JacoBlog - Jacobs Media's Blog

End Of The (Land)Line

When the Cell Phone Only controversy took shape a few years ago when our first Tech Poll was released in '05, Arbitron's Ed Cohen told me that the nation's landline statistics were tracked by the National Center for Health Statistics.  I've never figured out why they're the ones that research this data, but nonetheless, their stats are out for the second half of 2007 - and the numbers continue to show a definite trend.

We talk about the wave that powers the meteoric growth of Google, iPods, and YouTube, but the quiet statistic that has impact for all of us is the steady rise of Cell Phone Only households in the U.S.  This new data tells us that about 1 in 6 homes in the U.S. only have a wireless phone.

And of course, the phenomenon is even more pronounced among 25-29 year-olds - more than one-third are now CPO.

Our new Tech Poll data shows even higher CPO numbers - clearly Rockers (specifically Alternative fans) are especially likely to be CPO, and therefore, not in the Arbitron diary process.  Researchers have argued about the effect of their exclusion from studies - ratings and otherwise.  But when large segments of the population are not a part of research surveys, there's something wrong with the process.

Gallup came to this realization last year, and you have to wonder when radio researchers won't have to reach that same conclusion moving forward.  As the NHIS notes, "The potential for bias due to undercoverage remains a real and growing threat to surveys conducted only on landline telephones."  Technology changes everything.  And market research is no exception.

Just like with iPods, this is a problem that is only going to get worse over time.

Reimagination

In radio meetings, we're often talking about how we're going to have to reinvent events, features, and personality shows that have been around for years or even decades.  The last thing you can do is rest on those laurels in a rapidly changing environment.

But what about having to reinvent a hot product that's only been around for a year?

That's what Apple is doing with the iPhone.  After a very nice first year (our Tech Poll shows that sales are at a very nice 3%), there are signs of a slowdown.  Very few of those who don't own an iPhone indicate they're likely to take the plunge in '08.  After all that hype, that has to be a real comedown for Apple.

And it doesn't bode well for a product that has an iPod pedigree and similar aspirations.  So that's why Apple is taking mega-steps to reinvent the iPhone to make it more compatible for the business world, as well as for the larger audience.  From a faster speed to opening the device up to corporate and business types, the iPhone will be a different device.

But, of course, the big deal is that while the iPhone started as a closed system with no way to acquire new programs and applications, it is now open to program developers.  And there are more rumors that the case and look will change, that GPS support will be built in, and all sorts of other ideas (read: more hype) are on the way that can help get the iPhone to that next level.

Apple is a brand that doesn't live on its successes.  It is always looking for new ways to reinvent and reimagine its devices and applications.  That's what it takes to win in 2008.

Rockin' The Vote - Part 2

Jacobs Media's Tech Poll IV highlights are now available on our website.  While we asked our usual techie questions in this fourth annual poll about everything from text messaging to iPods to satellite radio, we also included a section about the upcoming Presidential election.

While we have no trending data from past elections, we were astonished to find out that 84% of respondents - and we're talking about more than 27,000 interviews from 69 Rock radio station databases - say they're planning on voting this fall.  That's an incredible number, and it echoes the exit polls and primary turnouts that America has witnessed in '08.  By the way, this strong projected turnout runs across age, gender, and format groupings.

We also held our own "mock election" inside the poll, simply listing out the candidates (no matchups), and asking for each respondent's top choice.

Barack Obama comes out on top among our "likely voters" with 26%, followed by McCain (22%), and Hillary Clinton (18%).  The poll was taken in late Feb/early March, so some of the developments that have occurred since (Reverend Wright, Hillary's Bosnia gunfire gaffe, etc.) aren't factored in.

So what does this mean to radio and its personalities?  Many morning shows have been taught to avoid "talking politics" because it can be polarizing.

And done the wrong way, this can be the case.  But when 80+% of the audience is engaged by the election and plans on casting a ballot, personalities and shows need to find a way to address this event on-the-air, reflecting the local market vibe.

