JacoBlog - Jacobs Media's Blog

Who Said That?

"We somehow evolved from a culture of entrepreneurship, creativity and innovation to a culture of, in a way, mediocrity and bureaucracy."

No, it's not a radio CEO, but it sure could be.  It's Howard Schultz, the on-again-off-again CEO/creator of Starbucks.  Returning to the helm of a suddenly struggling company in a more competitive, recession-scared world, Schultz has laid out an aggressive to new plan... to Wall Street and his thousands of stores.

It's about bringing back that original feeling that you had many years ago when you walked into a Starbucks - that your coffee was custom-brewed, and the barista knew your name.  Schultz is also initiating a loyalty club component so that "regulars" (like me) can enjoy greater benefits.  And overall, it's about a high-quality coffee experience, rather than the brew that McDonald's or Dunkin' Donuts offers.

All of these innovations and improvements will cost money.  They will take time.  But that's the process that's required in the quest to re-imagine and improve the experience of walking into a Starbucks.

These are bold steps, but they've already attracted the attention of investors, customers, and the company's employees.  Every industry goes through a downturn, a challenge, and at times, a redefinition of its purpose.  Schultz may not have all the answers, but he's bringing back a sense of leadership and change to his company.  He also realizes the showbiz aspect of the Starbucks experience.  As investors and employees lined up as early as 6 a.m. for the company's stockholders' meeting, they were treated to a barbershop quartet and baristas serving free coffee.  At the end of the day, Starbucks - like radio - is in the entertainment/experience business.

Radio could clearly learn some lessons from Schultz's efforts to resuscitate his business - both with customers and investors.  It starts in the boardroom, but needs to ultimately change and electrify the customer contact point - Starbucks stores.  Or in our case, our radio stations.

Now if they'd only make free Internet part of their new initiative.

Gee 4

Comcast isn't just talking about the young guy media usage problem - they're attacking it head-on.  In order to ensure their G4 Network is on-target and appealing, they have initiated a full-year research program to get at Male 18-34 tastes and habits.

Taking no prisoners, the program is called "Hunting with Lightsabers," and it's a full-scale, multi-tiered research effort that focuses on 1,200 well-targeted guys.  They'll survey them online, as well as launch an ethnographic study in three markets to gain a better, grassroots understanding of how these guys think, entertain themselves, and use their growing media and gadgetry options.  We learned the power of ethnography with "The Bedroom Project," the study we conducted with Arbitron last year.  Taking a page from Wayne Gretzky, these studies don't just tell you the status quo, they can clearly show you where the puck is going.  Comcast is clearly thinking along these same lines.

Already, G4 has invested in programming for the network (reruns of Heroes and Lost), and is seeing some ratings gains.  But with this new research program, Comcast is getting serious about targeting and attracting young men.  It's something that would make a great initiative for radio, given the challenges to keeping our medium fresh, current, and healthy amidst technological upheaval and innovation.  Why couldn't the RAB and NAB collaborate on a youth initiative as a part of the latter's "2020" program?  Radio needs to send the right message - to advertisers and consumers - about the future of its audience.  Comcast is clearly taking the right steps.

Rockin' The Vote

On the heels of the release of our Tech Poll IV findings comes a new study from BIGresearch that confirms what we've been seeing and saying all along - the political candidates ought to be using Rock radio as a primary tool.  In our Tech Poll, 84% of the entire sample indicate they plan on voting in the upcoming Presidential election.  Now, as every political wonk knows, saying you're planning on voting and actually doing it are two different things.  But, as we've already seen in the primary, the turnout is spectacularly large on the Democratic side.

And while this new BIGresearch study is essentially looking at what Democrats, Republicans, and Independents are doing with new media, the fact is that if you're a Rock radio station, you can reach them.  And these days, probably more efficiently than most other media. 

Consider these findings:

Not a bad showing for Rock radio - three out of four political parties can't be wrong.

