Last week, we talked about how the podcasting financial model is beginning to shake out. Many of those sitting in garages, basements, and studios delivering on-demand radio – better known as podcasters – are becoming more intricately involved with their sponsors.
Advertisers are finding podcast commercials are more effective when delivered by a trusted personality who (at least) sounds like they use the product or service. Of course, some podcasters cleverly talk about their advertisers in non-traditional ways, including interviewing a sponsor about something unrelated to this weekend’s red tag sale. In the process, their brands are exposed in a format that eschews screaming car dealers, aiming more for integration.
And why not? The personal touch from a credible, likeable host who is part of a listener’s routine has always worked for radio, whether it was Howard Stern hawking Snapple or your afternoon DJ talking about laser eye surgery.
Programmatic may be an inevitability as more and more marketers want to control their media buying in the same way many of us make our travel plans or even research the best car lease programs. But if it gulps down larger and larger pieces of a station’s inventory, does that end up shortchanging radio, a medium that has the unique ability to deliver results in a more personal way? And does it also hurt the advertiser who is literally buying the station by the pound – without buying its heart and soul?
Over the last few months, I’ve discussed this very issue with a guy that many of you remember from morning radio here in Detroit – Jim Harper. For years, Jim was the morning voice of WNIC, as well as its program director. In 2001, Jim made the jump across the street to WMGC (Greater Media), where he anchored morning drive for a decade. He hung up his headphones for good in 2011, and has been avidly observing radio from a more removed, objective perch ever since. I think Jim has gotten smarter and more incisive the further away he’s moved away from day to day radio.
One of things that jumped at me when I was visiting WRIF or WCSX in the same building where Jim did his morning show on Magic 105.1 is that he had something very special going with a small group of advertisers. He called it “The Platinum Club,” and it was dedicated to creating strong relationships – and results – for a select cadre of local businesses. I always marveled at how Jim approached the care and feeding of these special clients in ways I had never seen before.
During our recent conversations about radio’s shifting revenue generation challenges, Jim questioned whether the trend toward programmatic doesn’t fly in the face of radio’s true essence. As he said to me:
“Start with this simple question: WHY would radio opt-in for a system that makes our business totally transactional over what has been our life’s blood since the 1930s: relationships?”
Now you might say that we’re a couple of programming guys talking about revenue generation, so those of you in the sales and management community are welcome to weigh in and let us know that perhaps we should stick to picking hit songs and building clocks. But at a time when podcasting revenue is emanating from that human touch from talent, it makes you wonder whether radio isn’t gravitating away from its secret sauce at just the wrong time in order to keep up with the Westergrens. And doesn’t it send up a red flag if too much of radio’s advertising inventory is sold by an algorithm?
So I asked Jim to recall one of his most successful revenue-generating ventures ever – “The Platinum Club” – and explain why and how it worked. And how it might still be very viable for stations with bigger than life talent:
Marcy Cyburt, our LSM, and I came up with “The Platinum Club” as a way of creating more value for the clients who bought live read campaigns on Magic 105.1. We wanted clients to know how much we treasured our relationship with them for this premium form of advertising: our live read program. Spots hovered around the $1,000-per rate for quite a while.
We knew that increasing revenue for each of the clients was our first job, and that was happening through the unique way we did the live spots. With our parent’s generation, in the ‘60s and ‘70s, the dads would go off to work each morning and the moms would have coffee in each other’s kitchens or talk over the back fence. That’s how they shared referrals for everything they needed. It was “neighborhood-networking.”
At the turn of the 21st century, we felt our morning show served the same purpose, especially with live reads. So when we told listeners “Let me tell you about a friend of mine…,” we were providing the same referral service. Friend-to-Friend. It was based on honesty and real value for the audience. We never did spots for a client we didn’t believe in and in a couple of rare cases, clients were put on “probation” if we got complaints from listeners.
“The Platinum Club” was designed to strengthen our relationship with our LIVE clients, first by setting them apart from a regular advertiser and making them feel appreciated…in a special “club” that included social and entertainment events we would host. Special “Platinum Club” wearables and gifts were purchased by Marcy and me out of our own pockets.
