JacoBlog - Jacobs Media's Blog

It's The Pitts

Respected newspaper columnist Leonard Pitts, Jr. recently had an epiphany about his business and the Internet.  In a revealing column, he essentially threw in the towel over the issue of saving the newspaper industry, and said "We must blow it up instead."  If that sounds a bit like Jason Calacanis' take on radio at our Summit two years ago ("Surrender"), keep reading.

Pitts, who has not been a major fan of the Internet, now concedes that digital is the only way out for newspapers.  Consider these quotes, not just in terms of newspapers, but all traditional media that are now struggling for answers:

"We still tend to regard our Websites as ancillary to our primary mission of producing newspapers.  But I submit that our primary mission is to report and comment on the news, and that it is the newspaper itself that has become ancillary.

So maybe we should regard the Internet not as an extra thing we do, but as the core thing we do.  Maybe we should maximize the fact that we know our cities as no one else does.  Maybe we should make our Websites not simply online re-creations of our papers, but entities in their own right, destination portals for those who want news and views from and about a given city, but also for those who want to find a good doctor in that city, or apply for a job in that city or reach the leaders of that city or research the history of that city."

The only difference between his industry and ours is that they are a bit further down the same road. 

What's the digital strategy?

The End of Low-Hanging Fruit

The recent announcement by Anheuser-Busch that they are cutting marketing budgets to stave off the takeover from a Belgian brewer is another slap in radio's face.  In this chapter, the beer company that has dominated radio advertising for decades has decided to pull significant radio dollars off the table - and in some cases, is eliminating its radio buys in many markets.  Yet, it appears that A-B - rather than hacking its marketing budget uniformly across all media - is simply moving these radio dollars into other media.  For many stations that are dependent on beer advertising, this is yet another setback.

But in the bigger picture, the rules of buying and selling radio time have been undergoing changes for some time now.  The days of account reps who work for highly-rated stations sitting around answering the phone and giving out their rates are over.  As budgets tighten and competition increases, only the most creative and aggressive will succeed.   Nothing is as simple as it used to be for radio, and will probably never be that way again.

In many markets, we work with stations that are top-rated in the glamour 25-54 adult demos and they are struggling mightily to make goal.  The old adage that "If you get the ratings, the sales will follow" has been upended by the reality that radio is not going to get the dollars simply because that's how they've historically been allocated.  Just ask the marketing guys at A-B.

Instead, clients are looking for results, not numerical justification for higher rates or "getting on the buy."  Today, sales people have to SELL.  They have to be creative, and they have to provide solutions, not just cost-efficiency.  And that means developing programs that show results.  Retailers aren't interested in 25-54 shares and better cost-per-points.  They want people in their stores, buying their product.

A recent article in the New York Times told the story of Heinen's Fine Foods, a local grocer who is up against the big guys.  Rather than trying to win with lower prices, Heinen's has come to realize that in order to keep and win customers, there's a need to tell stories, a lesson they learned from competing against Whole Foods.  To generate sales and loyalty, Heinen's now trains its employees with an arsenal of 50 stories they can tell customers about the meat, the produce, and other store items.

A few years ago at another Jacobs Summit, marketer Tom Asacker told the story (that's what HE does well) about a how a good story can trump data every time.

Tom was correct, and radio needs to learn these lessons well.  The medium has tremendous power.  It can drive large audiences to web sites and car lots.  It can motivate listeners to download coupons and show up at phone stores.  But the simple times of getting ratings and easily converting them to easy sales are over, and radio is going to have to work harder at telling stories - ITS stories.

No, I'm NOT Trine...

Today's blog from Keith Cunningham wisely reminds us of the importance of maintaining updated direct mail marketing lists:

What do the following Los Angeles stations, KIIS, KYSR, KOST and MY-FM (formerly KBIG) have in common?  Yes, they're all owned by Clear Channel, but that's not the answer.

It's that I've been consistently receiving direct mail pieces from each station since 2001, for both the spring and fall books.  Kudos to Clear Channel for actually spending money on marketing and not taking the success of brands like KIIS and KOST for granted.  But there is a problem.