Once again, this signals a great opportunity for radio this year, as a way to reach the candidates.  Earlier this week, WMGK's John DeBella interviewed Senator Clinton on his morning show, and illustrated how Rock radio is a great communications tool for the candidates.  (She pledged to be back on his show later in the campaign.)  Data like the BIGresearch study, along with our Tech Poll, underscores how Rock radio ought to be getting its fair share of political advertising in 2008.

The Merger - What, Me Worry?

After more than a year, the DOJ has spoken, and the dreaded XM/Sirius merger is finally off to the FCC, where it will undoubtedly be approved - in some form.  For traditional broadcasters, this has been one of those gut-wrenching issues that has inspired much debate in boardrooms across the country.

But that's been the case with satellite radio from Day One.  In a style reminiscent of old radio war horses like Randy Michaels, satellite radio began calling out broadcast radio from the beginning.  Remember, "Beyond AM, Beyond FM...XM?"  Why wouldn't AM/FM operators get a little nuts when they saw these ads?

But today, while satellite radio is an irritant, it has been losing momentum for a couple years now.  We've seen evidence of this in our Tech Polls, conducted among 25,000+ rockers each year - just the kind of consumers that XM and Sirius have been targeting. In our newest poll, we're already seeing that when XM or Sirius ends up in the new car or truck you buy or lease, one's propensity to renew the service is much lower than average.  And overall, we're only seeing about a 56% absolute commitment to retain XM or Sirius among current subscribers - not exactly the numbers they want to see, merger or no.

While we won't know the new restrictions that satellite radio might have to follow once the merger is approved, we can only look at the DOJ's next to last paragraph for a clue about what the future may hold:

Any inference of a competitive concern was further limited by the fact that a number of technology platforms are under development that are likely to offer new or improved alternatives to satellite radio. Most notable is the expected introduction within several years of next-generation wireless networks capable of streaming Internet radio to mobile devices. While it is difficult to predict which of these alternatives will be successful and the precise timing of their availability as an attractive alternative, a significant number of consumers in the future are likely to consider one or more of these platforms as an attractive alternative to satellite radio. The likely evolution of technology played an important role in the Division’s assessment of competitive effects in the longer term because, for example, consumers are likely to have access to new alternatives, including mobile broadband Internet devices, by the time the current long-term contracts between the parties and car manufacturers expire.

And that's precisely what AM/FM operators ought to be thinking about, too.  If you want to worry about something, consider the day when most consumers have the Internet available in their cars.  Where will our stations be positioned in that tech smorgasbord when that day arrives?  If you're in denial about that eventuality or you've rationalized that it may be many years away, consider iPod/mp3 player penetration - right now.  Our same Tech Poll tells us that nearly six in ten respondents already own one, including nearly three-fourths of 18-34 year-olds.  What does that tell us about radio's continued ability to be the "go anywhere" medium?  And what does it also signal us about the incredible potential for creating and monetizing programming in the form of podcasts for these devices?

There's a future out there for AM/FM radio, and while satellite radio just got a second wind, the true forces that will most clearly impact traditional broadcasters are far more ominous.  But radio has the opportunity to play in the new media sandbox, if it focuses - once again - on creating great content, while providing multiple distribution outlets for that content. 

Curators Needed

If you are ever frustrated by inaccuracies in or simply have disagreements with Wikipedia entries, or you experience the feeling of confusion when you do a traditional web search for everything from cars to travel to restaurants, you're not alone.  A recent Newsweek article - "Revenge of the Expert" - talks about how the CGM phenomenon may be evolving back to an environment where professional opinions are more highly valued.

Our old friend, Jason Calacanis, has created Mahalo, a search engine that is people-oriented, rather than popularity-driven.  Thus, when you type in "Detroit restaurants" in Google, you get an infinite number of entries that are good, bad, and otherwise.  In Mahalo, you get this:

The key to sites like Mahalo is the premise that expert opinion has value.  As Calacanis notes, "The wisdom of the crowds has peaked.  Web 3.0 is taking what we've built in Web 2.0 - the wisdom of the crowds - and putting an editorial layer on it of truly talented, compensated people to make the product more trusted and refined."