We came up with the idea of offering to have me record the client’s voice mail system…free of charge. That and other little gestures solidified our relationship with them and left competitors stunned. There were usually no more than 15 members of this club. We provided a lot of one-on-one time with me and the other members of the morning show. Every client club member had my personal cell number and was encouraged to call 24/7. This gave us a deeper understanding of the client’s needs, and would result in great material for the actual spots. It made our job easier and the client’s message on the air more personal and relevant.
Just as important, we would often bring them together as a group to discuss and try to solve their business problems. We would have guest speakers (like Fred Jacobs) to help the clients learn and understand new business trends. We quickly realized that regardless of the services or products each of these advertisers were selling, they all had an awful lot in common. Birds of a feather, through our “Platinum Club,” they were members of a fellowship, and were no longer under the same stress of trying to succeed alone. They had radio…they had US.
This resulted in the live clients all becoming great personal and professional friends. They started referring business to each other. They patronized each other’s businesses and best of all, they all increased their revenue as they continued to advertise on our morning show.
It was very much a macro-version of the RAB, Adcraft, or a local business association. Like-minded people with similar challenges and goals, working together with radio to increase business and fight competitors. It trumped all of the ups and down of the ratings and ad-rate games, and it made us genuine partners with everyone who saw value in advertising with us. If a client was having a crisis, it became our challenge, too. This relationship built loyalty and success, and that’s the real fun of this business anyway.
Whenever I would meet salespeople from other stations, they would always compliment us on how effective and brilliant “The Platinum Club” was. That confirmed to me that we were building something that no one could touch and would make a lot of money for clients and our station. But most importantly, it was a perpetual living breathing entity that proved radio’s effectiveness…one spot at a time.
Fascinating, don’t you think? At a time when radio is moving away from the personal touch via a buying tool like programmatic, it makes you question whether the business isn’t once again ceding one of its great strengths – connecting its trusted personalities to local business to delight and inform the audience.
That friend-to-friend relationship…not an algorithm.
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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Interesting post. I think it’s important to point out the difference between local and national/regional sales here. The essence of Jim’s comments are true….for local business and (hopefully) will be for many more years. However, make no mistake..the national business dynamic is about radio buying is a commodity. A GRP, is a GRP. Occasional exceptions, but programmatic buying is a result of national clients wanting to move faster….and NOT having to “argue and debate” buying questions anymore. For the most part, it’s a agency driven metric.
While the “heart” behind the post is very admirable, i’ts just not the new reality nationally, that radio stations are facing. I know you guys know this and certainly the most recent Uber rulings point out, technology moves whether we like it or not.
Absolutely, Dave. Programmatic is a reality for sure, but sometimes radio jumps on bandwagons at the exclusion of an activity that could yield great rewards – financially and with relationships. Thanks for the comment, Dave.
Very interesting post / insights. I think there’s an inadvertent tendency to lump all things “programmatic” into one bucket, but it’s important to note there’s programmatic ad-buying, and also programmatic ad-targeting. I believe this post is largely reflecting on programmatic ad-buying in a broadcast paradigm (one-to-many), but it’s important to consider programmatic from a targeting standpoint in a digital audio paradigm (one-to-one). The latter can actually create a more personalized listening experience by targeting advertising in near-real time that is highly relevant to the online listener, based on demographics, psychographics, and other behavioral based criteria; and is thus less likely to be perceived as intrusive or interruptive. In this sense, programmatic targeting can help create “personalized advertising” in which the listener and advertiser both benefit from higher engagement and ROI.
Thanks for making that distinction, Paul. Our point is for radio not to forget radio’s unique differences especially when it comes to connecting advertisers with listeners. Thanks for the comment.
Fred – love your blog and this is another great topic!
We are seeing radio programmatic (broadcast) applied initially to pre-recorded audio spots from national advertisers (i.e., the national spot and network market) and driven by new ad exchanges run by major players like Katz for their clients, and iHeartMedia for its private networks. This essentially transforms pre-recorded “spot” buying and selling to be more automated and efficient for the agencies and national sales operations.
These programmatic ads do not compete with live reads, given they are the pre-recorded ads that are run every day. We expect there to still be significant opportunity for live reads and strategic integrations with clients.
