Throughout the course of the COVID-19 crisis, much of the talk in radio circles has revolved around how programmers and on-air talent have had to adjust to the changing conditions the industry is enduring.
But perhaps the biggest wave of change is occurring on the sales side. It started with the rash of cancellations in March. And while many cite some recovery in recent weeks – amid the promise of a “re-opening” – the fact is that radio's business model has been rocked by the virus.
What the radio sales environment will look like post-COVID-19 is anybody's guess. But smart, prescient companies are already contingency planning, trying to look around the corner of the pandemic to visualize a new sales landscape.
That's what Paul Jacobs is paid to do. He's the guy at Jacobs Media with a great sales/marketing resume. And these days, he's been working overtime on the challenge of rethinking radio's sales model. In today's post, he lays out his thinking. See if you think he's on the right track. – FJ
At the end of each year, in an attempt to fill holes during slow news days, media outlets run stories about the American Dialect Society‘s “word(s) of the year.”
They've been doing this since 1999, and some of their picks have been interesting, noteworthy, and even controversial. In 2017, it was “fake news.” 2010 ushered in the year of the “app.” And in 2008 in the heart of what turned out to be the Great Recession, their choice was “bailout.”
Usually, it's a challenge to somehow place 365 days into a single package. It makes for great filler material in late December, but doesn’t really mean much because each year is pretty much like the last.
Until the global pandemic It's hard to imagine the seers at the American Dialect Society won't pick “COVID-19” or “coronavirus.” But in the event they dig a little deeper, there may be some dark horses, like these:
In the world of business, it's a different lexicon. In past years, it's been “best practices,” “at the end of the day,” and “low hanging fruit.”
But, if I was to somehow do a word cloud on all the conversations I've had in the past two months, one word keeps coming up again and again:
And more and more, I'm hearing radio execs talking about pivoting. That’s not to say they're abandoning the existing model that has served them and their audiences so well for close to 100 years. But it does acknowledge the fact that because of the pandemic, everyone is looking at their business models differently. And there is considerable rethinking of radio's “givens.”
- Businesses of all types, shapes, and sizes are in full pivot mode, often because the entire raison d'être of their companies has been upended – in just a matter of weeks. It has been sweeping and it's been fast. The problems they need to solve – right now today – with their advertising and marketing dollars have dramatically changed.
- Audiences are enduring change every bit as cataclysmic. Not only north of 33 million people have lost their jobs in recent weeks, millions more are now at home. Among regular radio listeners, in particular, their usage habits are shifting, pivoting to listening to a favorite station or show on mobile apps, laptops, tablets, and smart speakers.
- Radio's programming community is in the process of re-evaluating the rules of the game, given all this change. Many are pressure testing their assumptions, and now focusing more on community outreach, listener connectivity, and fulfilling the audience's changing emotional needs.
And so it would follow that radio sales teams need to do some serious rethinking of their models – not only to monetize their growing digital listening, but to also provide solutions that go beyond running a bunch of 30's and 60's, and bonusing remotes.
When you think about how broadcast radio has evolved over the decades, every department has been forced to step back and reassess. From programming to engineering to upper management, the challenges and opportunities posed by consolidation, digital content and distribution advances, and technical changes have forced radio pros to learn new skills and develop new models.
Except in the sales department. As someone who spent the better part of two decades working in a cubicle with a team of other sellers, the landscape of radio sales hasn't changed all that much.
But thanks to significant disruption in listening patterns, changing customer tastes and mindset, pressures faced by the business community, and the revenue challenges now facing radio stations 2020, what should a smart sales manager or DOS do?
A recent article in Business Insider by Daniel Keyes, “Amazon Posts Highest eCommerce Growth In Over Three Years,” defines just how radically consumer consumption is changing, along with the new challenges many long-time radio advertising clients are now facing. This is the case whether you're Macy's or a hardware store on Main Street.
Despite the country heading into a severe recession or even a depression, Amazon’s net sales in Q1 jumped 25%. Now if you think this blog post is about why your station isn't more like Amazon or why your CEO doesn't think like Jeff Bezos, I wouldn't do that to you – especially in the eye of a global pandemic.
