(By Radio Ink Chairman Eric Rhoads) I’m afraid I have to be critical of the NAB. Facebook and Google are the competition to radio, according to the National Association of Broadcasters, and that is why the NAB is pushing for further deregulation at the FCC.
The NAB wants to push ownership limits to eight FM stations and unlimited AM station ownership in the top 75 Nielsen Audio markets, and they want to reward participation in an FCC incubator program with an additional two FM stations, for a total of 10 FMs under one owner in those markets. According to the NAB, this program will help radio compete with the two Internet giants, Facebook and Google.
That argument is as silly as saying that more TV stations would overcome YouTube’s power. It’s like saying that adding more inventory will sell more product, even though there are no additional buyers. It’s like saying hiring more salespeople at a station will result in more ad sales. (The last might be true, briefly, but you’ll soon reach the point of diminishing returns.)
Though I hold the NAB and its board in high regard, I feel the need to call them out on this argument.
Well over 10 years ago, in these very pages, I warned radio that we would be in exactly this position and having exactly these arguments. I outlined how and why Google and Facebook were in a position to take local ad dollars and said it was already happening before our eyes, though others didn’t see it. I outlined what radio needed to do then, early in the game and before these giants got bigger, so we could survive. I recommended collaboration.
Over the years these and other strategic ideas fell on deaf ears, and most of the e-mails I received scolded me for being so negative: “Eric, we’re in the radio business. We are bigger and better and have loyal audiences. We won’t ever have to worry about the Internet. Stop talking about the threats of the Internet to radio, it will never happen. Show that you believe in radio.” Frankly, I still get those e-mails, which means some still have their heads in the sand. I write these things because I have radio’s best interest at heart.
The FCC is made up of very smart people who, hopefully, understand that giving radio more stations is not going to solve the Google, Facebook, Instagram, Snapchat problem. I dare say that ship has sailed and that radio’s ability to compete with the Internet isn’t going to be impacted one ounce by having more stations per owner.
The only similarity between Google/Facebook and radio is that we’re all in the advertising business. That’s where it stops. Their approach to advertising is so utterly different that no one is going to spend more in radio because Company A or Company B has more stations. Putting more stations in the hands of someone who is not capable of competing with the stations they have already isn’t going to make a difference.
I spend buckets of money marketing my other businesses on Facebook and Google (I also buy radio), and I can tell you that this is not an either-or advertising scenario. Facebook and Google have become essential marketing tools. I use Google so my products show up when people search terms related to my businesses, and so that if they visit my page, I have the ability to keep putting ads in front of people until they buy. This remarketing/retargeting is also essential on Facebook, and it allows me to use hypertargeting I cannot get elsewhere. No, not even on radio.
Each of these media has strengths and specific purposes, as does radio. If radio is losing business to the Internet, it’s because we’re not telling the right story and helping advertisers understand the benefits of using radio to enhance these online campaigns.
There is evidence that the cost per lead goes down in search when radio is added.
There is evidence that radio is the best tool for driving preferences in search.
Radio can, in fact, get consumers to choose a particular business when searching a category, even if it is not in the top 10 search results. With radio, you can tell your audience, “When you’re searching restaurants here in Cincinnati, we may not show up number one in search, but scroll till you find Eric’s Restaurant, where you’ll get amazing food.” Implanting that kind of pre-search message works every time — I know that because it’s the secret weapon of a major ad agency that doesn’t want anyone else to figure it out.
Smart advertisers have realized that supplementing search is one area where radio shines, and it makes radio more relevant and taps different advertising budgets than those allocated to search. You can overcome the hierarchy of search results to drive people to your business. In fact, the cost of doing search in conjunction with radio as an add-on is often lower than spending on Google’s increasing ad rates to get in the top 10 in search results, especially in a popular, high-cost-per-click category.
Those same advertisers will also tell you that their search results increase organically, without spending more, as people put the advertiser’s name in to search it directly, or scroll down to click on it. In fact, it’s been found that radio can totally manipulate search results and be used to drive organic search higher. (Not to mention all the other benefits of the exposure.)
To think radio will take dollars out of the pockets of Google or Facebook is folly. The mere assertion shows that the NAB is either trying a tactic because they need a “good argument,” or they simply don’t understand the online world.
Sadly, my interaction with most of my radio sisters and brothers has indicated that most don’t have much, if any, understanding of the depth of offerings available from Google and Facebook, how effective they are, and how trackable their results are.
For instance, in my company we receive a minimum of $4 in sales for every dollar spent, and in some campaigns as much as $16 for every dollar spent. I can look at a dashboard and see results by the hour, and make adjustments and test new concepts instantly. If something newsworthy happens in the world, I can go to my dashboard and change a campaign headline instantly to reflect that event, and that drives clickthrough rates through the roof. And I can track who is buying, then click a button and model an audience with the exact same metrics as those who bought, and those people end up buying too.
To go to an advertiser without knowledge of this depth simply makes radio people look uninformed. Yet if we understood our strengths in conjunction with these tools, we would sell more Google and Facebook advertisers on using radio to enhance their campaigns. Radio isn’t going to take money away from Google and Facebook, but it can convince people to add budget to make Google and Facebook more effective.
The reality is that Google and Facebook’s advertising income would not be dented if radio had 10,000 more major-market FM stations (though radio’s would, because it would cannibalize itself even more).
Further deregulation may or may not benefit radio. That’s for the FCC to decide. My take is that it deepens the problems we already have and will only cause more pain down the road. There are, however, things the FCC could be doing to actually help radio. I’ll save that for a future editorial.
There is no doubt that budgets have shifted to digital. Two years ago, at our Radio Ink Forecast Conference, a major ad agency executive told us that all of his clients were shifting 80 percent of their budgets to Google and Facebook. He also told us that radio would never see any of that money with its traditional approach and that radio needed not to resist, but to join the party by offering truly valuable benefits to these advertisers that enhanced their spend. That same day, a panel of group heads, none of whom were in the room for this advertiser’s speech, said Google and Facebook were not a problem. Who turned out to be right?
If radio now truly does believe its problem is Google and Facebook, the solution isn’t more stations in the hands of fewer people, but extensive research, strategy, and training to get advertisers to understand how radio can enhance their campaigns and make them significantly more effective.
Out of one side of our mouth we’re telling people that radio has more reach than Google, while the other side is saying we can’t survive against the Internet without more deregulation.
If the FCC decides to deregulate further, it should be for a valid reason, not to continue this fool’s game that says it can help radio better compete with Google and Facebook.
Eric Rhoads is Chairman of Radio Ink Magazine and can be reached at [email protected]