Here is part 2 of the guest post from Paul Jacobs who offers his insight on how radio needs to invest in solutions to reach younger consumers:
Assume for a minute that radio’s revenue growth via the traditional commercial platform is going to continue to be challenging. And if your station specializes in lower demand demographics like 18-34s and Teens, you know that radio has fallen out of favor with many key advertisers, with no apparent turnaround on the horizon.
Yet, many major advertisers haven’t changed their target demographic strategy. They’ve changed tactics. And radio, especially formats like Alternative and CHR, has to respond to this shift in order to survive.
Here’s the facts: A recent report from PQ Media found that spending on "branded media" – event sponsorship and marketing (+12%), product placement (+34%), and advergaming and webisodes (+35%) – grew nearly 15% last year to $22 billion. And who are most of these advertisers targeting? The hard-to-reach youth market – Alternative and CHR’s target listeners.
So, for radio, there’s an obvious disconnect. The problem isn’t younger-targeted radio station’s demographics or our audience size (which is considerable). It’s the way we’re delivering listeners to advertisers, many of whom are moving away from the paradigm being the third spot in a five spot cluster.
Alternative and CHR stations have proven expertise in creating compelling events (and generating considerable profit from them), but there’s a long way to go on digital platforms. Most aren’t structured properly to satisfy changing advertiser needs. In a flat traditional advertising revenue market where owners and Wall Street are demanding growth, doesn’t it make sense to ask some hard questions about the entire business model of these stations and consider some radical surgery?
Looking at it a different way, youth-targeted radio formats might be able to lead the way to revenue growth for the radio industry. There are billions of dollars available chasing youth (maybe even more than for aging baby boomers). Maybe these stations need to consider some serious experimentation by re-structuring their promotional, digital, and sales models. Maybe they need to, in the words of Jason Calacanis at Summit 12 – "surrender" to the reality that the current business model is not the road to revenue growth.
Let’s invent a new one, and in the process, begin to reinvent the way that radio interfaces with advertisers – and the audience.
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.
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Hi Paul, long time no speak. Don’t know if you remember me, we worked together at NPR with Jackie Nixon.
Beefing upstream marketing, encouraging cross selling, increasing revenue productivity, implementing growth budgets, opening up communiations and making innovation part of everyones daily are all noble deeds, these are great intentions but if leaders are not using the right measures, these are a receipe for heroics and burnout.
In my experience, the folks at GM and Ford work harder and in many cases were smarter than their counter parts at Toyota. The real difference was not the quality of people, their sales and marketing efforts, or communications or even their ability to innovate, the difference was, is and will always remain the intelligence built into the system of work and exercise of the right metrics.
IBM had the best sales people, marketers, operational guru’s and productivity experts in the world working for them, but Dell was able to send them packing with their heroic tail between their worn out legs out of the PC market because they had a smarter system of metrics and management.
SouthWest Airlines has done this to Delta, USAir and AA. Wal-Mart did it to K-Mart and Sears (and now Target is doing it to them!).
The only reliable and sustainable way to transform the business model and thereby ensure the required growth in audience numbers that will serve as a magnet for advertising dollars is to ensure three back to basics fundamentals are in place.
These are: a) clear vision of purpose tied to qualified and latent needs in the market or communities being served, b) Transparency of value streams from needs-to-cash and c) the leadership fortitude and capability to visibly stay on top of and sustain a) and b)through all the self doubt, barriers and resistance to change.
If leaders persist in using the wrong measures and spend their time doing the wrong work they will only ever get hard earned results through the heroic school of hard knocks, eventually a smarter system will put them out of commission.
Kashmir Birk