Last week, BIA/Kelsey's blog discussed the comeback of radio companies in the all-important revenue department for 2010. While blogger Mark Fratrik noted that these improved numbers were predictable, given the low bar set last year, it is still good news.
But where is future growth going to come from?
Fratrik pointed out, "Where the stronger growth will occur with radio stations is with their digital/online activities. Radio stations are in an advantageous position to take advantage of its local assets – its brand name, its cross-promotion capabilities, its local content, and its local sales and marketing staff – to generate substantial revenues on their digital/online activities. In the next five years we expect an average annual increase of over 16% in these revenues. Where presently these revenues are a small portion of many local radio operations, we see some radio broadcasters earning substantial amounts from these activities in a short time."
The italics are mine. And while it is difficult to disagree with his prediction that the big growth sector for traditional broadcasters should indeed be digital, it is questionable whether radio operators will be able to capture a fair share of that activity.
Why is that? Well, if you think about life before the Internet, radio was struggling to get past the 7% slice of the media pie, despite being a legacy business with strong local brands and big personalities.
In the new digital world, is radio entitled to a larger share of dollars, given the more sophisticated brands and media sources that are already preying on advertisers?
Radio is going to have to earn every digital dollar in a new world with iAd and sophisticated marketing tools. And if that's going to happen, radio is going to need to reach a more enlightened state about what it's going to take to be truly competitive. This has a much higher degree of difficulty than doing battle for ad revenue with newspapers, billboard companies, and the Yellow Pages. Oh, for the good old days.
In the cold harsh light of day, how high on the priority list is the digital stream? Who's paying attention to the user's streaming experience, from the overall sound quality to the way that commercial breaks are filled? Do programmers - burdened with long and getting longer checklists of priorities and duties - have the time to focus on streaming issues?
You can answer these questions for yourself. But when you consider how pure play outlets like Pandora only have to focus on their streams - not transmitters or towers - it's a simpler more linear world.
In order to compete in this new environment and reap the financial benefits, it will require putting digital initiatives front and center.
Not as afterthoughts.
P.S. On Wednesday (5/19) at 1:00 p.m. Eastern Time, I will be participating in a free webinar, presenting the key findings from our sixth annual Technology Survey. It will be a fast-moving hour, including smart phones, Pandora, social media, streaming, and even Howard Stern. It is sponsored by Triton and AllAccess, so join in if you have the time.
You can register at this URL: https://www2.gotomeeting.com/register/820047627