In radio and in music, stations and DJs have the ability to play this curator role.  The vast resources provided by the web have made music searching a confusing process with too many choices and so many consumer opinions that no one knows what's worth buying.  iTunes may be a great resource because it contains so many millions of songs, but a filtering process would make it so much saner and easier to negotiate purchasing decisions.  And that's where your station comes in.

When new albums come out, when CD repackages and box sets are released, and when concerts and concert movies premiere, there's an opportunity for radio's "experts" to use the power of their expertise and history to play this important role.  And on a station's website, reviews and podcasts can be a great way to help listeners decide what's good...and what should be avoided. 

Back when Spike was with Q101, he did something like this for new releases.  The idea of a DJ as curator works both for the audience and for sales sponsorships, by leveraging their celebrity and their expertise.  It can generate that all-important dialogue with listeners, while creating web content that can be marketed.  That's MY expert opinion.

A Good Idea

Every time I post a blog about HD Radio, I just sit back and wait for the predictable deluge of negative comments - typically from the same people.  There's no doubt that many in our industry have become understandably disenchanted with HD Radio, seeing whatever potential and promise it once had now being jettisoned to the industry's backburner.

And many have legitimate gripes and concerns.  After the HD Radio ad campaign controversy from late last year, Peter Ferrara wisely put together the "HD Radio Idea Summit." I was invited, I attended, and I participated.  It was a healthy vent session, followed up by a constructive brainstorm that may have yielded several solid ideas.  If nothing else, many Alliance members went back home to their respective companies, and hopefully started pushing for some change, some investment, and some attention for HD Radio.

In these sessions, some of the creative folks from the Alliance's ad agency, GSD&M, were on hand to discuss the controversial "It's Your Radio" campaign, and to look for input for the next flight of spots.  This is where the "Upgrade" concept was conceptualized, and most participants concurred that it's an improvement over "Discover It."

My sense of this session - which I suggested in a blog last December - was that it was a start, but something that should have occurred a year or more ago.  There are great minds in this business, and if the HD Alliance is to successfully manage this difficult project, it's going to need creativity, input, and help from more than just the usual suspects.

That's why I got excited when I received a new HD Radio commercial campaign in my email last week.  It didn't come from the Alliance nor was it dreamed up by a big agency or even by a committee of esteemed radio broadcasters.  Instead, it came out of the production studio of Bonneville/St. Louis.  Cooked up by commercial production director, Brian Hartmann, it's clearly an improvement over the original campaign because it positions HD Radio as a positive upgrade.  Instead of a replacement for your old tired radio, HD Radio is presented as a complement to AM/FM.  You can check out one of Brian's spots here:

Click Here To Dowload The MP3 File

How many other Brian Hartmanns are out there, eager, ready and willing to make HD Radio work?  How many programmers at the local level have exciting ideas about how to program HD2 channels that might just sell some radios?  At the "Idea Summit," we heard from CBS' Dave Robbins talking about his company's HD2 plans.  Energized by Dan Mason's initiative to do something breakthrough with HD2 channels, the company is embarking on several new concepts - including Amp (a channel for pre-teen girls).

The "Idea Summit" was a start, but if HD Radio is to become viable, the Alliance and its members need to look no further than some of the talented people inside AM and FM stations who are teeming with ideas, innovations, and content that could lead to success.  There needs to be an atmosphere of innovation, experimentation, and entrepreneurship that is so often missing from broadcast radio today.

Thanks to Brian Hartmann, who took the initiative by sending his idea to iBiquity, and getting the ball rolling.  It's a start.

We Are The Target And The Agency

Today, it's a guest blog from radio vet, Jay Philpott.  It's a great example of how the consumer willingly plays a role in product marketing and promotion.

I recently received a cute little video from some friends, who had used a service available through Jib-Jab to superimpose their kids' faces on some breakdancers' bodies.

Funny stuff.  It was done to the tune of "What Is Love" by Haddaway.  After realizing I had just been "marketed to," I sent my friends this note:

That's awesome!!  Thanks for sending that.  Not to take away from the cuteness of the "Boyz"...but what we have all just seen is a commercial!  This is a perfect example of the evolution that advertising is making in the online world.  They have actually found a way for US to do their work - to reach the consumer.

