Radio pros look to the near future

Yesterday we heard from a cross-section of radio pros about how business is going. Today, we seek their thoughts on where the industry needs to go.

Second question: What are the issues you believe are most important for the radio industry to address in the next year?

Rolland Johnson, Chairman and CEO, Three Eagles Companies:
Critical thing, I think, for radio’s future is to stay with, or return to, its roots. Be local, local, local. Be live. Be relevant. Put more information and promotion and uniqueness into your radio station.  Have local personalities. Cover events important to the local audience. Serve the public interest, convenience and necessity. We need to be there for the convenience of the audience not our convenience. It is traditional radio. Hire more people; more feet on the street produce more dollars. Train them. Great radio well done continues to be important to listeners and works for the advertisers. Get rid of the green eyeshades running the companies and concentrate on making radio entertaining, informational and personable. It doesn’t cost that much more and the returns are phenomenal.

John B. Tupper, Kepper, Tupper and Company:
They need to make Pandora irrelevant.

Mary Quass, President & CEO, NRG Media LLC:
We MUST remain relevant and stay in the lexicon and be a part of the discussion of media going forward.  I am very concerned that radio is being labeled as an old outmoded and dead medium.  We need to be at the table, we need to start paying attention to what our listeners do and how they use media and what they want, and for Pete’s sake…sell RADIO!!  We still reach the largest audience in a week….we are not dead, we are just having trouble getting our head out of the sand.  Here’s what keeps me awake at night….in the past radio was one of the first to feel the effects of a recession….and the first to recover….will that be the pattern this time???? Radio was the FIRST social media site….and can be again…what are you doing today to be relevant tomorrow?!?!?

Natalie Swed Stone, US Director, National Radio Investment, OMD:
They must continue to find ways to cut product costs (programming/business costs) in every possible way so they can provide better efficiencies for advertisers and stay in business thru profitability—because much of the old way of doing business (programming/systems/towers) is wasteful and inefficient and will not hold up in today’s digital marketplace where production and distribution is inexpensive.

And—speaking of distribution they must continue to be everywhere the consumer wants them to be—on every device and platform (online/mobile/wireless/iPods, etc.) I know there is significant progress in this direction.

And—they must continue to push for and develop research which combines all of the distribution, bundles it and can sell it and package it uniformly so that it tracks the consumer and doesn’t confuse the marketplace with additional and unnecessary fragmentation and then work on ROI advantages via the new platforms—also proving for ROI for additional ad types vs. audio available on station sites/mobile devices such as video, rich media, texts, etc.

In other words not just show us what you have—and what is available but help to shape the advertiser usage and adoption. Provide much better presentations than are currently provided so that agencies can facilitate the sell-thru.

Daniel Graves, Managing Director, CobbCorp LLC:
To us, the issues go beyond just better blocking and tackling.  To be sure, costs have been rung out and sales just aren’t there.  They will return for those that can refocus and rehire to get hyper local in their sales.

We think large clusters where operators own the maximum number of stations in a market is a failed strategy.  To the extent possible in all the restructuring yet to be done in radio, owners should be focused on owning the right number and mix of properties in a market and not the maximum number of properties.

This dovetails with our overall view that radio management took on a way too large, national, Wall Street, approach to managing their businesses and need to get back to managing their business hyper-locally in the manner that once made it a great business.

We also believe that local partnerships against cable need to be forged.  In this, we think combining TV and radio interests is the way to go.  We realize that the operating synergies between the two businesses have never really been proven but this misses the point in our view. TV and radio share a need for better community service and local focus on the people, politicians, issues and advertising of their local markets. Spreading this desire to return to their roots over a larger local platform of TV and radio stations (either through combination or JV), to better compete against national cable interests, is the “synergy” that both need in this time of eroding audience and advertising shares.

