(By Wayne Ens) Before we address the question of whether we’re killing the golden goose, let’s verify that broadcasting is still very much a “golden goose” compared to most other industries.
According to the NYU Stern School of Business, we enjoy a 17.64 percent after-tax operating margin, well above the all-industry average of 9.51 percent. Our furniture and home furnishings advertisers struggle to surpass a 6.72 percent margin, automotive sales margins hover around 4.87 percent, and grocery and food industries eke out 2.78 percent margins. Even the lucrative aerospace/ defense industries only turn 10.57 percent margins. Our newspaper competitors struggle to reach 7.07 percent operating margins.
So let’s agree: Our industry is still in its golden goose cycle. But we’re killing that goose by incurring debt to buy more geese than we can afford — and by demanding our geese lay too many golden eggs.
I’m not the first person to jump on the “fewer commercials” bandwagon, but I fear if we don’t all jump on soon, it will be too late to save the goose. Once when I spoke about the advantages of creating more revenue with fewer commercials, I had a sarcastic salesperson say, “Only radio would employ a sales consultant who advocates having fewer of the only thing we have to sell, spots on the air.”
With those who think they’re selling “spots,” you can’t win the “less is more” argument. But we’re not selling spots, any more than we’re selling ratings points or station formats. We’re selling results.
Your advertisers invest with you for one reason: to reach and influence more people to buy their products and services. You would have to be blind and deaf not to see and hear the evidence that too many commercials, and, worse yet, bad commercials, will destroy the very audience your advertisers are trying to reach.
There are basically two types of media: intrusive or proactive, and passive or reactive. Radio falls into the intrusive/proactive category. Intrusive media reach and influence audiences as they go about their daily activities. Only intrusive media can reach and influence audiences to establish a brand and preference for a business before customers have identified a need for that business.
Passive or reactive media, primarily online and print, are those audiences must actively seek out to view in reaction to a need they’ve identified. Strategically, the best advertisers use intrusive media to inspire, and passive media to validate, the pre-need perceptions audiences have about their brands.
Radio’s intrusive nature is its biggest strength. We can reach and influence people and establish hard-to-change preferences long before they are in the market or begin their online search for a product or service. But that intrusive nature is also our biggest weakness. Nielsen and other research organizations have reams of evidence about the tolerance levels of audiences exposed to numerous ads that interrupt or intrude upon the reason they tuned to radio: information and entertainment.
The weakness of passive media is that audiences must have an interest in the message to click on or purposely read the ad. Conversely, that weakness is their biggest strength. Those who take the time to view or read an ad have identified a need for the advertised product and don’t consider the ad to be intrusive or clutter.
But if you run too many ads, or annoying ads, on your station, the audience can’t avoid them. They won’t sit through too many ads waiting for what they tuned in for. They’ll simply jump to another media that gives them what they want, and your advertisers will go with them.
Our listeners will accept a certain amount of commercial content, particularly if it’s entertaining or informative, in exchange for the content they want for free. But new audio platforms, apps, or technologies won’t save our industry if the heavy or bad commercial content is intolerable. I’ve heard radio presentations that extolled the virtues of audiences who consider radio to be “like a friend.” How many times can your “friend” try to sell you something before they cease being your friend?
There is a reason diamonds command higher prices than rocks. There is an abundance of rocks, but diamonds are scarce. The salesperson who’s selling rocks is relegated to trying to prove she has the lowest cost-per-ton. The salesperson selling diamonds is selling on an entirely different level. The salesperson selling radio “diamonds” isn’t selling tonnage, but value. These sales professionals have been trained to discover what each advertiser values, and appeal to that motivation.
They might be selling results in the form of consulting, creative, ideas, promotions, branding, or Web or foot traffic, but they almost certainly won’t be selling “spots.” Those sellers selling “cost-per-ton” will ultimately fail under the weight of that tonnage as it drives audiences away. Are you up to the challenge of selling fewer commercials for more, rather than driving our audiences and revenues to other media with too much commercial clutter?
Wayne Ens is the producer of the SoundADvice radio e-marketing system and TOMA research that proves radio’s intrusive role in creating top-of-mind awareness for local advertisers. He can be reached at [email protected]