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AG News: 12/11/2008

Radio Industry Essentials for 2009

Couldn't help but have LOL moment this morning after a friend sent a quote from Arbitron Executive VP and chief marketing officer, Alton Adams (spoken at Arbitron?s annual Fly-In): "Radio and Arbitron have some catching up to do in the area of analytics...."

To label this an irresponsible oversight is easy. To say that there have been plenty of warnings over the past decade that were ignored by Arbitron and the radio industry is an extreme understatement.

What follows is just one of the multiple times the importance of analytics has been stressed, written in January 2008 and posted here. It's also an example of the number of times that the radio industry - with Arbitron as its lead into the world of metrics - has failed to see another oncoming train. The time has now arrived to either jump on or get run over. Analytics in advertising is unavoidable.

Measuring Response to Local Advertising

Advertising is going through change. It doesn't matter if that advertising is on radio, television, print, or billboards; the days of simply buying impressions are beginning to disappear. Soon (within 5-10 years) all advertising buys will come with a requirement that all media will be forced to live with: proving the value of reaching your audience.

Until the internet came along, metrics and analysis of an advertising campaign were missing elements in calculating a return on an advertising investment. The radio industry used to do well providing pre-buy numbers - delivering "x" cume that could be converted into a cost per point (CPP) through a simple formula. Television would do the same, with measurements based on share of viewership. Print would present "circulation numbers," which were often inflated. Other strains of media had their own ways of selling audience, all dependent on vague numbers.

While the above "accounting" of media has been acceptable, it's hardly been accurate.

As stated, advertising is going through change. Accountability is a keyword today. Maybe it's not used by a majority of current ad sellers (not even a small minority yet), but accounting for the number of ads served, the number of people reached, and the cash flowing into the register that is tracked back to an advertising source is a reality. It's a process called "econometric analysis," and Sir Martin Sorrel, CEO of WPP Group - one of the world's largest advertising agencies - says "There is no doubt in my mind that scientific analysis, including econometrics, is one of the most important areas in the marketing-services industry."

There's a book you should read that's published by Harvard Business School Press, "Competing on Analytics" by Thomas H. Davenport and Jeanne G. Harris. It explains why the business world is turning to greater use of metrics and analytics. "Competing on Analytics," you can say, is a primer - the 2x4 upside the head - that shows a vastly changing world where everything you do is measured, evaluated, and benchmarked for use in determining future progress.

Today, online, this turn to metrics and analytics is in a growth stage. Only a few individuals go over numbers, which then help form decisions that increase those numbers tomorrow. We'll go deeper into the process of analysis and gathering the numbers to analyze as the next few months pass. Right now, the important thing is for you to understand the growing impact of measuring advertising performance.

Before you discard the concept of measuring advertising response, or how quickly the world is moving into analysis and metrics, consider this one timely point: Since Bill Belichick arrived as their coach, the New England Patriots have used the most detailed analytics and metrics system in sports. Every move they make is based on data that's been accumulated in a methodical way, then analyzed. Metrics and analytics have pushed the Patriots to the top.

JupiterResearch has released its estimates on local online ad spending through 2012. It states that $9 billion dollars will be pumped into local online ad buys by then, and it's not predicting that this growth will come from new money.

Locally, advertising managers need to understand that whether they agree or not, whether they understand or not, whether they want to implement metrics and analytics into their own sales system or not, measuring how much money is spent on advertising against how much money is made through that advertising is unavoidable.

Analytics and metrics are the basis behind every new move being made within the money side of the advertising industry. If traditional media like radio, television and print want to continue ignoring a new oncoming train, they are doing so at the risk of handing this $9 billion to the internet with no fight.

If your view is that it's destiny for local media to lose this local advertising war, then the time has come to find another occupation. But, if you choose to stand and fight, if you learn the system behind analytics and metrics and then implement it to the best of your media's ability, you stand a chance to slow the loss of revenue that's been drifting to the internet.

The choice to learn is yours. The opportunity to learn is here. The action you take to learn is all that's needed.

This is not a game you want to lose.

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President, Audio Graphics
Ken Dardis
Online Since January 1997

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