Jacobs Media clients who purchased their local market breakouts have an edge, because they can see party preferences in the poll, as well as the candidates of choice among their station's participants.  But even if you didn't take part in our survey, this is the type of information that is readily available by conducting a brief poll on your own among members of your database.  In this way, you can help guide your personalities with information that is relevant and market-specific.

This also should translate to a station's web presence, too.  The Sound (WSWD/Cincinnati) has a great election page, complete with useful links that direct its audience about how to register to vote, as well as information from the various parties, the electoral map, and other resources.  It reflects their audience's interest in the election, and The Sound's essence.

Once again, email databases are a critical - and often underused - connection to the audience, how they think, and what they want.  There's more to these clubs than just sending email blasts about upcoming bar nights.  They are a truly valuable resource that enough stations effectively tap.

In the coming weeks, we'll have more specific breakouts and results from Tech Poll IV.  In the meantime, with just over 200 days before the Presidential election, it's going to be an exciting summer and early fall in America.

Fashion Statement

A recent New York Times article, "Hoping to Make Phone Buyers Flip," discusses the aesthetics of mobile phone design.  Companies like LG Electronics (Chocolate & Voyager), Motorola, and Nokia are in an ongoing competition to design the coolest-looking phones.  It's a form + function game, where designers need to understand the marriage of a phone's looks with its functionality.  And word of mouth plays a role in a phone's initial success.  As Jeremy Dale, a phone marketing exec for Motorola, notes: "The strongest marketing tool is the first 20,000 people who buy the device.  If they like it, they will tell their friends."

But phone design goes beyond that, and the big companies are working hard to determine the consumer taste curve, years down the road.  Recently, Nokia staged a retreat at a farmhouse in Santa Barbara, where 14 designers and researchers brainstormed the future of phone design.

Part of the challenge is personalization, as consumers want their phones to make a statement about themselves... and perhaps their beliefs.  To that end, Nokia recently announced a new phone entrant, Remade, which is manufactured using recycled materials (old tires, aluminum cans), with a more energy efficient battery.

Now segue over the radio.  One of the big takeaways from "The Bedroom Project," the ethnographic study we did for Arbitron last year, was the importance of design for iPods and mobile phones.  At the same time, we saw firsthand the radios that our respondents had in their homes, dorm rooms, and apartments.  There was the joke about the guy who used a Shower Radio in his car.  But it makes you stop and think.  For the most part, radios at home were imbedded in alarm clocks or were old boom boxes right out of the '70s.  As more and more consumers use their cell phones as their alarms, clock radios could become an endangered species.

At a time when gadgets and fashion are virtually married to one another, the design of radios - HD and otherwise - plays a key role in attracting consumers and driving purchases.  Part of radio's overall image problem is that it is perceived as an old school medium in a hot, new media environment.  There are cool-looking AM/FM radios for sale - the Bose Wave radio is a nice, but aging design.  If we're going to move the needle with HD and even AM/FM radios, there are aesthetic/cool issues that need to be addressed.  Some of the newer models and docking stations that feature HD Radio are headed in the right direction, but they need to be affordable, well-displayed in stores like Best Buy, and simple for salespeople to explain to consumers.

The NAB's quest to stop the satellite radio merger has been well-documented, and perhaps will ultimately be successful.  But the bigger threat to broadcast radio is on the inside - turning around perceptions that the medium is out-of-step with consumer tastes and desires.  It starts with that old clock radio on your nightstand and that dusty boom box in the garage.  Dated-looking products won't cut it in this new gadget-filled millennium.

Moanin' About Phones

“If it's the Psychic Network why do they need a phone number?” - Robin Williams

Arbitron is probably asking the same question, as it is becoming more and more difficult to track Americans on their phones in a rapidly changing telecommunications environment.

Consider the following headlines and news stories:

"Cell Phone Spending Surpasses Land Lines" - Yup, 2007 was the first time ever that U.S. households spent more on cell phones than land lines.  As Allyn Hall, consumer research director for In-Stat , pointed out, "What we're finding is there's a huge move of people giving up their land line service altogether and using cell phones exclusively."

