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Radio is a specialty at Mediathink. Over the course of my career, I've helped over 50 radio stations improve their revenue and their ratings by refining music, air talent, promotion, production and even sales. We work daily with leading stations around the country to improve these product features for them.

But this isn't about me. It's about radio.

Radio faces many challenges that advertisers can benefit from. So, we risk biting the hand that feeds us because we believe smarter advertisers will make radio better for everyone.

Why Music Radio Is Losing Relevancy With Consumers

First, the tough part. Music, radio's primary source of content for the past 30 years, is in the midst of historic change. Radio is playing less new music.

Consolidation and risk management have caused radio to focus on playing more reliable “gold” titles. These titles are easier to research, but they are also easier to download and share. Record companies, victims of their own procrastination, have fewer resources to devote to artist and product development.

If the sad state of affairs turns around, it will be because the record industry properly leveraged the technology that now dogs them, not because radio got any more generous or adventuresome.

MP3 players of various types can now easily hold more songs than most radio stations play. File sharing may be slowed, but it can't be stopped. In a matter of months it will be necessary to acknowledge that the PC has replaced the DJ (or, more accurately, program directors armed with a music scheduling program called Selector) as Music Mediator for the Masses.

Right now 18- to 24-year-old adults, no longer relying on radio for exposure and guidance, are disappearing into their basements to find music rotation nirvana for their ever-growing collections of MP3s. As time marches on, those same adults will move into and dominate the coveted 18-49 and 25-54 demographic.

Additionally, satellite radio is also coming on strong, despite detractors. XM and Sirius have over 750,000 subscribers and are on track to hit a million by the end of the year.

But that's still not all. Office workers streaming high quality music over their networks have profoundly changed music listening. Real Networks purchased Listen.com earlier this year. Currently, Real has over one million paying subscribers, and the Listen purchase gave it the Trojan horse it needed to get into the big ISPs and MSOs for some serious distribution.

So, while profitability, critical mass, and business models remain dubious, these music delivery options are not going away anytime soon.

What's Next for Radio? Increased Personality and Audience Interaction

Here's the real news: product changes don't eliminate distribution channels, and radio will not die from this massively disruptive content shift. Far from it.

Think about how AM radio adapted its programming to the adoption of sonically superior FM in the '70s, as well as how radio radically changed its programming with the mass adoption of TV 15 years before FMs dominance, and you can get a clear idea of how all this will play out.

Many stations will actually benefit from this shift in content focus. While a quarter-million songs await a high-speed connection, radio will deliver personality and audience interaction in real-time fashion that can't be matched by any form of online delivery.

Moreover, terrestrial radio's ability to engage a mass localized audience, passively, is still unmatched—even unchallenged—by new technology.

And while those in denial of radio's seismic content changes will be quick to point out that radio still reaches over 90% of the US population every week (they are absolutely right), those same evangelists will be equally slow to point out the “time spent listening” erosion that plagues the industry. So How Do You Take Advantage of the Change and Confusion?

Scout the air for talent. Believe it or not, air talent is the key to radio's transition away from relying on music content, and the way for smart marketers to discern tomorrow's audience winners from the losers.

Many smart broadcasters are quickly becoming aware of this trend. Most major markets have afternoon drive shows that sound like morning shows. This is a trend that will continue.

In fact, it's one that has been in play since the early '90s. Advertisers need to look for the talent that best reflects the value proposition of your brand. There really is someone for everyone out there. Unfortunately, even the broadcasters don't often recognize the value of their own talent.

But, talent endorsements do work. They are both affordable and scarce. Most importantly, talent endorsements aren't as victimized by the clutter that dilutes a great deal of radio advertisements.

Change Your Buying Habits

Next, if at all possible, buy direct. Nationally placed buys based on cost per point are a dubious use of your dough. National buyers are often overwhelmed, inappropriately staffed, and lack deep local market insight required to make effective buys.

It's not their fault, either. Planners put buyers under pressure to meet Arbitron reach and frequency goals based on a granularity (demographic ranking) that is statistically unjustifiable.

Rating compression is gravely distorting the difference in rank between one station and another. And while few pros actually calculate the standard error of Arbitron ratings anymore, suffice it to say that in most major markets there is often little to no significant statistical difference between the third ranked station's 18-49 demo and the tenth station's.

Even more alarming, this “rating compression” is even more pronounced in the top 10 markets. This is an unintended consequence of consolidation: big broadcasters all using the same proven, consistent programming techniques, resulting in indistinguishable offerings from the advertiser's point of view.

Demand Value-Add That Has Financial Impact

What else? Demand value-add from your radio partner that means something. Radio has entered the direct marketing business via station Web sites and email. Their email campaigns work better than you think, and most stations with a decent database underprice the campaigns that utilize them because they don't know quite yet how to effectively integrate into a flight or price them as an adjunct to traditional broadcast advertising.

More simply put, radio sales people aren't compensated on their ability to sell integrated direct marketing—they get paid for selling 60-second spots. That puts you, the radio buyer, at a distinct advantage when purchasing that next schedule.

Seek placement opportunities in email campaigns that are currently underway. More advanced radio buyers will demand their own email campaign, and will probably get it.

Integrating talent endorsements and email in your radio buy will deliver ROI that you can take to the bank, making radio perhaps the best bargain in all of mass media, despite the crisis in the music business.

Continue reading "Rethinking Radio" ... Read the full article

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ABOUT THE AUTHOR

Tom Barnes is CEO of Mediathink (www.mediathink.com), a consultancy specializing in media and marketing strategy and implementation. Contact him at tom@mediathink.com.