JacoBlog - Jacobs Media's Blog

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.

Competing Against Everyone

There was a time only a decade or so ago in Rock Radio where we had it all to ourselves.  We controlled our music and our pop culture.  Sure, some of Rock's featured bands would appear on Saturday Night Live, and there was always the competition from MTV.  But for the most part, if you worked for a big Rock or Alternative station - even in a smaller market - you controlled the agenda for how music and concerts were exposed and promoted.

Today, you're competing with virtually everyone.  Wherever you look - on and off the Internet - Rock is being marketed in a multitude of different arenas and venues - and I'm not just talking concerts.  NPR does a better job of interviewing our bands and marketing our core product than we do.  Case in point - a Raconteurs concert that was recently broadcast via NPR.org.  And it seems like every week, "Fresh Air's" Terry Gross or their big news magazines feature interviews and music from artists as diverse as Springsteen and Coldplay.

Of course, Internet sources from iTunes to Pandora expose new music and provide information, background, and free samples.  Artists have their own websites, enabling them to independently market their own music and merchandise - without radio's help.  And fan sites are abundant with their own homegrown coverage of their favorite bands.  In response, most radio station websites provide bare bones music coverage, opting instead to hype station contests and events.

And last week in USA Today came this featured question:  "What's your most treasured concert T-shirt ever?"  That's a fun, highly relatable question that is sure to spawn many listener photo entries.  It's a great example of letting listeners get in on the act, sharing their emotion and energy in a highly visible place.  It's the essence of CGM - consumer-generated marketing.

And it's something that we should have thought of first.

Too often, if you ask a programmer who he's competing against, he tells you it's Q96 or Eagle 94 or Rock 107.9.  But that's the narrow, "too close to the trees" answer that has hurt radio and caused more of the myopia that stunts our business.  In the real world, Clear Channel isn't competing with CBS, and Citadel isn't going at it with Cumulus.  In reality, the radio company you're working for is up against Apple, The New York Times, MSN, Amazon, Starbucks, and Electronic Arts.

The pop culture/media stage has expanded exponentially.  But too often, Radio is content to sit in its little corner in the back of the room.  And that makes no sense if you consider that in a recent month in New York radio, PPM tells us there are 20 stations with weekly cumes over a million people, and 6 stations topping the 3 million mark.  In a Philly PPM month, 6 or 7 stations have cume audiences above a million.  That's a lot of people still being impacted by radio programming, and it provides the industry with a big pulpit for delivering entertainment and information.

The challenge of reimagining, reshaping, and fulfilling our future is immense.  Yet, if we're going to be players in this new game, we need to answer that difficult question: "What's the digital strategy?"

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.

The Next Radio Tsunami?

Today's guest blog comes from Paul Jacobs, who provides insight on the challenges of radio's listening audience:

Like all media, radio faces significant consumer and technology-based challenges that have been well-documented in this blog and others.  But there is a potential macro event taking place that radio requires awareness and action.  This is because a major portion of our listening base - the in-car environment - is being challenged.

We know from "The Bedroom Project" and other research that radio's stranglehold on "portability" has been compromised.  Gone are the days when listeners carried a Walkman radio around with them.  For many Americans (especially young ones), even the existence of a radio in their homes is a thing of the past.  Today, in-car listening is the last bastion of radio dominance.

But what happens when people abandon their cars and take the bus, the train, or the subway?

That's right, with gas prices above $4, a recent article in USA Today shows that mass transit ridership increased 3% in the first quarter compared with a year ago - the highest levels in 50 years.

And it's likely that a large portion of these consumers may be no longer listening to the radio on their way to and from work.

So we have two choices:  we can sit around and lament our bad fortune, or we as an industry can aggressively fight back.  In big mass transit markets, could deals be cut with Sony or other providers to purchase portable AM/FM radios and hand them out at train stations?  Can the NAB take the lead here?

Should radio buy transit advertising promoting listening to the radio while riding?