For this entire time - more than seven years - they think I'm someone else: a female who's probably between 25 and 44.  In other words, their direct mail lists have been flawed for years, and as a result, they're wasting money on me, as I'm clearly not part of the target.

I'm registered to vote, my driver's license is current, and every other direct mail company seems to know who I am.  So it's only these radio pieces that are misaddressed.  Further, I've NEVER received another piece of mail addressed to this mystery female.  And the previous two tenants who've lived at my address aren't the person they're targeting either.  So we're probably looking at a decade of errors or even more.

Some of you may remember I blogged about this last year, but since I'm looking at yet another stack of spring book direct mail pieces from each station, and more wasted money, I thought I'd take the time to post another reminder.  If your station is engaged in direct mail or telemarketing, make sure your vendor frequently updates their lists to ensure accuracy.   While there's always going to be a certain percentage of "waste" with these programs, radio faces enough obstacles these days.  The last thing it can afford is wasting money on unreliable marketing lists.

Your Wildest Streams - Part 4

Now that AOL and CBS Radio have hooked up in what CEO Dan Mason says is a merger that "has instantly doubled our daily audience of listeners," it's another victory for strong brands.  For years, AOL has offered generic streaming radio stations that were as exciting as wallpaper.  Now with 150 CBS Radio stations to choose from, AOL-goers can actually find a better radio listening experience - or can easily find a radio station they've heard from during their travels around the U.S.

The player (shown below) is nice looking, and provides album art in-sync with what's playing, the chance to rate and/or buy the song (or the album), as well as designate the station as a pre-set or share it with someone else.  On the left is a list of the CBS stations available.  Of course, there are no fewer than 8 Jack-FM stations on the list, and it's not always easy to find a station that you're searching for.  (Maybe list them out by markets - or at least offer that as an option, so the user can look through NYC stations, for example.)  The stream sounds good technically, and as we've discussed in this space, that's not always the case.

Overall, this is another indicator that big streaming brands will easily best "generic radio stations."  With its personalities, production, and elements that you could only get from a real radio station, this plan should be a big winner for both AOL and CBS, especially if it can generate significant web revenue.

CBS is positioning its terrestrial radio stations for the future by offering them up to a much larger web audience.  This bodes well for traditional broadcast companies as they seek out smart alliances moving forward.

I Mel-ed Them To Death

While watching a recent streaming video segment from CNBC - "The Business of Innovation" - featuring Mel Karmazin, it reminded me of Mel's talent for proofing ideas and forcing his people to exercise logic, strategy, and fiscal sense.  In the clip below, Mel talks about how Sirius came up with the idea of streaming television (Nickelodeon, etc.) for mini-vans in a deal they put together with Chrysler (starting at about 7:35 into the clip) .  He refers to his "devil's advocate" method that demands sound answers for a plan, and notes, "I Mel-ed them to death."  Of course, when his team was able to justify the plan, he green-lighted it.

>Click For The Video<

If you ever asked Mel for a music test or to hire a particular jock or to even change formats, Mel would put you through the ringer.  It wasn't always pleasant, but it forced you to think the strategy through, from beginning to end.  In the process of honing your own thinking in order to "do battle" with Mel, you ended up crafting the best argument for going forward - or in many cases, not bothering to pitch a mediocre idea in the first place.

As the radio industry constricts and belt-tightens, too many good ideas aren't seeing the light of day.  And too many positive and important components of radio success are being blindly cut in order to reduce expenditures.  Perhaps the "Mel Method" - forgotten by many, but still a very valuable exercise - is a great litmus test for the evaluation of "best practices."  (I still hear his voice in my head.)

No Limits

Struggling Chrysler is trying to do just about anything to get your attention - and to stimulate you to buy their vehicles.  The offer of $2.99 gas, while appealing on a very basic economic level, is apparently not moving cars and trucks off the lots.

