Yesterday, we discussed Saga Communications’ decision to end ad insertion in its streams. And that opens the door to a larger conversation and a bigger question:
If we cannot monetize it, why are we still doing it?
Of course, there are certain activities that radio stations should engage in that will never generate revenue – and that’s not a bad thing. It’s the price of doing business, it’s the cost of building relationships, and it’s the tariff to keep connected to the audience and build a meaningful brand.
As Facebook’s stock price may be proving, monetizing social media – at least in the ways it’s being done now – may be a futile, if not a counterproductive effort. As Lori Lewis has stated from the beginning, most consumers didn’t sign up with Facebook to join brand pages and to be marketed to. They just want to share their lives with other people.
So while social media monetization may be a very tough putt, that shouldn’t be the case with so many other digital activities that are crying out for sponsor and advertiser support.
How many radio brands have created and grown strongly successful franchises and cottage industries in podcasting, video streaming, large email and text databases, mobile applications, and other digital endeavors only to be running them commercial-free or watching the sales department throw them in as the dreaded “value-added?”
So where’s the breakdown?
You might expect this from a product guy, but I think it’s clear that great brands with respected and loved personalities can create compelling digital content that people enjoy – and might even pay for.
But if sales cannot figure out a way to sell these assets, the entire model is suspect.
When Paul starts a sales meeting with a new client, the first question he asks the team is, “How many of you want to make more money this year than last year?” Predictably, all of the hands in the room shoot up. He then follows this up by saying, “Then stop exclusively selling on-air commercials.” The point he’s trying to make is that radio revenue is projected to be flat to slightly up. In a hot political election year, the radio forecast is looking grim. If there’s going to be growth, it is going to emanate from expanding radio’s revenue via solutions on digital platforms.
Maybe it’s time to accept the fact that most traditional radio salespeople simply struggle to sell digital platforms. They are schooled in the art of selling radio ads to media buyers, utilizing metrics from Arbitron, and turning to old school solutions like remotes and live reads in order to close the deal. There’s nothing wrong with that – for the foreseeable future, commercials will comprise the bulk of radio’s revenues.
But if you accept that reality, then there’s only one solution – treat digital revenue as a separate business and hire reps with digital sales experience. Radio needs dedicated digital sellers that come to the table with knowledge of the strengths and weaknesses of each channel, an understanding of the metrics and how best to tell the brand’s story, and contacts with decision-makers that are seeking solutions using new media tools. They should have an understanding of how to creatively solve client problems, they should have separate revenue goals, and they should be empowered to not only generate revenue from existing station advertisers, but to also go outside the array of usual suspects to attract business from companies that don’t traditionally buy radio.
At this year’s Conclave, Paul moderated a session on non-traditional revenue. Two of the panelists were Hubbard’s Rob McCracken and Federated Media’s James Derby. We encourage you to check out how these two companies have created separate divisions focused on providing digital and social media solutions to advertisers in their market. In the case of Hubbard in Cincinnati, they don’t even use the parent company’s name – it’s 2060 Digital. These efforts are independent of the traditional radio business model; they have their own P&L statements and staff, and they are showing bona fide results.
We’re not throwing in the towel on radio’s prospects for generating digital profits. But it’s time to realistically assess what’s working and what’s not. Radio needs to come to grips with the fact that in many situations, traditional radio salespeople cannot take on this effort, and that digital selling doesn’t cannibalize the traditional spot sales effort. Pandora’s sellers (many of whom come from traditional radio) are focused on one thing – marketing results on their highly targeted platform. The same with Groupon and Google. Yet, radio’s sellers are focused on nothing and everything – commercials, events, banner ads, streaming ad insertion, mobile, and more. That’s a lot to ask.
Radio companies continue to pour money into music research, perceptual studies, and other efforts to support their brands’ on-air content. And they should.
But it’s also time to invest in solving the Rubik’s Cube that is radio sales while we still have viable media brands, and are still making marketable products that matter to consumers.
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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I agree that traditional radio sellers aren’t likely to embrace and sell digital products. They have a long history of not embracing ancillary media – and it’s probably more productive to just accept that than to try to figure out why or change it.
Hubbard’s separate business unit is the best monetization solution IMO, but there is a big caveat with that. Radio’s digital platforms – while really important to the marketing of its brands, has limited value to most advertisers. There simply aren’t enough eyes or ears there to significantly impact an advertiser’s product sales or brand image. And IMO, there never will be. If the best of those assets audience was a radio station – it would be considered almost worthless. Double or triple the revenue you could generate with that kind of low radio share – and you still aren’t left with much.
But that’s no reason to throw in the towel.
Radio has two options with digital if they want to generate meaningful revenue with meaningful advertiser results. The first is to create non radio digital platforms to sell with radio as marketing solutions. The second is to buy or align with those types of products.
The worst solution is the current one which is to move traditional dollars around so that money that really belongs there (in traditional radio) is recast into digital so that it can be (mis)represented as growing while portraying the station/group as being in touch. Among other things, it lowers the true growth rate shown for terrestrial radio and it masks the true revenue to be gained from current digital assets.
Radio could evolve into a great solution provider with traditional and digital media assets. But it needs to be honest with itself, then acquire and or align with enough of them to make a difference – and hire salespeople who understand the entire package. Then they can deploy those assets to meet customer challenges rather than a comp plan that doesn’t.
Bob, great perspective that is additive to today’s post. This is a complex issue, to be sure. But it is solvable because as you note, radio can solve customer and advertiser problems with its array of assets. This type of change is never easy, and it requires investment, people, time, and the inevitable faiures and “teaching moments” along the way. But the rewards are many, including survival. Thanks again, Bob.
Fred, this post is all rhetoric and no audience data.
Reality check: Not a single radio Internet stream met Arbitron’s MRS in New York, Chicago, Los Angeles, Philadelphia, Atlanta . . .
George, even Arbitron will tell you they don’t measure streams well. PPM has limitations as we know, headphone listening is under-reported, and there’s actual usage metrics that stations can use to measure (and market) their streams. Streaming may not be a mainstream audio source today, but Pandora’s numbers sure indicate the potential. The same could have been said about FM radio in 1967, and I think we know where that ended up. Thanks for the comment and continuing the dialogue.
Bailey- Hundreds of billions (that’s not a typo) of minutes of radio are streamed every month in the US alone and virtually non of it is measured by Arbitron. That’s because Arbitron is non-factor in streaming. With streaming there’s no need for estimates, each listener is logged, exactly, and these numbers are accurate to the second.
Rob, thanks for adding to the conversation. Appreciate you taking the time.
Bailey,
Triton Digital’s Webcast Metrics measures most of the streaming stations in the markets you mentioned. There are plenty of examples of stations which have streaming audience levels higher than the over-the-air listening levels estimated by Arbitron for other rated stations in those same markets.
John
Thanks, John. As noted in an earlier comment, metrics for streams are “real” and provide accuracy. Arbitron measurement for terrestrial radio listening is the standard, but for digital, doesn’t reallly capture what’s happening in that space. Appreciate your comment.