Radio’s Forecast Revenue Decline

I’m angry at radio’s resolve to take a back seat to digital. While I don’t deny the powerful role of digital in marketing, digital budgets should be coming from print, direct mail, and yellow pages, not from radio.

In fact, radio should be perfectly positioned for revenue increases.

A recent Radio Ink article reported, “According to Borrell the online share of local advertising revenue will increase from $48.3 Billion to $65.8 Billion, that’s nearly 50% of all local ad revenue. Radio, according to this report, will decline from $10.2 Billion (8.9%) to just over $10 Billion (7.6%). Borrell claims that despite the fact that 90% of adults listen to radio every week, radio’s problems include the loss of advertisers like auto dealers and the heavy competition from print, digital, and other radio stations.”

Here is why these three “problems” make me angry:

1. The loss of advertisers like auto dealers. Get over it! Why do we keep going back to the same old familiar wells or lamenting their quest to try something new? Our research conducted in 126 markets over the past five years indicates there are 37.5 businesses per thousand population in your market who cannot recall having seen a radio salesperson. In a market of 100,000 people, that’s 3,750 prospects who can be sold radio as something “new.” Imagine closing 5% of those and capturing 187 new 52-week advertisers.

Our research also reveals that share-of-voice does transfer to share-of-mind and share- of-market. Twenty car dealers all vying for attention on your station will each capture a 5% share of voice. The only seamless eaves trough installer on your station will capture 100% share of mind with your audience and realize dramatic sales increases.

2. Competition from print and digital. I’m losing patience for broadcast companies that have not trained and equipped their account executives to sell radio’s role in this competitive environment. Your salespeople should not be allowed on the street if they don’t know how to respond when an advertiser says they’re going to cut their radio in favor of digital.
3. Competition from other radio stations? My biggest pet peeve of all! We think other radio stations are our biggest competitor. So we cut them up, and reduce our rates to “compete.” Let’s look at part of what Radio Ink’s CEO and radio advocate, Eric Rhoads, wrote at the beginning of the 08/09 recession…

I’m going to ask you to do something that may make you uncomfortable.

Is there a way to get advertisers to spend money in radio during these lean times? Maybe. The indirect nature of this strategy may make you uncomfortable, but I ask you to keep an open mind, because it is a huge opportunity for radio.

My fear is that your natural competitive instincts will kick in, like a tiger being asked not to bite.

THE PLAN:

1. Phone the market manager of every radio station in your town and invite them to a meeting ASAP.
2. All radio stations in town will be given an opportunity to participate in a local advertiser event, which you will create together. All stations must agree to participate equally, even though some may have more stations and some will want more credit.
3. Stations must put aside all competition and not try to gain special advantage in this event.
4. Invite every retailer in town to a four-hour conference packed with sessions, experts, and advice on boosting business in lean times. Advertise it on the air. Mail out invitations. Hold the event at a local hotel ballroom with an impressive array of food and drink following the sessions.
5. Develop an agenda of experts: The sessions should be a combination of recession strategies, business-cutting strategies, and marketing strategies.
6. Do not allow your salespeople to pitch radio, or to even push for appointments. The ONLY exposure should be brief introductions to the local managers and a pamphlet that you will create called Strategies for Small Business. Highlighting radio’s strengths, it can have ads for stations and listings for all participating stations in the back.
7. Give away some impressive door prizes just to keep things exciting. You want about 10 percent of the attendees to win something nice — thanks to radio.

Why You Should Do This: It’s the right thing to do.

People who attend will expect to be pitched and will be amazed that you actually hold to your word. With no obligation and no pitch, radio will be elevated in the eyes of all in attendance. If they follow the advice and it works, radio will be the benefactor.

Why You Should Not Do This Alone: Lift the tide for all of radio. Every station will benefit, and you’ll have 10 times more retailers present than if you held a single-station event. This is about growing radio. If radio gets credit for helping local retailers, the laws of reciprocity will kick in and they will help radio.

One Thing I Learned at the Google Conference: When I attended Google’s recent invitation-only conference, I listened to people who had changed the world. These were regular people who saw a problem and wondered, “What can I do to address this problem?” Please do something.

Thanks for listening, Eric Rhoads

Sadly, little if anything has been done to educate local advertisers, or for that matter, radio salespeople, on radio’s strategic fit in the new media environment. Instead, we try to ride on the coat tails of digital’s popularity to capture a few digital crumbs ourselves, and downplay radio’s role.

I know that radio still works, but I think we have to admit that radio gets the revenues we deserve.