Radio’s future – sure seems like the past to me…

Mark Ramsey has more good stuff on his blog in a week than most people do in their lifetime. Today is no exception. He posts about The Most Important Thing You’ll Read About Radio’s Future this Year. I read this once and said, “Yeah!” Then I read it again.

It suddenly hit me that this is where we were back in the 80s. Marketers were pushing us to become more invested with their marketing. We built teams at stations focused 100% on developing non-transactional business. We called it all sorts of things, from NTR to Vendor. Hundreds, maybe thousands, of bright marketing-oriented people joined these teams either from the ranks of radio sales or from the greater marketing community. We developed relationships with food brokers, wholesalers, marketers at CPG companies, and small marketing teams consulting CPG companies. We learned all about in-store display, push vs. pull marketing, consumer promotion, floor plans, vendor-funded marketing programs. Millions of dollars were invested by radio broadcasters to support these programs and they began to return their investment. We did not sell using Arbitron numbers. We sold using the results of the last program. And, those results were terrific! So, we were able to get more and more marketing dollars for the programs and give up less and less inventory on the station.

And then something happened.

The advertisers said, “You know, let’s go back to buying on Cost per Point. And, while we’re at it, you can throw in all that extra stuff as a freebie for just getting on the buy.” Radio managers caved. NTR/Vendor departments were decommissioned or turned into ghosts of themselves. Smart marketers left radio, were fired in consolidation moves, or they were sucked into the vortex of transactional radio business.

When I think about Mark’s article and the points he makes,

1. Act more like a marketing company than a media company.
2. Be organized around an audience and not a platform.
3. Work directly with marketers.
4. Not just create spaces for ads next to content, it’ll create whole media channels and platforms for brands
5. Employ technologists who can build device-agnostic platforms for marketers.
6. Know how to deliver instantaneous gratification when it comes to measurement, and it’ll be measuring outcomes not outputs. A rating…stat is not going to be enough in the future, and certainly not when it’s presented weeks after the fact.

I can’t help but remember what these same marketers have done time and time again – when it suits their need, they go back to twisting radio’s arm with commodity pricing. And radio lets them do it.

Don’t let them do it again.

Ratings, Radio, Sales – The Debate Goes On

Chuck Francis, VP New Media at RemergeMedia.com, wrote a well-received article in Radio Business Report recently called “A New Day for Radio.”

Chuck makes the valid point that, in truth, ratings don’t matter, except to “…those that provide ratings.” However, this common-sense statement misses the mark. Yes, it’s not the ratings that matter to the listener or the advertiser. It’s the thing that the ratings represent.

For example, Chuck says:

In the years I spent as a Program Director I cannot recall one single instance where a listener came up to me at an event or a remote and said: “the reason I listen to your station is because your station the number one station.” In fact, even if your station is 13th in the market – I’d argue you’re number one in the minds of the people that listen to you regularly.

One of the reasons that a listener is loyal to a station is because of its reputation among her peers. The listener doesn’t look at the ratings and make a rational decision about whether or not to listen to a station because it’s #1 in one category or another, but she does decide whether to listen partially based on her peer group’s relationship to the station. The ratings are a surrogate for this – they tell us roughly how many and what kind of people are listening to each station. They tell us about the listeners’ peer groups.

On the advertiser side, the ratings are a surrogate for a true measure of results. In the absence of a way to directly measure the ability of a station to deliver results for a specific product, the ratings system was developed in an attempt to predict what will happen if you run a spot on a station.

Those stations who achieve success without ratings have found other ways to measure their reputation with their audience and to predict the results their advertisers will have when they run a spot on the station. However, I suspect that these substitutes for ratings remain surrogates of a direct measurement of reputation or results.

TRA, a research firm in New York, is developing a very interesting way to measure results in TV advertising… a methodology which could well be transferred to radio and other media. Instead of measuring how many people are viewing a particular program, TRA measures how many people actually were exposed to a specific ad and how many of those people actually purchased the product being advertised. This is similar in many ways to the work that was done on Arbitron and Nielsen’s suspended Project Apollo, but TRA is processing millions of households’ viewing data and matching it up against their purchasing data. As this platform matures and is able to capture not only TV viewing but also other forms of media, we will move away from the surrogacy of ratings and towards the direct measurement of the results of radio campaigns.

