I recently met with a senior executive from a major television group owner. The meeting started with this executive explaining to me that “without a reinvention of our business model, our station group, with present day value in the multiple billions, will be worthless in 10 years”.
This comment really struck me. My immediate thought was that he was probably correct but I couldn’t possibly imagine any radio station owner making that statement. I’ve wondered if that’s because nobody in radio actually thinks like this, or because it would be politically incorrect or career damaging to make such a statement.
I have to admit, I’m not sure which. What I do know is that this TV exec is at least directionally correct. There is no way that traditional media can sustain audience or revenue in the years to come without a complete renovation of the house. We think about it this way and boldly state it on the Triton website and in all of our support materials…
…the clock is ticking. Radio’s distribution advantage is weakening. We will no longer simply own the car and the office. Radio brands are going to have to win a war of relevance in a sea of new competition. We will have to close the accountability gap between traditional and new media and provide proof that our campaigns move product and services. We’ve got to eliminate our legacy bias, systems and practices that impede our evolution. We’ve got to get past the intramural mindset that has locked us up for far too long. We will have to rationalize and optimize our inventories. We will have to entertain and engage in new ways that retain and enhance the affinity of our audiences. If not our brands will be worth far less than they are today.
The recently released “Infinite Dial” study from Edison Research and Arbitron sited convenience as the number one reason why people listen to radio. Responses like “I just get in the car and push a button” were the norm. This study also points out that less than half the people now identify radio as their first choice to discover new music. It points out that in younger demos people are spending more time with their personal music collections and internet radio than they are with traditional radio. A statistic that I watch with particular interest is the one that shows that traditional radio’s share of online listening is less than 50%. What does this indicate might happen when IP radio gets into the car?
Despite all of the looming threats to our audience size, up until now the attrition has been minimal. Radio remains ubiquitous with over 90% of the population listening each week and still getting north of 20% of the average persons media time spend.
So then, why are revenues falling so quickly in the top radio markets? Why is national spot plummeting? Why is big market agency business so bad?
To be sure, there are lots of factors here. To me, the most dramatic is the one that is the key differentiator between traditional and new media advertising- accountability! We live in a world of estimates while today’s marketers are looking for exact and real time measurement. We live in a world that is an estimate of what happened three months ago not an exact measurement of what is happening right now. We offer an estimate of exposure but have very few ways of defining anything that happens after the exposure.
Marketers want to know sequential actions and predictive behavior. They want to buy in context and track behavior. They have a near endless supply of new digital inventory to choose from with all varieties of vertical networks, contextual networks, widgets, social utilities and on and on. Each delivers complete accountability. Optimized search and opt-in email offer huge ROI, and CPA models allow advertisers to pay only for what they get.
Mike Agovino is COO of Triton Media Group.