Sometimes the only course of action is to guess. It’s what nearly everyone in the radio industry has been doing since 1996. Early on, guessing how consolidators would pay for those high-multiples that radio stations were being bought for seemed reasonable. Because of radio’s outlandish growth through the 1980s and early 90s (when a radio group plunked 30x annual revenue for a station’s purchase), logic said that money would come back many times over – or there’d be a “greater fool” waiting in the wings.
Those controlling the purse strings in the rush to buy more stations guessed that buying, then reducing operating expense, would bring a return. But this thinking was based on the same logic used by people buying homes many times over their ability to pay; prices would continue to rise, and they would cut back on other expenses. It was a time of irrational exuberance, as then-head of the Federal Reserve Bank, Alan Greenspan, said. Whether the topic was Wall Street, personal finances, or purchasing radio stations, people were going in way over their heads in expectation that the good life would continue.
Retrospectively, that guess turned out terribly wrong for the radio industry. Blame it on 9/11, a faltering economy, or (as many radio insiders claim) the dismantling of staffs large enough to deliver a local flavor to programming. Prices fell. Revenues declined. Profit margins shrank. Competition grew. The result is now a new round of “guessing” as to what will happen to radio in the coming years – and you’re bound to hear plenty of that at the upcoming RAB/NAB conference in Washington next week.
One of radio’s defenders and Chairman of Pollack Media Group, Jeff Pollack, tried a little two-step dance at Huffington Post with an article titled “Radio’s Not Back (It Just Never Went Away).” In it he quotes many of the same numbers seen in radio industry trade publications that try to keep the spirits of readers up by saying radio is still in the fight because “93% of persons 12+ listen to radio each week.”
What’s being missed with this statement is that the numbers of people reached no longer dictates the success of media.
Even if this 93% is an accurate figure, revenue still comes from advertisers looking at ways to better maximize returns – and for this there is a growing pool of advertisers turning to accountable advertising systems.
If more evidence of a downward spiral for radio is needed, simply check the comments from Huffington Post readers to Mr. Pollack’s words at the article’s end. None speak highly of commercial radio’s appeal, though there are a few comments about Public Radio still moving down the road of quality content.
It’s very likely that after the multiple sessions at this week’s RAB/NAB conference outlining how your station can “make it” in this new digital world, you will return to the same style of selling radio that was in place prior to the get-together.
All we need do is look at the past dozen years of RAB Radio Shows to see how little progress has been made using the internet as an adjunct to radio programming and sales.
What is your prediction for post NAB-RAB performance?
Mine is that regardless of the multiple “easy” methods for generating revenue using new media, being claimed by many newbies in the digital world, the vast majority of radio operators will continue to sell audio ads in on-air programs, complain that there’s little money to be made online, and avoid taking steps that will improve audience/advertiser relationships through integration of digital applications. As has been the case every year, radio will just continue to be “radio” after this upcoming conference of shakers and movers.
I know this is only a guess, but unless there is serious money spent on upgrading station web sites (never done on the cheap) and we begin to see the radio industry offer advertisers a way to account for how much business an on-air/online campaign delivers, few ad dollars (as a percentage of the whole) will be spent on local and national radio programs.
Here’s the truth, which will save you a trip to NAB-RAB. Perception is reality, and the radio industry is perceived more than ever as a “listen because it’s there” medium.
Youth are moving away from treating radio as a source for music discovery. Elders are gravitating towards talk and oldies formats, but are also exploring more of what the online radio world offers. And web sites looking like promotional tools for radio stations which rubber-stamp the look across hundreds in the group are no more interesting, or capable, of drawing repeat visitors than a brochure mailed to each of the people who check in to check it out.
Hearing the experts talk about how to generate revenue for radio online, or bring back those clients who abandoned over-the-air campaigns, will do little to lift respect for the radio industry. It’s not until we all see movement towards these goals that radio will swing back.
Just because 93% of people 12+ are allegedly tuning into radio each week doesn’t mean they are listening to what’s being said. And this is the same prediction I’ll make about all those people sitting in the NAB-RAB Radio Show sessions in Washington DC.
(source: Ken Dardis, Audio Graphics, [email protected])
RBR-TVBR observation: Ken is 100% correct: Serious money must be spent on upgrading station web sites. Radio, unlike TV, has not moved with the consistent times of today’s media world. Think: just less than two years ago the mobile business world did not have smartphone applications or APPs. There was NO iPad and as quickly as you can blink an eye here we are: Technology waits for No One. RBR-TVBR has upgraded and kept pace with all continuing developments in the mobile business.
RBR-TVBR now has its first smartphone app – the iPhone app – and we will progress and develop apps for the other smartphones before the start of 2011.
Radio must get there act together, the internet is today’s ‘New Asset’ builder in audience, soical interaction and money.
NAB-RAB in many ways is not in sync with what has been growing for years – besides the internet it is now the mobile marketplace.
Radio and TV will continue to face the daily challenge of making their stations relevant to today’s audience consumer. In short: Radio/TV is not in today’s Consumer Vocabulary.
From where RBR-TVBR sits the first biggest problem Radio and TV has to overcome is the ‘Internet Fear Factor’. The one company that gets to the ‘Teaching’ spectrum first will be the winner. RBR-TVBR will do our part to help in every effort.