KPCB’s Mary Meeker is an analyst that makes the best use of PowerPoint of anyone I’ve ever seen to explain what is happening in our media world. Thanks to Business Insider’s Silicon Alley Insider Chart of the Day, the slide below tells an amazing – but illogical – story about media spending and where it’s headed.
It simply shows time spent using media versus the percent of advertising spending each medium attracts. The Business Insider folks used the chart to illustrate that online sellers should stop whining because ad dollars are rapidly catching up to overall usage.
That’s nice. But what does it also say about radio’s perennial quagmire?
The chart was mentioned in a couple of sessions at Convergence in Santa Clara this past week. Visionary Rob Curley pointed out that based on this data, radio doesn’t look bad. But of course, radio’s revenue seems to always lag real usage. And inexplicably, the “dying newspaper industry” continues to siphon inordinate ad revenue from the coffers of companies big and small. Curley pointed out that newspapers have a 70 year history of going nowhere, and yet, one-quarter of media dollars spent are devoted to column inches. I’m waiting for a Vulcan logician to explain why in the world print somehow attracts this big slice of the money pie while usage continues to crater.
And during a mobile panel, Hipcricket‘s Rob Mumford pointed out the disparity in mobile’s impact versus the paltry dollars it now generates. Again, the blame was placed on the agency world which is typically slow in seeing where consumers are headed. I can understand that as an emerging space, it is taking longer for the ad community to figure out that smartphones may be catching on. Aren’t most of them still carrying around BlackBerry handsets?
We are all being forced to adjust to the changing winds of the media business and the world in general. It’s not easy. Disruption is in the air, our entertainment/information world is moving at breakneck speed, and change is a constant. Every day you find out about a new app, alliance, or innovation that you didn’t know about last week. So I think we all have a basic understanding that keeping up with the pace is a challenge.
But if there’s a media planner in the house, would she please step forward and explain this chart to those of us in radio? Or mobile? American business simply isn’t being served by an advertising community that is so out of sync with reality.
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Ad agencies are often out of sync with reality and their public proclamations in the trades about embracing new forms of media are often not supported by actual spending figures.
But when was the last time a media planner had the power to make basic media selections? Isn’t that usually done at the Management/Supervisor level…or above?
Radio is being outsold – pure and simple. And the more they hamstring their sellers with non-competes, goal post moving budgets, less and less comp ect., the more that trend will continue.
If radio wants a bigger share of the ad dollar, it will have to hire some true consultative sellers who will get to the places where real business decisions are made and solve real business problems with radio, one account at a time.
Radio doesn’t need to tell its story better. Every agency Media Director could repeat the reach argument radio has been peddling for 40 years verbatim. Radio needs to creatively tell its client’s stories better. If people aren’t using radio for reach as they could/should – it should go to the people who make those decisions and show them how…on a specific account, while also being open to other ways to use radio for that client, based on their stated needs and goals.
That will increase radio’s share of the ad dollar. IMO, nothing else will.
Bob, thanks for the perspective. Yes, it’s more than just usage – it has to be about results. But many agency people would be surprised at the gap between usage and spending. Radio does need to tell its story better – and it’s not the 93% cume story. It’s how radio delivers results. Appreciate you taking the time.
Not only that, but according to at least one major syndicated research source, their “share of TSL” is completely off. If don’t know where emarketer gets the data it uses for radio in their reports, but their “15%” is ludicrous. USA Touchpoints shows radio at about 25% Or more of the average person’s total media consumption. I am in awe of how trusting all these analysts are of data that make sweeping claims with no sourcing or explanation of how they arrived at these conclusions. But they blindly accept idiotic statistics and then the media giddily report it as if it were true without ever investigating, or even asking where the numbers actually came from.
Of course, once it then appears on the internet, it must be fact, right, because everything on the internet is true.
Mary Meeker should be ashamed of herself. So should emarketer (her source for this drivel). We really are a nation of sheep.
MB, thanks for the comment. There is a lot of “research” floating around that is questionable. We try hard to be sure our Techsurveys are credible and trustworthy. Thanks for taking the time.
You’ve narrowly defined “reality” as the amount of time consumers spend with media. Media planners define reality as effectiveness. We don’t rely on a single data source or a single variable like TSL to make a decision. Media models use multiple inputs (sales, media weight, media cost, store/web traffic, etc.) to optimize media spending against objectives. This access to data and analytics keeps media planners tightly in sync with the reality of effectiveness.