Using our newfound love of social networking online, they have turned us into the target demo AND the ad agency!

Think about it - here's the math behind the DNA of a viral video commercial:

Take a popular SNL bit using that Haddaway song

Turn it in to a Diet Pepsi commercial

Air it during the Super Bowl

Making it interactive using a popular satire site like Jib-Jab

Allow you to add content - in this case your kids

Make it easy for you to share with friends and family

Craig & Lisa - you should bill PepsiCo for your services!!

How could radio do the same kind of thing?  For starters, why not film the morning show doing a familiar benchmark bit, or just a really good exchange on some topic, and allow listeners to put their own faces on those of the station's crew?  It could even be something as simple as your star air talent extolling the virtues of the station - with a P1 listener able to put his/her face over the jock's... and then forwarding that off to everyone they know!

$4 Gas

As oil prices skyrocket, the possibility of $4/gallon gas prices seem more than likely as we head into the summer.  But not if you're the President.

Perhaps you caught his recent press conference, when he was asked about this.  Looking surprised by the question, President Bush responded, "That's interesting.  I hadn't heard that."  It was a reminder to Americans that a guy who doesn't pump or pay for his own gas isn't truly in touch with regular folks.

And it's something you hear with regularity from personalities who have hit the big time financially.  It's not uncommon to hear them talk about a lavish vacation, a Vegas weekend, a luxury car purchase, the free tickets to the suite they received, or the limo ride to the concert.  Part of this may be expected by listeners who totally understand that they're listening to stars who have cashed in on their success.  Some live vicariously through these DJ stars and their rock star lives.  And clearly, a portion of the audience can afford these types of extravagances - or buys them anyway.  Howard Stern has typically talked about his riches and perks, and he's often made it entertaining.  Although I would submit that he was always more relatable playing "everyman" with regular guy problems with Allison and the girls, than when he dated strippers in limos.

It's the same thing with the local morning guy, and even the syndicated show that speaks to millions of listeners around the country.  More often than not, they are better off being relatable, and in-touch with their audiences, rather than above them.  In these recessionary times (yes, it is a recession), keeping it real is the way to go.  We're going through a difficult period in this country, where foreclosures are common, jobs are tenuous, and it's tough for the "Average Joe" to afford concert or baseball tickets.  Personalities that maintain great eye contact throughout this tough patch will most certainly have an edge - not just with their listeners but with many others who work at the station who are struggling to make ends meet.

March Gladness

This is one of my favorite times of the year.  Spring training is going strong, with the promise of Opening Day just around the corner.  After a winter like the one we've endured here in the Midwest, March is the transition month where good things lie ahead.

But it's also the time when a number of great radio stations pull out all the stops, and do their own unique versions of "March Madness."  Here are a few of the better ones:

• The "new" 92-3 K-Rock in NYC has one of the best brackets I've seen.  PD Mike Tierney, along with web guys, Christian Conte and Joe Cingrana, worked with web designer, Bluefuse, to create a very cool, interactive bracket for "March Bracket Brawl." 

• Over to Chicago, Q101 has its very cool "March Music Madness," engineered by PD Marc Young, as well as Rey Mena and the Emmis Interactive team, who always do nice work in the digital department.
• There's always the gang at KSHE who puts everything into "March Bandness" - one of the better inside and outside versions of this stunt.  Every employee at KSHE is playing along with the audience, trying to make the best possible picks.  They have "retired" Sammy Hagar and Rush this year, claiming "tour exhaustion."  Rick Balis and the staff always do a great job here.
• Of course, 97Rock and John Hager in Buffalo always run a class tournament.  This year, Led Zeppelin has been elevated to naming rights on the championship trophy.  (Wonder what Lord Stanley would think?)
• But the bracket that got my attention this year comes out of Seattle.  KISW's afternoon show, "The Men's Room," has their "Alco-Hall of Fame."  It's warped, it's demented, and it's that show's lifestyle.  Miles & Thrill have created a bracket that is....well, unique.  Dave Richards enables this juvenile behavior.  If you participate, bring a designated driver.

