While the radio industry is wringing its hands over measurement, encoding, black boxes, and number games, the rest of the world that calls itself “radio” is busily generating revenue. And a lot of it.
If you clicked past the Voltair news last week, you may have read the story that Pandora reported Q2 revenue of $285.6 million. Going back over the prior year, that totals up to a cool $1 billion in ad dollars.
Now I know the broadcaster knee-jerk response: Yes, but they’re still losing money.
But that revenue had to come from somewhere.
And what is Pandora doing with this torrent of money?
Investing a lot of it in marketing.
A recent Ad Age story reports that Pandora has hired DigitasLBi San Francisco as their lead media agency. Part of this decision is driven by the numbers. Pandora CMO Simon Fleming-Wood told Ad Age that the agency has “great respect for data and what can be accomplished with the data.”
While Pandora was at first about word-of-mouth and viral tactics, they are increasingly plowing more of their dollars back into sales and marketing. In the past year, the world’s leading pure-play spent a mind-boggling $277.3 million in that category – a surge of 157%. That could be an indicator that listening and usage is no longer skyrocketing or it could be a sign they want more and now realize they need to use more traditional advertising tactics.
But the amazing thing is the percentage of its earnings that is getting plowed back into marketing initiatives. Consider that Pandora spent $84.3 million on sales and marketing in Q1 against $230.8 million in revenue in the same period.
That comes to 36% of its revenue going right back to marketing the brand.
What will the new marketing effort be about? Pandora’s previous campaign featured artists and listeners interacting, called “Thumbs Up.”
https://www.youtube.com/watch?v=SQgE2WO5nqA
What DigitasLBi will do on the creative side will take shape in the second half of this year. But we do know the pure-play is serious about staying on top, building its brand, and growing its audience.
The radio broadcasting industry could use a big-time agency and a strong marketing message of its own to remind consumers, advertisers, automakers, and ourselves about the power, clout, reach, and influence of local radio. Of course, that would require investment, collaboration, and focus.
Instead, we keep arguing about and being distracted by encoding and watermarking.
Jacobs Media has consistently walked the walk in the digital space, providing insights and guidance through its well-read national Techsurveys.
In 2008, jacapps was launched - a mobile apps company that has designed and built more than 1,300 apps for both the Apple and Android platforms. In 2013, the DASH Conference was created - a mashup of radio and automotive, designed to foster better understanding of the "connected car" and its impact.
Along with providing the creative and intellectual direction for the company, Fred consults many of Jacobs Media's commercial and public radio clients, in addition to media brands looking to thrive in the rapidly changing tech environment.
Fred was inducted into the Radio Hall of Fame in 2018.
- Radio + Thanksgiving = Gratitude - November 27, 2024
- Is It Quittin’ Time For SiriusXM? - November 26, 2024
- Radio, It Oughta Be A Crime - November 25, 2024
Radio is the best field for radio stations to promote all the wonders and possibilities of radio
What. A. Waste.
#DamnFools
Dimitri, when you have a product with as many assets as local radio, it is a shame that industry and individual station marketing is so sparse. Thanks for reading our blog and commenting.
Great blog Fred.
P, S, and A are the “big box stores” of the audio medium. Local radio station DO market. They pour a tremendous amount of time, resources, attention and money back into their respective LOCAL markets. The other guys take a mass approach and have little interest in understanding or supporting each and every local market. You are correct that “that revenue had to come from somewhere”…but the larger issue will be that revenue from those companies as well as Facebook, Google etc. represent LEAVING the local economies.
Good points all, Chet. The big box phenomenon affects media spend, too. Appreciate you taking the time to read our blog and comment.
I know many feel this Voltair story is distracting the industry and and as a guy that’s been pretty visible on it, I can attest that those feelings are right. 🙂
While getting our ratings measurement “house in order” is really important, this entire/conversation/process is certainly distracting radio from much bigger picture issues and this is without questions one of them. Strong read.