Mark Heller, President and General Manager, WGBW Radio, Two Rivers, WI:
The era of the “out-of-town” or “out-of-state” radio station owner in small and medium markets is thankfully coming to an end. Localism isn’t just in your PSAs and cookie-cutter newscasts, but you had better have a cluster manager that actually lives in the area, not an hour or more away. If you won’t live in your coverage area, you shouldn’t be running the station, sorry. Your EAS equipment should be working perfectly…and finally, you’d better have an engineer available on call when things don’t work properly. The destruction of large market broadcasters has a minimal effect on our market, but I expect that to happen no later than late 2010. It’s going to be like a “mass suicide,” but from a distance. We’ll mourn for a few days, then get on with our lives.

I unfortunately think 2010 will be worse than 2009, but we won’t know it until 2011.

Robert Conrad, President, WCLV, Cleveland Orchestra Broadcast Service, and Host, Weekend Radio:
The Performance Tax issue before Congress is a primary concern.  As a local stand-alone independent classical station, our budget is modest, and the amounts they are talking about would put a big hole in our available cash for operations. We’ll survive, but the amount of special live programming and promotions will diminish. Of course, the Tax would be on top of what we pay RIAA for the right to play recordings on the Internet and what we pay to ASCAP, BMI and SEASAC.  We have been running announcements on the air asking listeners to write to their Representatives and Senators about the Performance Tax issue. A goodly number have done so, but the responses from Washington, if any,  have not been enthusiastic…usually a staff written form letter rehashing both sides of the question..
 
The amount of money that is flowing from radio to the Internet is a concern. Most of this, I suspect, is going to companies’ own web pages, not to banners on stations’ sites.  Most of our business is local. We don’t see much web advertising on our site, even though we try hard. 

I’m concerned about the removal of the 3rd adjacent channel protection from LPFM stations.  We’re an upgraded Class A, and we need all the coverage we can get.  We don’t need little mice eating away at the fringes of our coverage.

Robert L. Heymann Jr., Director, Media Services Group — Chicago:
The biggest issue facing the radio industry today is to find a way to effectively compete against the almost infinite choices of audio services available to listeners.

Bob Neil, President & CEO, Cox Radio:
We’re going to continue to face pressure on the Performance Tax. We have to keep talking to our representatives and educating them. We need to be vigilant against attempts to reinstate the ‘Fairness Doctrine’ whether it’s called that or not. The industry needs to think about whether the millions we are paying to Arbitron would be better spent with a consortium of broadcasters who own our rating system. The money saved could be used to rebuild our marketing and programming efforts that have suffered in the past few years.

Frank Kalil, President, Kalil & Co.:
The biggest issue is how to get compelling local content in radio.

Operators have to do what they tell their advertisers to do. That is, they have to spend money to make money. They have to beef-up the sales force. The stimulus package, which would be better, in my mind, then anything proposed out of Washington, would be to underwrite a draw for three sales people for every radio station, television station, newspaper, and outdoor company in the United States. This would generate huge amounts of increased advertising, which would generate sales, which would generate taxes, etc., etc.

Forget market revenues.  Instead of cutting up the same old pie, figure out new ways to get new advertisers.

The issue of having quality radio commercials is critical.  Very few are compelling.

Eileen Decker, President Sales, Dial Global:
Triple M – Media Mix Modeling – is the most important issues to be addressed.  The days of anecdotal sales results are over, Digital and TV provide timely research on ROI, David Landau, Charles Steinhauer, Arbitron, PRN and WWO are leading the effort to get radio – all radio, not specifically Network Radio – integrated into the mix.

Larry Patrick, President, Patrick Communications:
The most critical issues continue to be performance royalties pushed by the record labels and the general economic issues facing the nation.  The record companies will continue this royalty tax fight for many years.  The radio industry must realize that this is a war and not just a one-time battle.  They will continue to attack us and try to chip away at our support.  We must also become far more serious of supporting members of Congress through direct contributions via NABPAC, the political action committee of the industry.  We have grassroots support which is critical.  In Washington, however, cash is king and we need to step up our level of giving from every owner, manager and department head.  We need to thank and support those members who are with us with campaign contributions.

