industry should be chasing. That phrase may be real if you continue to think in terms of "advertising impressions," but the technology sector has many disciplines.
Impressions are cheap, and getting cheaper. To operate a business model around the concept of delivering impressions is no longer sound. To offer impressions without an accompanying "accountability of performance" places huge burdens on radio.
Since 2004 I've been calling for each radio group to have its own internet guru in each market. The radio industry should be guiding local advertisers to better results using not only its airwaves, but the assortment of digital options.
The act of creating a picture of performance through coupling email, keyword ad buys, and social participation for national or spot market buyers has reached puberty. There's still room for radio to move in and claim its ground, though the field is crowded.
Where radio can shine is in accountability, using analytics and metrics. That is an industry in infancy, where radio could get in on the literal ground floor.
What we have before us is the chance to grasp a moment where most people are confused, and help them understand. We do not have a shortage of opportunity.
The only way that the radio industry will begin growing again is if it loses the mindset of delivering impressions. That concept just won't translate online in dollar amounts worth pursuing. Impression supply far exceeds demand.
Run a campaign and hand the client a breakout of all activity - possibly from ad to the cash register - and you have the nuance of digital that's missed by radio industry executives.
The chance to constantly test, evaluate, improve, and present data to the client cannot be ignored any longer by radio. Many digital companies are taking former radio ad dollars using this method, which proves the theory.
Don't be fearful of trading broadcast dollars for digital dimes. Be excited about trading a broadcast $10 spot for a digital $100 bill, when radio starts including analytics and metrics, email management, keyword ad buys, digital commerce, accountability, etc. into its rate sheet.
Anyone who looks into why money is moving into digital so fast will know that's exactly why it's happening;
and I'll tell you that it is one of the few ways left to make money in radio.
Not to frighten, just wait until that digital dashboard starts to replace broadcast station buttons.