Of course, it is not likely that this direct measurement of results will be applicable for all advertisers, particularly local retailers. As data is developed inferences will be possible that are much more precise than today’s rating system. TRA could syndicate their data in such a way as to provide local decision-makers tools to determine which media selections are best for their businesses.

Direct response radio marketers are measuring this today, for their clients. One particularly sophisticated firm, Strategic Media, has literally written the book on the subject. Through extensive testing and results measurement, they have built very detailed databases of the stations and creative execution that works best for their clients. Perhaps local radio can learn from this and develop similar data for their advertisers to use.

Please share your views on this subject by commenting on this article.

Interview with Ernest H. Clay of ARB

I found an archived interview of Ernest H. Clay of ARB, circa 1960, on the subject of TV ratings as they stood at the time. Very informative and many of the questions raised are the same that we hear today. Listen here.

Streaming Audio ROI Spreadsheet

A while back, I wrote a spreadsheet for some simple calculations of the return on investment for streaming audio – like a radio station.

I have made some changes to the spreadsheet to accommodate the new negotiated SoundExchange fees for terrestrial broadcasters who stream.

Here’s a link – click on the picture and then you should be able to edit the cells in yellow to see the results of different audience size, spot counts and so on.

It’s a work in progress – tell me what you think!

Using a Macintosh in a Radio Station

Chris “Doc” Tarr, Director of Engineering for Entercom in Milwaukee and Madison, WI, wrote an article for RBR today about using Macs in radio stations.

As a business technology consultant for radio stations, I strongly endorse Chris’s statement.

The Mac is a terrific computer for a radio station. It is simple for even the most technophobic account exec to use and because it comes pre-installed with a ton of useful software, there’s a lot you can do with it out of the box.

For example, with the extremely powerful (and included as part of the OS!) iMovie video editing software, even a neophyte can produce compelling video presentations for your sales department or your website. GarageBand, the Mac’s audio editing system, provides many of the features of a much more sophisticated package like ProTools. Thousands of bands have produced professional recordings using GarageBand, right on the Mac. It even has features for creating podcasts – including building the RSS feeds and so on. Very powerful stuff.

For an extra $79, you can get Apple’s iWork, a suite of three applications that include a word processor (Pages), spreadsheet (Numbers) and presentation program (Keynote). In many ways, these applications are even more powerful than MS Office – and they are certainly easier to use. There’s no doubt that Keynote blows away Powerpoint as a presentation tool. Plus – you can create your presentation in Keynote and then export a perfectly compatible Powerpoint version for your less capable colleagues.

Plus, with the free OpenOffice package for OSX, you can have the complete functionality of Microsoft Office on the Mac without the cost!

I have run a virtual machine on my Mac with copies of Tapscan, Maximi$er, PD Advantage, AudioVAULT and various music scheduling packages – and they worked without a hitch. Of course, the vendors get a little “hinky” when you run on unapproved hardware, but with the right relationship with these folks, you can get them to understand.

Imagine being able to create a Tapscan report and then use it seamlessly in a powerful Mac-based presentation package to create a compelling story for a prospect. Of course, as these applications go more to the web (as Max and Tapscan are starting to now), you will be using the web browser and not a built-in application; but the principle still applies. Even more so, because the Mac will let you dress up those dull-looking web reports with some truly persuasive graphic elements – in a snap.

Back in the day, before Maximi$er, I used a Mac to suck in AID runs (remember those?) and automagically transpose them into compelling graphical presentations for my sales team. Even 20 years ago, it was a very useful tool in a radio station.

Another advantage to using a Mac on the business side of a radio station is, quite frankly, the “cool factor.” Many radio station clients are Mac users themselves – ad agencies in particular have been one of the strongest vertical markets for Macintosh for decades. If you walk into a presentation to a group including a creative director, media director and account manager and you plug in your Mac for a Keynote presentation, you will gain immediate “inside” cred. It might be that extra edge that gets you the deal.

Today, the Mac will give you an edge over the competition.

Want to know more? Please leave a comment here or email me: steve dot burgess at agencytechnet dot com.