As for the economy, I unfortunately believe that we may bump along in the doldrums for another year or so and see more stations face restructurings and workouts.  The lenders do not enjoy this process any more than the owners.  We all would hope that the economy shows even modest recovery in 2010 so that we can regain some valuable lost ground.  I think that if we could see a 3-4 percent improvement in revenues in 2010 over this year, it would be a good sign.

Kay Olin, Local Focus Radio:
Recovering from the 2008 budget cuts and deeply discounted CPP's will be key to all in 2010! 

Building out our digital platforms and partnerships must continue to move with haste.  Rather than compete with digital, radio has to position and partner itself as the credible, ultimate social media catalyst that we are to the local community.  Radio enjoys a loyal and engaged listening base.  Marketers are expecting us to quantify our results as other mediums do.  Strong digital platforms/partnerships will enable radio to quantify its value as the requirement for posting becomes the norm.  As an industry we failed to monetize promotions initially, we cannot make the mistake of "giving it away" again.  We have to be in front of advertisers and agencies educating and earning the respect of larger budgets for radio and the local marketing access we bring to advertisers. 
 
By building out digital assets and monetizing them,  radio can build back our rightful share of ad budgets and build back the CPP's that have been beaten down to the lowest level in years. We need too move away from negotiating and selling as a commodity and move towards selling the value of our local marketing access. 

John Pierce, President, John Pierce & Co.:
The radio industry should not be in the defensive but the offense with more and more local emphasis on people in their immediate coverage area whether that be looking back at some of the old days of radio as far back as the 60’s.  That was when radio stations were almost a daily part of peoples lives……The reason for trouble is in 06, 07 and 08 radio or real estate over paid terribly…

Bob Struble, President & CEO, iBiquity:
Taking actions to drive a revenue recovery is clearly number 1, probably number 1-10. I am biased obviously, but we believe the push for mass market HD Radio consumer adoption has to remain a high priority. With consumer sales increasing (there are more than 1 million receivers out there) and all these cars with HD Radio receivers rolling off the line, people are listening. Radio stations are in a cash crunch, so they should focus on the ‘soft cost’ options for making sure consumers have a good HD Radio experience. Make sure the engineers keep the digital signal on air, with the right level and time alignments. Do a great job programming the HD2s and HD3s, consumers are developing their perception of radio’s new channels right now. And promote the digital offerings to listeners: run the HD Radio Alliance spots, create some of your own highlighting the unique content of your HD2s and HD3s, promote and stream the new channels online. These actions don’t cost much if any incremental dollars, but can make all the difference in the world.

Dick Kozacko, Kozacko Media Services:
I still think that radio stations have to be creative and local in their service to their community.  It's disturbing how many stations, and this is probably most evident among major broadcast groups, seem to feel that programming done by a service located thousands of miles away will still meet the needs of a local community.  In many cases, the local station services such as news and sports are being eliminated and that doesn't seem to be the appropriate answer.  In talking with a television station general manager we know well, he indicates that approximately 50% of the station's revenue is generated from new broadcasts.  It's also an area where heavy political advertising does occur during the election season.  Most people still like to know what is happening in their community and this is best covered from a strong news effort.  News and public service remain an advantage that local radio can provide without any strong competition to the newer media technologies currently available.
 
I also feel there's a strong need to be creative both in programming and in commercials.  Humor is one of the most effective tools to accomplish a strong creative effort.  Many stations don't seem to feel there is a need for copywriters or any type of professional writing individuals and that's really too bad.  It takes an effort to create a good local programming that's attractive to listeners and a desirable source of advertising for clients.  An owner has to spend money to make money and this truism continues.  I'm afraid in many cases that creative programming and advertising are overlooked and prevent radio from standing out and being the highly desirable medium that it should be.