But looking at what Amazon has wrought – and its impact on the entire business community – goes to the heart of redefining our own models, as well as helping clients maximize their opportunity during COVID-19. Or maybe just survive.
Amazon is in the great shape they're in, not because of a virus, but because they created their own game, their own rules, and their own operating standard. By changing the way the world shops, Amazon was the most successful company on the planet before all hell broke loose in Wuhan.
And when in just a few days in March, most consumers were hunkered down in their homes, and local businesses were forced to put “CLOSED” signs on their doors, Amazon’s already successful model suddenly made even more sense in a new landscape where people were asked not to leave their abodes. For Amazon, even the sky is not a limit.
Seemingly overnight, local businesses couldn’t solve their new problems with old tactics. A “President's Day Blowout,” a “Red Tag Sale,” or a “BOGO” event aren't viable during a pandemic. And because so many aspects of their traditional tactics no longer work – “Stop by and browse around,” “Fast, friendly service,” “Take a test drive,” became obsolete. Many of these same businesses lacked a true e-commerce solution, an extensive, functional email database, or any other way of pivoting during the pandemic.
And as the “re-opening” in your state or your town rolls out, they still do not have an efficient and effective way to communicate they're back in business, they now feature curbside service, or they have instituted new policies to protect shoppers and allay their already off-the-chart fears.
It's why they cancelled their existing buys with radio stations in March, because they had nothing to advertise and no way to sell it. Concurrently, many radio stations weren’t capable of solving their new problems, because the traditional radio advertising tool kit was only adequate to addressng their old pre-pandemic needs. Even before the wrath of COVID-19, radio was struggling to provide ROI, accountability, and data for advertisers. For the rest of 2020, what's radio's answer?
Beyond the obvious financial challenges many businesses are facing, here are just some of the problems clients are facing, all of which challenge the radio business, but also offer opportunities, if radio is strategic enough to pivot, and re-establish its worth as a valuable, local marketing partner.
So, consider these new “givens,” that might stimulate some smart pivots.
Driving ears in the traditional way is over. Historically, radio has been a perfect traffic-builder for local businesses. It has been especially effective for “windshield advertisers,” physically nearby as millions of consumers drive to and fro, hearing their advertising in real time. At least for the foreseeable future, that value is eroding.
In its place, local enterprises need to motivate radio listeners to visit their website, a landing page, browsing and ordering online, downloading their app, or joining their database.
In the past decade or two, radio has done an outstanding job of accomplishing this for its own agendas. iHeartRadio was basically built by the megaphone of broadcast radio – urging consumers to get the app, listen on any number of distribution outlets, and change their consumption habits. It has worked so well that Entercom is adopting the same model for Radio.com. And any broadcaster can do the same, especially using the power of its personalities, its cume reach, and local brand strength.
But now, radio's salespeople need to change their decks and presentations to sell through these new benefits, rather than going for just an ad schedule and tossing in a remote that no one is going to attend.
Local advertisers need to understand their new challenges. Amazon has reinvented the paradigm that now everyone else must follow. Manny's Discount Furniture in your neighborhood may think their competition is that new company, Modern Designs, or even IKEA – and yes, they're all in the same area code – but, in fact, that may not be the way local residents see it. Instead, more and more consumers are browsing Amazon or virtual brands like Wayfair to accomplish their furnishing needs – with convenience and now the added benefit of safety. They're the real competition.
The same is true for all those car dealers in your metro. Yes, they compete against one another. But perhaps the real battle lines are being drawn by Carvana, TrueCar, CarMax, and other up-and-comers in the space, all of which promise simple transactions without having to walk into a showroom. How can radio once again solve these mounting problems faced by hometown dealerships?
Most local businesses don’t have a clue about digital. Since connecting in person may be in the rear-view mirror – at least for now – the focus shifts to connecting digitally. But too many merchants and retail entrepreneurs don’t know where to start. Right now, they're focusing on safely separating customers and employees, new sanitizing procedures, and other features designed to make customers feel safe and comfortable.
Learning digital under these circumstances is out of the question. As a result, this is a service many radio stations should consider providing – – yes, for a fee.