"Who Needs A Land Line?  Probably Not You" - Citigroup's Michael Rollins issued a report about the "teleconomy" and these factoids speak volumes:
        - The telcos are losing residential phone subscribers to VoIP and cellular phones at a rate of 7-8% a year.
        - By 2010, wireless-only households are expected to jump to 27% (from 13% in '06 and an estimated 17% in '07).
        - Wireless penetration should jump from an estimated 83% in '07 to 87% by the end of this year.

"AT&T Announces Intention to Withdraw from Pay Phone Business By End of 2008" - Why do you need a pay phone when there's a phone in your pocket?  The data shows that pay phones have fallen from 2.6 million in 1998 down to about 1 million today.  AT&T will hand over what's left of this business to independent providers.

Arbitron knows all about this data, and as our initial Tech Poll data revealed back in 2005, the "Cell Phone Only" problem is big, and getting bigger - especially among younger people who are ditching their land lines faster than ever.  The National Institute of Health - amazingly, the government agency that tracks the CPO situation - reports that nearly 28% of 18-24s and 3 in 10 25-29s fall into this group.

This is why Arbitron is moving from a phone-based sample frame to one that is addressed-based.  The thinking is that a large percentage of these households will fall into the CPO group, and then it's open season to encourage them to participate in the ratings process.

Changing realities require different tactics.  For stations that focus on 18-34 year-olds, better representation can't come soon enough.  And these same stations clearly need to be developing plans to ensure their content and personalities can be received by the growing throngs of cell phone users in their markets.  AT&T, Arbitron, and other major players are making the adjustments.  Radio needs to figure it out, too.

Tomorrow: A Cell Phone Only adopter that may surprise you, and possibly determine how news coverage about the presidential race might change.

Whole Lotta Phone

In the latest marriage of Classic Rock and digital technology, Verizon and Led Zeppelin are now offering wallpapers, ringtones, and full-song downloads of the band's catalog.

Check out this quote from the director of digital music at Verizon Wireless, Ed Ruth:  "Verizon Wireless is proud to be the exclusive over-the-air retailer of digital downloads from Led Zeppelin.  We are thrilled to deliver this anxiously-awaited catalog to existing Led Zeppelin fans, while also helping a whole new generation to discover this classic rock for the very first time.  All of this on the one device people never leave home without -- their mobile phones."

In Jacobs Media's Tech Poll 3, conducted earlier this year, we learned that downloading ringtones and wallpaper are popular mobile phone activities - yet another way to monetize these versatile devices:

We saw it up close and personal in "The Bedroom Project" - cell phones aren't just cool gadgets; they are fashion statements.  And now Classic Rock continues to extend its influence to its original fan base, as well as younger Zep fanatics, too.

Location, Location, Location

"We will strive to ensure that radio is on new, emerging technologies. It's our job to make sure broadcast signals are available on every gadget, everywhere."
      --David Rehr, NAB President/CEO

That statement was part of the "Radio 2020" initiative introduced at the NAB Convention, last month in Charlotte.  It's timely for a number of reasons.

First, one of the harder hitting findings in "The Bedroom Project" is the gnawing reality that radio may be losing the "location" battle to other media.  Among our 17-28 year-olds:

1. Radio in the home has become tertiary to the array of other gadgets and media, from computers to video games to good old television.
2. On the street, radio has all but lost the battle to iPods (and mobile phones).  The only people walking around with Sony Walkmans are radio programmers.
3. In cars, radio still rules, but iPod connectivity will challenge its dominance.  And the automakers are quickly making it possible for most new car buyers to plug their mp3 players into their vehicles' sound systems.

Second, XM has announced a new initiative that should be a wake-up call for broadcast radio.  New CEO Nate Davis tells you all you need to know about where they're headed, merger or not: "Our strategy will be that we need to partner with more people (such as) portable navigation devices and cell phone providers."

AM/FM stations need to become the "radio" that is featured in mobile phones - period.  This isn't just a good idea, it is paramount to our industry's ability to have a seat at the new media table.  If radio isn't a dominant feature in cell phones (and are there really stations that still aren't streaming?) moving forward, the portability battle is game-set-match over.

