Don’t let today’s blog headline fool you. The future of radio is “Off-Air.” Or as it is also called NTR or just “Other.”
In fact, if you study those new bi-annual RAB reports, “Off-Air” is the only radio revenue category that is showing any signs of serious growth. This little table speaks volumes about the changing ways that radio stations are chasing business as we officially look back on the first half of 2015:
Spot sales continue to lag, and network ads aren’t much better. CEOs can debate about who’s doing what to whom on national buys. But an argument about network dollars seems almost besides the point when you’re looking at diminishing revenues like these.
The fact is, digital dollars have nearly eclipsed national levels. And what’s known as “Off-Air” is nearly twice the level of network spending. And it’s up a whopping 11% from last year.
What does that tell you about what radio stations ought to be strategizing as the rules of media engagement and advertising change? Yes, more brands are seeking out digital, even though they may not always know what it is, how it works, or what advertisers want.
But the desire for advertisers to sponsor or become part of an event, a concert, a bridal fair, or a pet expo seems to be getting stronger with every passing quarter. And the revenue and the momentum are there to prove it.
The phrase “Follow the money” was the key clue that Deep Throat bestowed on the Washington Post’s intrepid reporters, Woodward and Bernstein, during the Watergate scandal. In this case, that advice holds up well for radio, too. If an environment where spot revenue is stagnant, broadcasters have to do something that’s creative, innovative, and has the potential to grow the pie.
Now as most of your know, I’m a programming guy. But it doesn’t take a brilliant sales strategist to see that with every passing quarter, it’s becoming more and more obvious that “Off-Air” could be that four-lane highway to generating revenue.
So perhaps the bigger question is this: What events and experiences can your stations pull off that can be easily monetized? Or in the case of a company like Townsquare, what entertainment franchises can you buy or partner with where your stations are in a position to drive traffic and ticket sales to events of all kinds?
If you haven’t visited Townsquare’s Live Events site, you can click here to do so. There you’ll see a wide array of events that run the gamut. Clearly, they are positioning their company to be about entertainment – and not just radio – and that covers a lot of ground:
Other broadcasters have adopted this mindset, too. Ed Levine, who owns Galaxy Communications, has been especially active in upstate New York, working community events and generating a great deal of “Off-Air” for his company.
I know there are many examples of stations buying, owning, or partnering with key events, concerts, and other happenings in local markets. But the truth is, most broadcasters are still at an embryonic stage in the “Other” department, despite its great potential.
It’s noteworthy to point out that in recent months Townsquare has expanded its sphere of entertainment assets. Last month they purchased Phoenix-based Bridal Fashion Debut shows, a successful franchise that taps into events that virtually everyone experiences.
Not to be outdone, they recently bought NAME (North American Midway Entertainment), “the largest provider of rides, games, and food concessions in North America,” according to the magazine Venues Today. That article notes that Townsquare paid more than $75 million for NAME, a clear acknowledgment that family entertainment and radio are joined at the hip.
So what’s the thinking? Townsquare Chairman and CEO Steven Price laid out his company’s strategy with great clarity:
“Nearly half of NAME’s current events are within 100 miles of a Townsquare market and fit squarely within our core-stated strategy of providing affordable, family-friendly entertainment content. This acquisition furthers our efforts to diversify our product offerings and increase our non-advertising-based revenue, allowing us to offer more multi-channel, cross-platform content opportunities to our consumers and business clients.”
“Non-advertising-based revenue?” I think that’s what Erica Farber refers to as “Off-Air.” Townsquare has to be the most aggressive of the media and entertainment companies our radio trades follow. In fact for Q2, Townsquare reported their Live Events revenue was up more than 50%, reaching nearly $30 million.
In many wa
ys, the model is similar to what Clear Channel/iHeartMedia did to build and grow iHeartRadio, using the power of their collective station reach to drive sign-ups and usage. In Townsquare’s case, the radio stations are used as megaphones to sell tickets, connect events with the station and its personalities, and encourage attendance and ticket sales. In this way, radio’s sponsors and advertisers aren’t making all the money, while the station is left doing the heavy lifting in exchange for negotiated spot revenue. When you own an event, you assume the risk, but you also reap the financial rewards.
Interestingly, much of this “Other” activity is happening in smaller and medium markets. That’s because whether people live in Minot, Lubbock, or Utica, they have to entertain themselves. Radio stations that provide that experience can greatly benefit in both the ratings and revenue columns.
In the process, “Off-Air” means keeping financially healthy.
And staying on the air.
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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Radio’s domination began because it connects to everything. Any detours resulted from allowing other channels to take over. Ordinary doesn’t win. Standing out does. Radio is the hub of the wheel and the spokes have to reach out, not curl up. Social, mobile, digital, remotes, events all revolve around presentation and content. Be creative, make it stand out, sparkle and win.
Fred, thanks again for the morning stimulator! Clark http://www.broadcastideas.com
Appreciate the kind words, Clark!
Just like your financial planner would advise about your investments it is important for businesses to diversify. For broadcast companies whether that’s investing in events, podcasting or something else it all protects them from taking it on the chin when one area of the business is challenged financially.
Great stuff as always Fred, thanks!
That’s exactly right, Sean. Sometimes you have to take a hard look at your plan, question it, and re-evaluate your priorities. Thanks for the comment.