In fact, programmatic frees up time for the broadcaster and their sales organizations (locally and nationally) to spend more time with their clients and audiences on integrated ideas, live reads, events and the other sales opportunities which provide huge ROI for clients, and the best CPMs as well for broadcasters. Programmatic can in fact allow teams to be more strategic in this way.
In general, technology will unlock significant potential for broadcasters to compete on a more level playing field against Google, Facebook and digital competitors for national advertisers who are rapidly adopting programmatic across digital, video, social, and even TV, and have a higher expectation now than ever before related to transparency, reporting, automation and data targeting. It is important for broadcasters to embrace and not be left out of opportunities for programmatic budgets.
I believe programmatic technology will someday help assist live reads as well – but we are a little ways away from that now. It is a powerful part of radio and I agree it should remain a huge part of broadcaster and their client’s strategies.
Mike
Mike, I was hoping I’d hear from you on the topic as a couple of programming guys like me and Harper wax philosophically about programmatic. Obviously, the end game is to meet somewhere in the middle which would benefit both radio and advertisers. Thanks for the perspective on programmatic from someone’s who’s making it happen for radio. Appreciate you taking the time to comment.
(Per Dave’s comment above..) Largely speaking, the attributes of Direct (local) buying, with relationships have always been very different than a majority of Agency buys. Programmatic of course upgrades the tools of those combing over rankers & cpp’s in a cubicle. In Canada, total Radio Revenue is 30% National and 70% Local (and of course, a fair amount of Local is also Agency – although some of this Rgl. buying is a mix of “by the pound” and proper consideration of “the heart and soul” of the station). Given the essence, history and DNA of Radio, programmatic will very likely continue to make bigger inroads in Digital and TV. As to the road ahead, I think I have an analogy. Picture a really charming Italian Pizzeria that has (1) cheap, weekly specials delivered efficiently by Uber drivers and (2) cool tables, rooms & décor inside – where lively tables of friends & families enjoy custom pizzas with extra toppings along with samples of the Owner’s favourite olives (and remember that night the Head Cook had a night-cap and song with your group and stayed open an extra hour)! Radio will continue to have both customer groups. Serve each group the best you can and aim to maximize both. And, the composite of each revenue stream will continue to vary by station / format.
I love the analogy, Rob. That personal touch and feeling of belonging is exactly what Jim Harper and his team delivered with “The Platinum Club.” The fear is that those qualities will be diminished over time as the automated process becomes accepted, cost-effective, and frankly a lot harder than the head ccoop hanging around and singing with your table. Thanks so much for weighing in.
Agreed. The technology is coming. Agencies will want or need to embrace it. And the fear is there. My question is why and will the new technology be used by more local clients than the current volume who already buy in this fashion. IE the most noteworthy local, direct radio clients are already saying no thanks when Agencies prospect them – because they know the merits of directly managing their “heart and soul” buy, with a deeper concern and regard for creative, format, sponsorships, endorsements, VIP bonus, etc
It is essential to try new architectures that might entice advertisers to climb back aboard the radio bus. Thanks again, Rob.
I’m looking at it like self-checkout vs. cashier at the grocery store. For small orders without a lot of moving parts, self-checkout is incredibly convenient and desirable. But if you’ve got a cart full, especially with items that require ID verification, coupons or cost-by-weight, self-checkout can be a hindrance to you and to other shoppers. That’s when you need a kind, courteous cashier to help you make your purchase and bag your items. The buyer and seller relationship in media is far more complex, but at its core I believe the same principles apply. In my opinion, the best way to mitigate the “programmatic problem” is to embrace it and position it correctly to buyers – in other words, show them how and when it saves them time, and when it doesn’t. That will build immense trust with buyers moreso than criticizing an alternative purchase point to which they may be more attracted. No industry can fight convenience – but in many ways, we can make the presumably inconvenient more appealing with excellent service and delivery in ways technological convenience simply can’t. Just my two cents.
Chris, your emphasis on service goes to the heart of the issue. An automated buying service is about as appealing as “Press * to hear these options again.” Thanks for a great comment that continues to move this conversation along.