But in all their new '09 vehicles, wireless Internet may be a motivator for some adventurous buyers.  It's a platform called UConnect Web, and it opens up the Internet to consumers on the road.  For radio people, it's the inevitable announcement that all content in cars is fair game.  And it's coming to Chrysler showrooms in September.

According to Keefe Leung, a Chrysler engineer for this initiative, "There are no limitations in content."

That's a quote that should be posted in cubicles and offices throughout our industry.  The excuses for not streaming or for offering a substandard stream are coming to a swift end.  Radio is in a great position to brand and market its streams because as mobile WiFi becomes as ubiquitous as wireless laptops, there will be no limits on access.  The best known brands in local markets - KLOS, KBCO, WRIF, WMMR, KQRS - will have a decided edge.  But only if radio realizes what's at stake and steps up.

W.T.D.S.

I'm now thinking that the better question for radio might have been, "What's the digital strategy?"  Gordon Borrell's newest report, "Local Web Revenues," is very revealing.  Of course, local online advertising is exploding, but it's the hurting newspaper business that is garnering the lion's share of the $8.7 billion that was spent in 2007.  While print journalism is hurting, they are finding a way to attract $3.1 billion of this growing piece of revenue pie.

Now you could argue that newspapers have been in more trouble for longer.  Necessity being the mother of invention, they have made more significant and serious moves to take a hefty share of the Internet turf.  And while they are still struggling mightily as circulation figures continue to erode, they are much farther down the interactive path than any other medium.

Where's radio?  Overall, it has attracted only $189 million in '07 - a paltry percentage of the total.  As Mark Ramsey notes in a recent blog, there is indeed a lot of headroom.  But does radio still see the newspaper business in the same old light where sales managers buy the local print edition, cut out the ads, and implore the salespeople to call on these accounts?  That is so 1987.

The newspaper "threat" is that they actually have an avenue to get healthy again.  They've spent the money, the time, and invested in talent who can help them turn the Internet corner.

Where's the overriding strategy for radio that's going to earn a larger piece of this Internet business?  While just about every radio company has now hired an "Internet guy" (who in turn has hired an "Internet team"), how is radio going to seriously improve these numbers?  And are these methods being communicated to the rank-and-file that make stations go on the local level?

Back in the old days when Ries & Trout's Positioning book was the Holy Grail, stations were encouraged to develop a position, stake it out, and execute it up and down the line.  The concept was to make sure that everyone from the morning guy to the salespeople to the receptionist knew what that big umbrella position was all about.

Well, we're in that same position with digital strategies, content development, and revenue generation right now.  If you ask local programmers and managers about their company's digital strategy, many would shrug and give you a blank stare.  How are their stations supporting web content efforts?

How does video fit in, and who will create it?  How are the various departments working together to generate content and revenues?  Will there be a local online sales staff that's dedicated to selling a station's online products?

These are all key questions that point to the need for a big-time strategy and a long-term map.  While there's always been a "Wild West" quality about the Internet, a plan that everyone understands at all levels is necessary.  We're going to cover a lot of these issues at Summit 13, but the heavy lifting needs to happen inside companies, and it needs to happen soon.

No, I'm not going to make new bracelets with new initials.  Hopefully, our now-familiar W.T.D.A. green wristbands are having the necessary effect.  It's time to develop and articulate a strategic plan now.

When Waterfalls Go Up - Part 1

As technology moves at lightning speed, it is increasingly difficult for radio companies (and all businesses) to track and respond to it - much less get ahead of it.  When you consider that iPods, Google, YouTube, and MySpace have only been around a few short years, it can be mind-boggling to even think about what we'll all being doing in 2010.

But that's precisely what we're paid to do.  Because as radio has learned - the hard way - continuing the same repetitive motions leads to stagnation, and ultimately being usurped by new media, and perceptions that we've become passé.

So how do we keep up with what's next?  Well, the auto companies are grappling with the same issues.  Finally, cassette decks in dashboards are vanishing.  But do consumers want satellite radios, HD radios, GPS systems, or wireless communications systems?

Tom Steenman, VP of Intel's digital enterprise group puts it this way: 

"It will waterfall up instead of down."

