Jacobs Media President Fred Jacobs was intrigued by the comments for CL King analyst Jim Boyle published a few days ago in RBR (1/18/08 RBR #12) on new ways that radio stations might look to monetize the value of their P1 listeners.
Jacobs has posted his entire commentary on his Jacobs Media blog and provided it to RBR to post below:
In a recent issue of Radio Business Report (www.rbr.com), CL King financial analyst, Jim Boyle, offered his prescription for what Radio can do to jumpstart its business. Here are Boyle’s comments:
"Can a different revenue stream start and sustain a radio rebound? Yes, by monetizing the P-1 listener. Radio groups fetch about 2%-3% of revenue from internet initiatives, but that hasn’t stopped 2007 from being a down revenue year. So what else is out there? We would strongly recommend that radio look to the second of its two constituencies. Not just its advertisers, its audience! Radio’s most loyal, engaged listeners are dubbed P-1 listeners. We believe radio should sell small local content and branded items to its biggest fans. Consumers have become highly trained by eBay, iTunes, Amazon and others to frequently purchase impulse or planned items via the ease of well-established micro-payments. There will be many failed attempts by Radio to monetize listeners, but potentially some large successes. Most people forget that the cable network that allowed cable to garner non-subscription revenue from the subscriber, Home Shopping Channel, started as a Florida radio show.
We also believe radio station personnel and younger employees are more likely to come up with successes than the corporate or top executives. We bet you that no P-1 would ask, what is the cost-per-point of a daily e-mail of the best jokes (on-air and off-air) of the Morning Zoo DJs? Or what is the cost-per-thousand of a station logo baseball cap? Or what is the AQH rating of a mobile flash alert of the latest club event? Radio should establish a second revenue stream or resign itself to being the ‘new Newspapers.’ A second consumer-fee revenue stream would bolster the industry and excite investors and it could even make radio a creative and fun business again, in our opinion."
First, it’s noteworthy that a financial analyst has even offered possible solutions to what’s ailing Radio. For the most part, these guys crunch numbers, talk to a lot of people, and provide their best guesses about a sector’s financial health. But that was then.
Nowadays, everyone has an opinion. And perhaps that’s healthy. Because if Radio is going to find a solution set that truly addresses its deepening problems, maybe it will come from an unlikely source. This is why Boyle’s "outside/in" thoughts caused me to truly consider his thinking.
First, the P1 aspect of his solution. These are indeed the people who are loyal, engaged, and emotional about Radio stations. We need them – badly. But for the most part, Radio continues to look past them, trolling for diarykeepers and possible PPM cooperators.
Yet, it’s the P1s who are still showing up for events and even for meaningless, unentertaining advertiser promotions. They still call the request lines, and they are habituated by our morning shows. And the incredibly great news is that the majority of them are locked and loaded in Radio station databases. We have simple (and free) access to them – in many cases, by the thousands. The question – as Boyle asks – is how do we best utilize and mobilize them to Radio’s advantage?
Most stations choose to bombard them with weekly emails about events and advertiser specials, rather than learning from them, nurturing them, and stimulating them to become evangelists. The data that we’ve collected at Jacobs Media, after nearly a decade of web polling, suggests that approximately 75% of all database members are P1s. You don’t need a telemarketing company to find your fans – they’re in your email club. Yet, most programmers cannot tell you the true gender and age makeup of their databases, much less their sexual or political orientation, despite the fact this is essentially "free research" during a time when research budgets are dwindling. Boyle is correct when he proffers that most stations totally under-utilize these all-important fans.
And beyond that, the P1 potential to provide us with "answers" through Listeners Advisory Panels is untapped by most stations. Most consumer product companies rely heavily on their biggest fans to help guide their quality control, while providing new ideas for the future. Rarely does Radio turn to these core listeners for advice, confirmation, and guidance.
Add to that the concept that Radio could be interviewing its database members to learn about their buying habits. Imagine surveying these core listeners to find out which ones are planning on buying/leasing a new car in ’08. Or the fans who will be getting married. Or buying a home. These ready customers can be aggregated, and should become part of a station’s advertising strategy, because Radio can provide hot prospects to its advertisers – for a price, of course.
In the sales cubicles. how much longer is radio going to put up with account reps who don’t get it and never will? At Jacobs, we are continually asked to "sell" formats and stations with great histories, legacies, and ratings to local sales staffs that are unenthused, undermotivated, and often just clueless. Stations that have decades of history, brand name personalities/celebrities, and consistent successes are being severely undersold by account reps who are uncommitted, unknowledgeable, and ineffective.
Is that radical to look to Radio’s legions of P1s in station databases who may be in professional cul-de-sacs of their own, toiling away at meaningless jobs? These are people who love your station, and passionately tell others they should be listening. You don’t have to teach them who’s on the morning show, persuade them about your format’s value, or hype that spring concert the station does every year. They know it all – chapter and verse. And they would be much happier selling advertising on behalf of your station than the copiers, used cars, and window sash treatments they’re stuck pitching now.
This could also be a way of bringing some youth to Radio as well. I won’t even go into the wisdom’s of Boyle’s comments about injecting younger people’s opinions into Radio, as this is something that Jacobs Media has championed ad nauseum over the years. As formats have narrowed into the 25-54 "sweet spot" (or "black hole"), America’s youth have continued to drift away from Radio, and toward more attractive, welcoming media options that offer more control, variety, and choice. We saw enough of this in "The Bedroom Project" we conducted last year for Arbitron, so Boyle’s observations about how Radio might harness new ideas from younger employees instantly elicited our nods of agreement.
We know only too well there are thousands (well, maybe that number has diminished in the past few months) of dedicated radio professionals, dying inside about what is happening to our products and content. Many are simply untapped by the companies they work for, as Radio’s leaders believe that the rank-and-file simply do not have the answers, and are best suited to simply carrying out "the plan." If the solutions aren’t at the top, perhaps there are successes and innovations waiting to be heard on the ground, closer to listeners, and consumers in general.
So, thanks Jim Boyle, and RBR, for swimming upstream and shaking the tree. That may be the way out of this mess.