Dave, Voltaire IS a huge story but one that has mired the industry in a finger pointing fest. Our eye is off the call at a time when the smartest minds need to be creating great content and elevating the industry. Thanks for being a bold voice.
Fred…I was at a social gathering last week and introduced myself to an Expedia exec. Asking what I did for a living i replied that I run radio stations. “Radio? I didn’t know radio was still around…!”
You address a systemic issue. The radio business is perceived as old-media – along with newspapers, yellow pages and soon broadcast TV. Dead. Over. Last weeks news. At best, dying a slow death and not a bandwagon hip marketing folks want to climb on.
That’s what we need to address…
Radio is alive and well, Jackson, and while challenged, it is a viable, effective advertising vehicle. But as you suggest, that message needs to be communicated to advertisers and digital media types. Thanks for the comment.
I agree that radio needs to market itself, but I don’t think a national campaign is the answer. People are still listening as evidenced by radio’s still strong cume numbers – what’s off is TSL, so because the audience is still there radio needs to convince them to tune in more often. I don’t see how a national, generic campaign would do that…but local campaigns would IMO. Its not really about the fact that there are lots of music formats, morning shows and spoken word options with local references, its about your specific morning show or station or another one that you might like even better.
Whatever radio can do to extend and highlight its local focus will only help it – anything broad and national takes away from that. Pure marketing would help radio a lot, but some data driven product redefinition, a renewed commitment to real (not tracked) localsim followed by some great local marketing that highlighted those changes station by station, personality by personality would help a lot more.
Bob, I agree that local campaigns would be more effective and focused for the reasons you mention. That’s where radio is most effective and its personalities matter. The challenge, of course, is finding that funding. While a national effort might end up being generic, radio’s messaging isn’t getting through. Read Jackson Dell Weaver’s comment as it likely echoes what many of us hear. Thanks for adding to the conversation.
Spot-on, Fred. Thanks, again, for the reality check.
Let me commend you for today’s post and your ongoing campaign about this matter.
To put the challenge in context, let’s stipulate: Radio enjoys a remarkable reach, advantages of the audio incumbent, however the trend in time spent is not favorable. More options compete for listener attention. Radio’s efforts to increase share of ad spend (“grow the pie”) have been patently unsuccessful. More options compete for audio revenue. The good news is our vehicle is still running. The bad news is we’re hearing odd noises and the “check engine” warning light is persistent.
My thought is we need to begin competing for the future. It starts with facing reality as it is, not as it was or as we wish it to be.
We need to invest in marketing and promotion targeted to listeners and advertisers. This should and must begin with our own air and online assets. This past weekend while listening to the stream of a major market station I heard “The radio station you are listening to is in a commercial break.” Missed opportunities abound. What happened on your air or your online assets this week that has your market talking, which was covered as news by your local media or gone national?
Larry Rosin wrote a post last week, on Infinite Dial, Telling AM/FM Radio’s Story…
“I believe the reason advertisers nail radio with comments like ‘no one is listens to the radio anymore’ is in large part because they don’t see radio stations anymore.”
Advertising and promotion to grow audience has an added bonus. It lends support to our sellers. Advertising and promotion to grow revenues helps get us into the conversation with decision makers. We need both. Leadership required. Tick tock.
Dave, your comments and passion are much appreciated. I believe your premise about competing for the future rather than defending the status quo speaks to the need for a new agenda and marketing plan for radio.
Larry is right. All those billboards and TV spots stations dutifully designed and ran back in the ’70s and ’80s had two target groups: audience and advertisers. We could see movement in the ratings when the marketing was good and the product was competitive. What we couldn’t see was that subliminal under-the-radar impact of this marketing on the ad community.
Whether overt or not, radio was telling advertisers that it was a big dog medium, populated by strong, vital, local radio stations. The disappearance of that marketing coincides with falling TSL and usage. I appreciate, as always, your support.