The mobile industry is evolving every day to become more effective – and most media planners are confident mobile will gain share of media budgets.
Stop asking advertisers, “Why doesn’t radio get more of your money?” Start asking the radio industry, ”How can radio be more effective for advertisers?”
Brian, you make a good point – at the end of the day, it IS about effectiveness. And how can anyone in advertsing justify the inordinate share of revenue that newspapers still own? Are agencies as up to date with consumer behavior as you suggest? I appreciate you making the comment and keeping the dialogue going. I would like to hear from others, inside and outside of ad agencies.
Hey Fred,
WIth media buyers it often comes down to what’s easiest to buy.
It’s the only explanation for the fact that TV audiences keep falling and TV rates go up (at least in the upfront). It also explains newspapers.
The internet is expensive and time consuming to buy. Mobile is very complicated. Radio is iffy, partially because it has become disconnected from ‘fitting’ advertising to formats.
Media buying is a ‘for profit’ business. The easier anyone makes it for them, the more they will pay attention.
And, ‘effectiveness’ is one of those slippery metrics. TV can be very ineffective (Superbowl ads come to mind) and radio can be very effective (but very expensive and tricky to measure), and targeted email can be the most effective of all but it’s not sexy and media buyers usually aren’t involved in it.
Looks like you’ve started a lively debate.
And I appreciate you adding to the discussion, John. You are right that the path of least resistance is often the one taken. Radio has always been complicated and overly competitive, and I cannot help but feel that there’s a “hipness bias” at the agency level that works against the medium. And regarding mobile, it may be too new to be viable. But the newspaper portion of ad revenue is the Rubik’s Cube of the argument because everything about print is out of fashion, the arrows are pointing down, the content has clearly slipped – and yet, they walk away with a share that is more than envious. Thanks for your always sharp POV.
If “easy to buy” were the issue, then radio would be winning by a mile. Digital is more labor intensive, fragmented, and complex than radio. TV is more complex than radio with multiple measurement methodologies, time shifting, digital nets, and multiple delivery methods/populations (wired, satellite, antenna, online). Even print is more complex than radio with multiple printing specs requiring multiple creative versions and circulation numbers that now factor-in digital subscribers.
Radio can be as easy as one phone call to a rep firm, if we need it to be really simple.
Media planners are accountable for hitting client metrics in a media environment that is growing more complex every day. If we just made decisions based on what was easy or hip, we wouldn’t be in business.
Brian, I love posts that elicit comments where I find myself responding at 8:30 on a Friday night. I don’t mean to simplify radio’s problems as being a complicated buy – although the number of local stations, the predatory nature of local stations and clusters oftne seem to wear buyers down. I think you nail it when you mention the complexity of the overall environment, and I agree with you that radio often comes up short. We have a new head of the Radio Advertising Bureau, and hopefully some solutions on the way to help address radio’s revenue-generating dilemma. I truly appreciate you taking the time to respond, and hope that our blog will become a regular stop for you.
“You either innovate or you’re in commodity hell. If you do what everybody else does, you have a low margin business”. ..Sam Palmisano, CEO IBM.
This is why “the path of least resistance” comes into play as was mentioned. When there is a lack of innovation and everyone has access to the same resources and talent or the lack of both, then ad agencies and the web are the great equalizers. When there is little perceived difference in the quality of the product…then they grind you on price and buy what’s cheapest.
Gordon Burrell at Convergence told radio they need more “verticals”…real estate, help wanted, cars, classified, directories, coupons, deals, loyalty programs etc. Sounds like reasons people are still buying space in newspapers even though it’s not the news source it once was. All this is happening while radio plays more music and “shares” less than ever as not to make the PPM meter stop.
Bottom line…It’s never about what you want…it’s about what you deserve.
Radio has become an acceptable expense, a commodity rather than a valuable investment.
Mike, more imagination, more integration, and more compelling content are all qualities that are lacking industry-wide. We can all think of stations doing it right, but they are too few and far between. Radio was getting a small piece of the pie before there was Facebook and the iPhone. As the world has become more complex and what defines “results” has been redefined, radio continues to struggle. Thanks for your thoughtful comments as always.