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Wednesday, December 12, 2012
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Radio Industry Faces Analytics Crossroads

Over time I've seen Radio Ink Publisher Eric Rhoads prod the radio industry to accept new goals. One such moment was pointed to here in April 2010 when he spoke of his neighbor, a business owner, whom he quotes: "I was spending 15, 20, $25,000 a month on radio and newspapers. Then I discovered search. I spent $3,000 on search and got more business than I got off of radio and TV."

At the time Eric Rhoads was pointing to a radio industry failure that still has not been addressed - the advertiser movement to new media.

"These [agency] execs said radio is no longer on the radar of many advertisers -- it's not even part of the discussion." He prodded again: "What if, I thought, I could put together a dream team of advertisers, and ask them why radio is not getting more ad dollars?" And he did.

As four big ad agency heads sat down at the recent "Radio Ink Forecast" conference... well, let's hear from Eric: "Though there were several radio presidents and CEOs who stayed and listened, most of those representing radio's biggest companies were outside of the room."

The visual signal this must have sent to the agency world cannot be repaired. The ignorance generated by radio industry CEOs missing a panel of advertising agency CEOs speak about what radio can do to capture more ad dollars cannot be overstated.

The message missed? "The [agency] panelists told us ratings are not the metrics they're looking for...." (read the article).

This is where it gets weird; there are radio industry people commenting on this Radio Ink article who are still in denial. One fellow states, "...most of these ad agencies donít 'know' our business...." They do, though, know what they want, and it isn't radio in radio's current state.

Comments on the Comments

For the conspiracy theorists in the group claiming radio is losing because agencies get a higher rate for a more expensive television buy, the cost of constructing an online campaign is not cheap! If the radio industry ever gets over its chant about reaching 93% of Americans weekly, it could handsomely profit from providing digital services.

Please listen: Agencies and advertiser need "proof." CMOs are demanding accountability, because it's being demanded of them.

Rod Schwartz of Radio Sales Cafe (whom I respect) is missing a valuable point with his thoughts on "branding campaigns" and local advertising. That national advertisers put effort into building brands is acknowledged. But local advertisers run product/price campaigns. Few local radio advertisers invest in building brand.

Another note on this national/local concept: 20 years ago 75% of revenue was local. Today local is so low that RAB doesn't even break it out in its revenue release. National brands use radio. Radio has all but lost local (small/medium small markets excluded).

Within the radio industry there are those who defend its power. None presents data that those four big agency heads request. Nearly all emotionally quip how radio is misunderstood and just needs to tell its story better. Tom Taylor's newsletter "Now" carried a story about Powell Broadcasting's Ira Rosenblatt stating with confidence, "Maybe the answer to increasing local revenue is as simple as bringing on more sellers." That's the approach Mel Karmazin took at CBS, during radio's first stage of drop in relevance. If this action is carried out, with the same level of account rep education that's present today, you'll create a bigger problem.

Again, quoting Eric Rhoads, "These [agency] execs said radio is no longer on the radar of many advertisers -- it's not even part of the discussion." The radio industry CEOs who missed that panel are part of the reason why. Eric identifies the other part: "Clients simply won't buy unless we first provide proof of radio's relevance and effectiveness."

Radio campaigns can be created which use the power of the internet to deliver response metrics. In certain cases, radio can connect an over-the-air campaign to the cash register, at a premium cost that's enough to give agencies better commission (satisfying the conspiracy theorists). Better analysis of web site visitors and social media use are required, not more words telling ad buyers that they "need" radio because it's ubiquitous.

Mr & Mrs Radio, you're at an analytics crossroads. The longer those defense lines are up, the farther down the relevancy pole you go. It remains your choice.

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