That is, in-car technology is something that young consumers "get" and appreciate, so car makers would be smart to load up affordable cars with the latest gadgets and services.  "It is evolving rapidly, Steenman said.  "The car is becoming the next frontier."  Eventually, telematics (as the automotive business calls it) will work its way up to older demos who have more money to spend.

From our Tech Polls and the Arbitron "Bedroom Project" ethnographic study we conducted last year, that logic rings true.  If you want to know what you'll be doing a few years from now, talk to a few 14 year-olds.  One of our "Bedroom" respondents told us "Email is for old people," and that finding made us stop and think about the differences between adults and teens.

A few years ago, I remember watching my tween-aged daughter IMing seven of her friends simultaneously.  At the time, I wondered who in their right mind would do this, and why she wouldn't just pick up our landline phone and call them all.  A couple of years later, I found myself IMing my co-workers two doors down the hall.  And who needs a landline?

The same might be said for social networking sites, blogs, cell phone texting, and many of the other tech trends that have taken societal hold in the past few years.  They start with youth and "waterfall up."  Radio has all but lost the teen audience, and technology mixed with corporate denial and arrogance ("Where else are they going to go?) have been the culprits.  But it doesn't have to be that way.  Teens will tell you what they want - and don't want - and their preferences are "techno-omens" about what's to come.

Tomorrow, we'll look at teens and Tech, along with Jon Coleman's new study about how we're at the techno "tipping point" when it comes to young people and music consumption.

If You Spend It, They Will Come

As radio proceeds through tough financial times, marketing budgets (among other expenditures) have been slashed.  What type of impact do these cuts have, and how might they be hurting the medium's long-term growth, as CEOs continue to tighten the belts?

There's no better Petri dish than right here in the State of Michigan where the economy is clearly the worst in the nation, led by the highest unemployment numbers in the 50 states.  Trust me - it sucked here even before the economy tubed.

And yet, Michigan has announced it will increase its tourism marketing budget by 33% to $17.5 million.  How can they justify this, while jobs continue to deteriorate, along with home prices?

It's because the campaign - "Pure Michigan" - worked.  In an independent study conducted by Longwood International, they found that for each advertising dollar spent out-of-state (Chicago, Cleveland, Indianapolis, Cincinnati, Milwaukee, and Ontario), $2.82 came back to Michigan in new tax revenue.  As a result, they're budgeting more for advertising, and expanding it to other markets in the Midwest. 

It's a great campaign on both TV and radio - voiced by Michigander Tim Allen - and of course, that is a big part of its success.  But the other side is simply the same basic axiom that radio reps have been saying to clients since the beginning of time:  marketing works.

Here are two examples of what the spots sound like:

Download MP3 File of "Gone Fishin'"

Download MP3 File of "Beachtowns - Lake Effect

We should follow our own advice.

And by the way, so does great writing, outstanding delivery, and a well put-together audio campaign (something that's been missing from so much local production over the past decade).  It's amazing how a well-crafted commercial campaign stands out in this environment.

iPods & Cars

Our Tech Poll clearly shows the impact that iPods are having on the driving experience.  While iPod ownership continues to soar, more than half of these consumers say they can connect these devices into their cars.  It's more proof that radio continues to fight a difficult "location war," especially in its long-time bastion - the car.

*Among iPod Owners

But radio isn't the only one suffering from the iPod in-car explosion.  It turns out that in-dash audio aftermarket sales are down 21% for the first four months of '08.  A new article in Brandweek discusses how companies like Pioneer and JVC Mobile are combating this trend with new campaigns.

Pioneer is going to shoot older (and away from the iPod super-target), while focusing on devices that include GPS to Bluetooth to iPod connectors to voice recognition.  JVC is going in a different direction, using the Internet in a campaign that features rock bands Buckcherry and Papa Roach to promote El Kameleon, a device that has Bluetooth, video, and a proximity sensor.

Meanwhile, neither HD Radio nor satellite radio are even mentioned in this article as gadget come-ons to lure consumers back to the in-car audio aftermarket.  Wonder what that means.