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.

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.

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.

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.

For Those About To Rock... Go To Wal-Mart

At long last, a new AC/DC album is on the way (untitled), and the big news is that it will only be available at Wal-Mart stores.  This is more evidence that distribution paradigms are rapidly changing, and that the labels continue to lose control over their domains.

This news comes on the heels of the news that new 3-disc Journey album, Revelation, sold over 45,000 copies in its first three days in another Wal-Mart only distribution strategy.  According to the New York Times, Front Line Management's Irving Azoff is predicting one-week sales of 80,000.  As he pointed out, "With the downturn, the labels couldn’t match the marketing commitments that Wal-Mart could make.  It was well in excess of anything a label could do.”

Some are saying that price is a big driver here ($11.98 for Revelation), but most of us know better.  Journey (like the Eagles and AC/DC) is a venerable Classic Rock brand with legions of loyal fans.  And as importantly, the traditional relationships between artists-labels-radio-distribution are undergoing major change, allowing this new plan to be very successful.

Sure hope AC/DC's album art conforms to Wal-Mart standards, because the sales numbers will most definitely be strong.

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.

Topical CGM

Here is a guest blog from our own Keith Cunningham enlightening us on the power of topical CGM:

While it’s not the greatest photo gallery you’ll find online, you’ve gotta give CNN some credit – they definitely get CGM.  With the passing of the legendary Bo Diddley earlier in the week, CNN sprung into action and asked their viewers (“iReporters”) to send in pictures of themselves with Bo.

The power of topical CGM is not talked about enough these days, yet TV networks (and their news programs) are getting very good at it.  And while evergreen radio campaigns like “Show Us Your Tatts” or “The Homemade Bikini Contest” have their value, topical CGM can also be very viral, if executed well.  And we urge programmers and webmasters to think “outside the radio box” and use video CGM more often.

The topical video CGM possibilities are endless, but consider the Sex & the City event this past weekend as an example.  Listeners could have sent in Vlogs (video blogs) about the movie.  Maybe its guys ranting about the flick or offering up excuses other men can use to get out of going to see it; or even groups of well-dressed women delivering excited, flirtatious reviews of the movie and teasing the men they adore.  Finally, I wonder if any morning shows took a video camera to the theater and captured the moment in their own unique way, and then posted the video on the station website.

Online revenue growth for radio will only be fueled by great content.  Therefore, it’s critical we ask ourselves W.T.D.A. ("What’s the Digital Application")?

And more often than not, some of the best answers will be found in CGM, especially topical CGM.

Got Live If You Want It

Question: How are television networks working around the TiVo problem?

Answer: By doing something that radio has done forever.

The New York Times reports that live commercials (or as we call them in radio, "live reads") are making a comeback on network TV shows.  Jimmy Kimmel (yup, a former radio guy) has done a live commercial for Quiznos (among others), and it turns out that the client is "ecstatic" with the result.

Look for TV networks to do more live commercials, because as we learned in radio with "value added," once the horse is out of the barn, it will run a long way.

But when executed well, these live reads can be good for advertisers, and not harmful to stations, programs, or jocks.  Howard Stern certainly didn't lose any ground with live commercials on his show, and advertisers like Snapple clearly benefited.  In radio, WMGC's Jim Harper and the station's sales/marketing team have been leaders in creating a special category for his "platinum" advertisers.  Not only do they get Jim's attention and great reads, but these clients who pay premium prices also receive other special treatment and services as well.

It's all in the approach, of course.  If personalities put something into these commercials - and don't just fire them off or make them sound like they're shills for their advertisers - they can actually have some entertainment value.  This is - once again - an asset that radio can leverage to put butts in seats and get bodies into retail stores, even in this lousy economy.

As I've posited in this space before, stations should consider using their top personalities to sell their own promotions and contests.  If advertisers are going to pony up extra dollars for their celebrity, credibility, and their unique presentational styles, why wouldn't their home stations want to derive some of these same benefits, rather than having Mr. Big Voice do all the reads?

At a time when radio is looking to leverage its strengths, and find greater benefit for its existing assets, perhaps more attention to putting together programs where stations, personalities, and advertisers can mutually benefit should be pursued.  It's going to work for television - and radio can do this better than anyone.