Retailers, in particular, need a trusted partner to help them navigate these new waters. Radio companies could be hosting paid webinars focused on how to develop e-commerce solutions, effectively managing an email database, the power of mobile, etc. For companies that already have a solid digital agency or infrastructure, leveraging the expertise of the staff to consult clients on their needs is the new pivot, followed by selling them the solutions.
Geography no longer matters. One of the complaints retailers have about radio is they have to pay for audience that lives too far away. The fact is, when shifting to a digital e-commerce strategy, geography no longer matters. Many businesses can now look at the entire metro – or even the entire planet – as part of an expanded footprint of their customer base. When someone wants to buy from them online, it doesn’t matter whether they live five miles or 500 miles away.
This calls into question some of those geo-fencing strategies, designed to limit access to streams – and therefore, potential new listeners and shoppers. Given radio’s already strong reach, this is another pivot point worthy of rethinking.
If they’re still in business, they still have to get the word out. It seems like every ad on television (outside of the incessant “We’re in this together” or “We've got your back” messaging) is highlighting a new pivot – pizza untouched by human hands, home delivery of cars with delayed payments, curbside pickup of just about anything, safe, easy online ordering, and new safety and hygienic measures.
Businesses that are open – or will be soon – have to get their newly refined messages out in ways that cut through and are effective. Sales packages and tactics addressing those specific goals can be strategized because never before have so many businesses found themselves in the same boat.
Develop your own digital solutions. If your station or company hasn't already developed digital solutions for clients, it’s time to get moving. Yet, even for companies that have already committed to this space, it is still smart to create new marketing strategies designed to help local businesses get back on their feet, and start generating much-needed revenue.
Consider creating a “digital shopping mall” on your website and app, with links and listings to businesses that are open. Digital is scalable, and there’s no limit to how big your mall can get. And there are never parking problems.
Stations are now hosting virtual happy hours, programming events that are sponsorable, along with product placement opportunities. Other stations have launched food drives and first responder fund raisers that have partnership and sponsor potential as well.
It is also time to analyze and transform your existing digital solutions and tools. Why not turn your email database into a viable, strategic sales tool. The ability to push out coupons, links, specials, and other client information (to those that opt in, of course) is incredibly valuable to advertisers right now. Segmenting the database by consumer interests is another way to take advantage of a station's outreadh.
Of course, it starts with actually tending to the database, keeping it clean, viable, and valuable to station fans. I'm all about the programming department utilizing these directories of local customers to promote special weekends and contests. But there is also incredible value in also using it on the sales side to connect advertisers with customers.
But it all requires one critically important dance move:
Finally, while the Business Insider article applauds Amazon’s financial success in the first quarter, it also highlights two key reasons why their business model has been so disruptive, so sustainable, and so successful – they are never satisfied.
At a time when their revenue is going through the roof, and they could sit back and spit out profits, they decided to place restrictions on its services in order to adjust to the way the pandemic is changing their business. They stopped merchants selling non-essential goods, and even asked Prime subscribers to join a wait list for Whole Foods and Amazon Fresh.
And a second key is their relentless focus on their customer. Bezos, himself, is the mastermind behind this strategy, summed up by his quote:
“We see our customers as invited guests to a party, and we are the hosts. It's our job every day to make every important aspect of the customer experience a little bit better.”
And so Amazon continues to pivot, even when things are going so well. Bezos knows that to stay on top, he needs to keep adapting to meet future demands. As the article reminds us:
“These efforts, while costly, should help Amazon ensure it’s able to meet consumer demand and ensure they deliver the products they want in a timely manner, which should help Amazon build loyalty with customers and make sure they don’t start to shop with competitors during the pandemic.”
And that’s the key point about pivoting. Gone are the days where anyone – a business, organization, or even a manager – can set it and forget it. The winners will be those who ask the hard questions about their organizations and approaches, respect but don’t be a slave to tradition, and connect with customers.
COVID-19 should not signal the demise of radio's business model, but instead, the birth of taking the medium's inherent strengths, and then adapting to meet changing needs. In other words:
It may not end up being the American Dialect Society's “word of 2020,” but it should be the mantra that guides radio toward its next renaissance.
I'd love to continue the conversation with you. Reach me here.