(By Mike McVay) Last week news broke that, according to a study by the research firm MoffetNathanson, radio revenues will rebound in 2021 by 12%. That is truly a positive sign, and significantly better than seeing the 25% loss in radio revenues from 2019-2020, driven by the pandemic. It isn’t the significant rebound that many of us expected or hoped to see. Up is up and down is down, and given the devastation to the global economy because of the pandemic, anything that stops the bleeding is a positive.
Overall ad revenue, for media, will be up 24.7%, 2021 vs 2019. That number is buoyed by a huge 59.6% increase for Digital advertising. Radio will be down 16%, 2021 vs 2019. We’re in the same space as outdoor, magazines and newspapers. What should concern us even more is that the study shows radio on a continual revenue slide in 2022, 2023, 2024 and 2025; which is as far forward as they projected. Losing 5% in 2022, 3% in 2023, 3% in 2024 and 3% in 2025. The losses are estimated. Meaning they could be greater or lesser.
These numbers should serve as a wake-up call. The revenue erosion that’s predicted for radio doesn’t have to be ‘fait accompli’. We can stop the erosion of revenue, but we have to do this soon, and we have to realize that a turnaround won’t happen quickly. Changing habits is hard enough. Failing someone’s expectations and bringing them back as regular consumers is even harder.
My advocacy is multifold. Our focus should be to run several streams at once.
- Improve the listening experience; Content, Commercial load, Production and Technical.
- Deliver content on every platform that is used for entertainment by your target audience.
- Connect to the community that you serve and be visible in the community that you serve.
- Sell your advertisers product/service/experience and stop selling “spots.” When you get results for your advertisers, you’ll get results for yourself.
- One of the most important steps is to do research with your current and potential audience base and research with your current and potential advertiser base.
- Entertain the audience at a higher level.
- Inform the audience credibly and at a higher level.
- Market and promote the product; once the product is ready to be promoted.
- Have patience.
Radio, that word that describes audio no matter where you hear an over-the-air station, has amazingly large distribution. We’ve spent slightly more than 100 years making radio a part of everyday life, only to allow it to begin a slow audience decline and a rapid revenue decline. We need to improve the content that we deliver.
We need to do a better job of satisfying advertisers. We need to promote the benefits of radio to the advertiser and the audience. Radio still moves product, makes music a hit, is the “turn-to” that you can depend on in a crisis … for now. It isn’t our birthright to have an audience or advertisers. It’s hard work to attract them. Apparently, it’s even harder to keep them.
This is still a good business. I believe in the power of radio and the audio we deliver to multiple platforms. We don’t have to accept that radio is an eroding business, but we have to take action, before we can stem the erosion that we’re seeing. How far do we have to fall before we make the painful decisions necessary to stop our audience and revenue losses? We can stop this … but it means change.
Mike McVay is President of McVay Media and can be reached at [email protected]
As always, McVay is focused. Without that focus the declines in audience and revenue dollars will not abate. If I were in your shoes i would heed his words. The digital world has a continuous built in feedback loop imbedded in their delivery system. I’m using it right now to reply to Mike’s brilliant content. Have I completely missed it, or is conventional radio fighting with one hand tied behind its back? When (or who) will radio capitalize on its digital HD signal and manufacture and market a delivery system (radio/audio device) and give the audience a way to communicate back to us, directly through that delivery device? Ever hear of two way radio? I think that technology actually fostered mobile phones, right? Dick Tracy watch? Own the device, own delivery to the audience, provide real value to the advertisers who spend $$. Or just simply cut out the advertiser life blood, charge the consumer for the device and give the content at no extra charge. $100 billion replacement revenue for ad dollars / 125 million consumers = $800 per unit . Double the consumers and halve the unit cost. Price tag sound familiar? Just a thought.
Everything Mike said ****including our built in appeal**** is squandered by a lack of creativity. Boring the audience is the ultimate insult. We have advertising clients that stay with us year in and year out because we believe in advertising ourselves. You’ve got to make your messages stimulative to the listener. That’s what we do starting with the mandatory shoutable first line. If you want to know what that means email me.
Mr. McVay has accurately summed up the state of today‘s radio. Most importantly, he draws attention to the continuing decline of pure radio revenues while at the same time, offering solid solutions to reversing the erosion. Another observation about revenues in general.
While digital may be the latest growth sector in radio, stations are for the most part splitting the dollars 50/50 with third party digital providers. Add on the commissions, and each digital sale nets 30-35% to the station while radio yields a 80-85% return. I’m not a financial whiz but I never could understand why broadcasters place such an emphasis on digital for so small a profit, while radio sales (which is more lucrative) slowly becomes the figurative red-headed stepchild.