You may not agree with every aspect of "Radio 2020," but in this area, Rehr's concern about radio's "locations" moving forward is dead on the money.

The Swiss Army Phone

We used the graphic to the right for our "Bedroom Project" presentations in Charlotte - the perfect way to depict what mobile phones have become.  Consumers do quite a bit more than just talk to others on their phones - from texting to photo taking/sharing to the alarm clock to streaming.  And now, Nokia is acquiring the technology and expertise of Navteq to cement in the GPS function.  It won't be long before those portable, plug-in GPS units will become a thing of the past, as mobile phones make this feature as texting is today.

As Roger Entner, senior VP for communications at IAG Research chimes in, "It's a step that moves us toward the Swiss Army phone." And it's a reminder that media outlets absolutely have to be accessible via mobile phones.  That was one of the messages that was part of NAB President/CEO David Rehr's "Radio 2020" initiative.  Radio needs to be a part of new technologies, rather than run from them or pooh-pooh them as just fads.

This move by Nokia is another wake-up call for broadcast radio.  While there may be long-term value in introducing something totally new to the gadget world - that is, HD Radio - it is even more imperative that radio find its way into existing technologies.  In the case of mobile phones, these are gadgets that are far more than just phones.  They are lifelines, fashion statements, photo albums, texting devices, alarm clocks - and people don't leave home without them.

As radio loses its grip on portability to these devices and iPods, wouldn't it be wonderful if AM/FM stations could easily and conveniently be accessed by cell phones?

AC/DC Rocks Your Phone

That's the headline on this quarter's Verizon Wireless magazine/catalogue and also a major focus of one of their TV spots.  It's another reminder about how critically important mobile phones and Classic Rock are in the new media scheme of things.

Of all the gadgets that respondents discussed in "The Bedroom Project," the mobile phone stood out as both a fashion statement and the most depended upon.  As we witnessed when Natalia in Columbus, Ohio, caressed her RAZR and cooed, "It's like my little pet," mobile phones are passion plays.

And it's where all content needs to be headed, especially AM/FM radio.

You can see both "Bedroom Project" presentations at the NAB/R&R Conventions in Charlotte next week.  Conceived by Arbitron and conducted by Jacobs Media, "The Bedroom Project" is an ethnography study about media, technology, and survey research.  The presentations are Wednesday afternoon at 3:45 at the NAB; Thursday afternoon at 2:15 for the Jacobs Summit 12.

On Trial

As readers of this blog know, the success of the iPhone has not been a surprise.  Besides answering many of the needs that mobile phone and iPod owners have, it is truly an innovative device.

Equally impressive, however, is the way that Apple marketed this launch, from the day that Steve Jobs introduced the iPhone at MacWorld back in January to the actual debut on June 28th.  Every step of the way, it was a textbook marketing effort - all in less than six months.

If you think about it, Apple did their homework, developed a product that people wanted and needed, created a brilliant marketing and advertising campaign (that is ongoing), and fanned the flames of buzz and word of mouth.  They even sent a "heads-up" email to members of their database the day before the launch - not taking anything for granted.

But the key to the campaign was the demonstration of how the iPhone looks and works.  If you think about the ads you've seen, Apple let the device sell itself.  The TV commercials are clever demos that show the iPhone in action.  Once you've "experienced" it via the spots, you "get" the concept, and you want one even more.

Contrast that with the HD Radio situation.  At the end of the day, HD Radio may be a wonderful product that most people have simply not experienced.  As we saw in our Tech Poll III this past February, a key obstacle to purchasing an HD Radio is that many people have never seen or heard one, nor do they know anyone who owns one.

Apple had some of these same challenges prior to the launch of the iPhone.  How do you show consumers what this device is all about before it reaches the marketplace?  Simple.  You develop and create TV commercials that show the product in action.

If HD Radio has any prayer of becoming a player, a plan for marketing the features and benefits of the radio itself, as well as a means for consumers to demo it, is going to need to be developed.  And fast.