With Labor Day heralding the end of summer, I’d like to observe one of my favorite annual traditions that you may also remember from your elementary school days: the teacher’s request for students to write an essay recapping the most recent summer.
For radio, and in fact for media overall, it was an eventful season as consolidation continues in the face of economic headwinds.
Bankruptcy, staff reductions, rule changes, the integration of artificial intelligence, and retirements; those things made headlines over the last few months, in a continuation of what’s been going on in recent years. There’s now a greater focus on podcasting and digital. Sellers are adding more arrows to their quiver of what they can sell.
We saw Audacy enter a streaming deal with iHeart. Connoisseur acquired Alpha. Saga replaced its imaging voices with AI. Beasley Media redefined itself as a digital-first company. Satellite format offerings were reduced while more stations shared content across multiple stations in many markets. Delivering audio on more platforms is becoming a standard to compete. Nielsen lauded the success of the recalibration to a 3-minute AQH requirement in PPM markets.
The audience is there. The way they use radio is what’s changed.
The challenges we face have certainly caused sleepless nights for many of us, but it’s not all bad news. There are opportunities that surfaced this summer that should be cause for a business reset. Whether you call it a “Correction” or a “Reboot,” this business is setting itself up to rebound, rebuild, or remodel. The question is, will radio do what it needs to do?
What we cannot do is stay the course and hope that the advertising recession we’re experiencing will end on its own. We have to be in control and focus on advertisers and the audience. If you can take care of those two things, maximizing your assets in those areas, you can be successful.
Someone is getting the advertising dollars available in your market. There’s at least one radio station or cluster in almost every market that dominates in building and maintaining an audience, and in generating real revenue. What’s their approach versus yours? What are the most successful stations doing? What can be learned from those stations? What’s their advantage, and is it tangible or is it more about legacy and history?
I have to wonder when the last time a management group analyzed what’s working versus what’s not? What’s working for them and working for their competitors? That would have been a good way to spend one’s summer. That’s exactly what I did. I focused on my clients as well as their competitors. I also looked at those stations that fall into the category of being successful and admired that were neither a client nor a competitor.
It should be obvious that seldom does the “one-size-fits-all” approach work when it’s not customized for local markets, adjusted to compete against your rating challengers, or a “plug-and-play.” There are those things that work well, though, and uniformity allows for scale. The question becomes one of audience attraction and revenue growth. The general thinking for decades has been that great content attracts an audience and that leads to big ratings. Big ratings help to generate revenue. They don’t do the selling for you, but they help to get you into the “discussion phase” for potential advertisers, and audience size helps with increasing rates.
The commonalities of the most successful radio stations are that they have great talent, (which may be a mix of Local and National personalities), a direct high profile connection to the community, are marketed in a way that enables them to be everywhere and be seen everywhere, have active local sellers, and are focused on moving their advertisers products, services, and goods. They invest wisely in growing their audience, with the intention of recouping the expense as they grow revenue.
They’re marketing machines for their advertisers. Over the air, digital, podcasting, on-demand, social media, appearances, newsletters & websites, and selling promotions, experiences, deals of the day, along with packages that benefit retailers. One example is a Grand Opening Package that entices an advertiser to turn over the event to the station to plan and execute for them. There are those who fall back on the tried and true practice of including sponsors and advertisers on promotion packages. It works.
A recent visit to a major market emphasized to me that doing radio the way it should be done works. That “way” includes all of the aforementioned practices that build an audience, which leads to taking more of the available ad dollars off the table. The anonymous client had 8 cubicles occupied by sales reps.
The promotion department has a veteran leader with team members who execute weekly onsite events. There’s a digital director. Programming and Operations leadership. The production and copy writers, administration, and traffic that one would expect to see inside a station. I think that I mentioned that this station is profitable.
So that’s how I spent my summer. I searched out radio stations that are doing well. Successful stations. In a multiple-station cluster, some stations generate a greater return on investment, and they deserve attention and resources. The formula for success in radio, and frankly, all media, isn’t as complicated as it sometimes appears to be.
The challenge is apparently the funneling of resources. That and the belief that radio done right still works.
Mike,
First of all, thank you for taking the time to express some of your incredible insights on the radio industry, the importance of strategy and finding the path to success.
Everything that I’ve ever read that you have written is worth its weight in gold—and I should point out that I’ve never met or spoken to you. In spite of that, it’s hard to misunderstand the level of competence you possess.
I often ponder why radio is in such a state of disarray today and I think it’s because during the first 80 years of its existence, it was not in a “war” for ad budgets. The money showed up anyway. The people in radio are not trained, not disciplined, not strategic, not persuasive and largely unprepared to talk about radio’s insanely powerful qualities in a compelling way to the people who control the most money. They never had to, so they’re just bad at it. Have you ever played a violin? I haven’t. I bet I’d be pretty bad at it if I tried. That’s the point. The radio industry is full of people who never had to speak to someone with real juice who controlled a few hundred million in ad budgets…so they’re just bad at it. Most aren’t even trying. Most don’t even know who those people are. I talked to people like that regularly, by the way, which is why I never had a down quarter in 76 quarters in a row—and I’m a moron.
For the first 80 years, the money showed up anyway and because of that, the industry filled up with uninspiring leadership with minimal skill and lots of folks with all of the characteristics that you’d expect in a used car dealer.
There is an ever growing gap of understanding between CEO’s and front line workers that leads to unnecessary audience erosion, unnecessary revenue misses and all of the unnecessary turmoil that follows: Management reshuffles, firings, ruthless costs cutting and a common theme of treating the symptom, not the root cause of the problem, which is: A lack of intelligent planning, a lack of training, a lack of competence among middle managers and constant bumbled execution in every phase of the business.
Today, you need a expert to grow your audience and maintain it. Today, you need an expert to grow your revenue and keep growing it.
Do you think the largest radio groups are hemorrhaging money each quarter today because they’re getting this right, or do you think there’s a fundamental misunderstanding about the business itself and the astonishing value that radio delivers and always has?
When the suits at the top spend more time talking to bankers and investors than clients, that’s a problem. I think radio has lost its way and the current CEO’s and their management teams don’t even have a compass. They’ve lost touch with what clients and listeners want today and don’t seem that interested in correcting that. That’s a problem that only wholesale leadership changes can fix.
Or, they can listen to you, Mike. That would be an intelligent place to start.
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