These promotions are great because they stir up passion - for music and other stuff.  Excuse me while I fill out my brackets.

The 800 Pound Gorilla

Today, it's a guest blog/article from Gordon Borrell, CEO of Borrell Associates, Inc.  Gordon delivered a great presentation at Summit 11 in Dallas, and we continue to find his observations about the Internet opportunity spot-on.

My jaw dropped the other day when I read in Inside Radio a discussion of how radio operators should approach Internet advertising.  The message: Don’t overestimate the Internet opportunity, don’t be distracted by it, and treat it as a brand extension.

Wow.  The last time a new medium as significant as the Internet came along, the radio industry took the exact opposite approach – and won Big Time.

It was 60 years ago, and the new medium was television.  Many radio stations did indeed believe in the “brand extension” idea and carried their call letters over to the broadcast TV medium.  But think of how disastrous the result might have been if they were advised not to overestimate the TV opportunity, not be distracted by it, and to merely use it as a product extension.

The cold, hard facts are this: The Internet has followed the same growth patterns in terms of consumer and advertiser acceptance as television did in its first 15 years.  As an advertising medium, the Internet is already larger than radio.  It will approach $34 billion this year and is on a trajectory to overtake newspaper advertising within five years.  In virtually all markets, the largest local Web site (typically run by a newspaper company) is now grossing more ad revenue than the largest radio station in that market.  In some markets, the largest site is grossing more than the largest cluster of stations.

Don’t overestimate the Internet opportunity?  That’s like telling your ten-year-old, “Listen, son, most people in our family are shorter than average, so stop watching basketball and stop wanting to eat so much.”

Here’s another cold, hard fact... and I’m truly sorry to have to tell you this.  Your radio reps have a bounty on their heads.  We survey more than 3,000 local Web sites every year about their revenues, expenses, number of salespeople and other revenue-related topics.  The ones with the greatest market share and revenue have an interesting characteristic in common: a star-performing “former radio rep” on the sales staff.  The word has spread that radio salespeople know how to sell the Internet, and newspaper and TV Web site managers have been recruiting them left and right.  Radio reps know how to cold-call, how to generate new business, and how to sell reach and frequency.  That’s a perfect match for Internet sales.

While the newspapers and TV stations seized a combined $3.9 billion in online ad sales last year employing a growing battalion of online-only sales reps, radio Web sites garnered a paltry $190 million using… well, radio reps.

In my humble opinion, the radio industry has forgotten its entrepreneurial history.  It is underestimating this new opportunity and has been deluded into thinking its reps can simultaneously sell radio and Internet advertising.  They can’t – at least not to any great extent.  This problem is not unique to radio.  Show me a single instance where a rep is selling two separate media and achieving a significant share of advertising in both, and I’ll buy you dinner and stand outside and watch you eat it.

Frankly, I’m surprised by your industry.  Radio is an extremely creative, interactive, and niche-oriented medium.  Those are the same attributes ascribed to the Internet.  Radio is missing opportunities to recapture the lost youth segment online by creating localized versions of MySpace or Facebook.  It is missing opportunities to leverage its entertainment expertise by creating sites like Metromix to reach a broader and entirely new audience.  It is missing the opportunity to use the Internet as a publishing and broadcasting platform to dig into newspapers’ classifieds franchise, yellow pages’ directory franchise, and broadcast TV and cable’s video advertising.

In short, by viewing the Internet as a distraction and trying to manage it with internal sales teams, the radio industry is missing the boat.

Additionally, Gordon is looking for stations and station groups to participate in its fifth annual online revenue survey.  Participation is free and confidential; the results are used for benchmarking radio station website sales efforts.  The survey takes about 5 minutes to complete.  Participants will receive a summary of the research, which currently encompasses more than 3,100 local media websites.  If you'd like to participate or want to learn more, contact Gordon Borrell at gborrell@borrellassociates.com or call 757-221-6641.  We thank him once again for his contribution to The JacoBlog.