Let's not sit back and let outside forces impact our destiny.  Morning and afternoon drive is the lifeline of many of our brands, and the dayparts that traditionally drive ratings.  We have to adapt to changing conditions, and stay relevant.

(And you thought I was going to talk about iPods in cars, right?)

D'oh! Online Communities & Your Station

Here's a revolutionary announcement - Fox is aggregating a group of 2,000 loyal viewers and "giving them a seat at the table in the decision-making process," according to Melva Benoit, a senior VP of audience intelligence with the network.  Holy NeoRadio!

Of course, many radio stations have been engaging listeners via email databases for years now, but the Fox announcement lends more credence to the wisdom of using the audience to help guide programming, promotions, website, and marketing decisions.  Fox notes that it plans to use its "community" as another voice beyond perceptual research and focus groups.

This is exactly how radio should be shaping its future.  As we've seen with our Tech Polls, Listener Advisory Board groups, and other tools, our email databases are a fountain of information and feedback from loyal, caring listeners.

In many ways, radio has been ahead of its curve, but simply hasn't formally tapped into this resource, partially because it's so different from traditional research studies.  Many radio stations have larger and more vital databases than most cable television networks.  It's just a matter of putting together a program, and staying with it.

Even Homer Simpson could tell you that.

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.

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.

Music Discovery

In the midst of this musicFIRST fiasco, radio's role in breaking music and artists continues to be minimized.  Of course to those of us in radio, this nearly "1984" spin about the truth is mind-boggling.

But now, consumers weigh in on the topic.  A new Pew study - "The Internet and Consumer Choices" - reveals what radio people have known since Alan Freed.

Here is a sample from the Pew report:

- The Internet is a great tool for connecting consumers with artists and music info, "But it doesn't strongly influence how they buy."

- 56% of music buyers say they find out about music through online sources (a band's website or streaming samples of songs).  But more than half of music buyers say that online information had no impact at all on their purchasing decision.

- Yet, 83% of music buyers say they find out about music "from hearing a song on the radio."

So, it makes you wonder why the marketing "strategies" on the label side continue to veer away from broadcast radio.  An artist interview on a satellite radio may not reach any more listeners than the cume of a Boise radio station, but that's what excites them.

This is more proof that radio is still the prime source of how consumers discover music.  Too bad the music business isn't doing research, and instead is letting their anger and emotions dictate policy decisions.

Your Wildest Streams - Part 3

We heard from a number of you about our streaming blogs last week.  R&R's News/Talk/Sports Editor (and former Jacobs Media staffer) Mike Stern writes today's entry:

Radio people don’t seem to realize that listeners don’t understand or care about the legal and talent issues that affect streaming.  All they know is that when they stream their favorite station, they hear the same four PSAs over and over again, or the stream regularly goes dark for a few minutes or, on one station I stream periodically, the annoying message “This station is in a commercial break and will return to normal programming in a few minutes,” plays over and over and over.  Programmers would never permit this on their terrestrial signals, but accept it on their streams.

To take the issue a step further, at the R&R 2008 Talk Radio Seminar, Andy Lipset, managing partner at Ronning Lipset (which is essentially a national rep firm for major online radio providers including AOL Radio, Yahoo! Music and who recently took over national sales for all CBS Radio online streams) suggested stations and advertisers take the commercial efforts on their streams a step further.  While admittedly challenging in the face of budget cuts and reduced staffing, Lipset suggested advertisers run separate spots on streams that are more appropriate to the medium.

Working from the assumption that streaming listeners have the player minimized on their screen, he suggests writing specific copy and providing graphics, links and special offers that will engage a streaming listener, get them to open the player and click on a link to the advertisers site or a special page on the station’s Web site.  He says streaming is about engagement.  Terrestrial listeners have to fire up their computer and search, or pick up the phone and dial, to access an advertiser’s brand.  Streaming listeners are two clicks away – a click on the player and a click on a link.