OK, it was tough enough when all those little mom and pop record and stereo stores went away and became big box retailers like Best Buy. And when many grocery stores threw in the towel because of Sam’s Club and Costco. And when all those quaint hardware stores simply faded away because of Home Depot and Lowe’s.
Unable to attract big corporate brand companies, radio began to focus on what was left – local advertisers.
But radio isn’t chasing these dollars in a vacuum because local is the magic word, the secret sauce, and the Holy Grail for the biggest Internet brands. And radio better figure it out in 2011 or risk even more shrinkage moving forward.
(By the way, I love these debates where pundits vociferously claim that local radio station brands should be thinking globally, and in the process, neglect or cast aside personalities, event promotion, and the other things that make them special within their metro limits. I wrote a three-part series for this blog last year called “Local Schmocal” – defending the philosophy that if you aren’t focused on what’s happening in your hometown – the apocalypse will arrive a whole lot faster.)
Well, if your sales manager is still directing the staff to focus on the Yellow Pages or keep tearing apart the Daily Tribune Press Citizen Leader Journal Times to look for leads, it may be time to send her off to her next opportunity in “Pros on the Loose,” because those strategies no longer hunt.
The New New Local Sales Reality
Brick and mortar businesses are under direct attack. Online sales jumped more than 15% over the holidays, surpassing in-store revenue hikes. Yes, it was a great December for everyone, but much better for Jeff Bezos and other online retailers.
The pressure on local businesses is intense. Between the costs of paying for and operating in physical locations, hiring and managing staff, plowing the parking lot, and providing all those other services, traditional retailers need all the help they can get.
And that’s why your real competition is Groupon. And now Google.
You should know first-hand how and what Groupon is doing. If you’re in radio sales, and you haven’t signed up for this service, this is more important to your career than posting your resume on LinkedIn or tagging a picture from a local bar night on Facebook.
Couponing Is King
Our Tech Polls have consistently shown strong interest in couponing, especially when the recession took hold. (By the way, for broadcasters who claim that research is no longer necessary, that’s the type of findings that pay for themselves ten-fold – if you ask the right questions.)
And that’s why we have relentlessly recommended that radio quickly set up organized couponing programs with station databases. Innovation is not about trading for that first quarter sales trip to Cozumel. It is about devising effective strategies to defend your local advertising turf, while going on the offensive to generate new business as the country digs its way out of the recession and segues into better times. It is also a way to attract an entirely new level of clientele who might not be able to afford your spot rates, but spends a considerable amount of money in other advertising sectors.
My wife teaches classes at a new cutting-edge fitness studio called Real Ryder Revolution, which specializes in a unique form of cycling that allows you to lean, bank, and steer similar to a real bike. Their thriving business is less than a year old and trying to grow its clientele in the struggling Metro Detroit economy. Not a single radio station has called on them, but a recent Groupon promotion blew the doors off the place, bringing hundreds of new customers into both of their locations.
And it only gets more competitive, because Google – rebuffed in their effort to buy Groupon – is now adopting a different strategy to attract those local ad dollars – personal phone calls.
Their automated ad sales program – AdWords – never really took off, so as The Wall Street Journal reported late last year, they have hired 100 sales reps to work the phones to bring in local retail advertising revenue. Here’s why this new initiative could be very successful for Google.
First, the Google brand has value. (Remember the Pandora blog from earlier this month – it pays to build great brands.) When a business gets called by Google, the customer has a positive brand association.
Second, Google is now keeping it simple because they’ve discovered that the world of online advertising is confusing to first-timers. Unlike AdWords, this new Google program offers a fixed monthly amount which local businesses can easily budget into their expense lines.
Third, mega-brands like Google know there is a lot more money out there than local TV, radio, and newspaper were ever able to extract. Facebook’s “Places” program (also discussed in this blog last year) is another example of a global company seeing local dollar signs that “old media” simply could not effectively attract.
And Google is planning on integrating Android software for mobile phones to integrate local sales efforts that include locating stores and deals, while also paying for products using a smartphone.
"Google has always had large sales forces and, quite frankly, the advertiser opportunity has always been bigger than the number of people we were able to hire."
If you’re in radio sales, those are fighting words. And during a time when demand for :60s and :30s is shrinking, these digital competitors have figured out a way to unlock huge amounts of revenue. While most of these “buys” aren’t large by themselves, companies like Groupon and Google see local businesses as a scalable opportunity that is wide open to their approaches because they aren’t limited by inventory. They’re a 21st century version of the Yellow Pages, sucking up small amounts of money from thousands of businesses – many who don’t advertise in traditional media like radio because they’ve been told they can’t afford it.
Just Do It
Radio has those extra “avails” – on its streams, via HD2 channels, in sponsorships of podcasts, videos, webcams, and even social media pages. Innovative local packaging that provides new and exciting avenues so any local advertiser can get in the game is sorely needed but so often missing or treated as afterthoughts.
But the biggest advantage radio has over competitors like Groupon and Google is . . . cume. You’ve got the biggest megaphone going and the ability to move hundreds of thousands of listeners to your various platforms. That’s something these digital competitors will never have.
For decades, radio programmers have bought into the need for strategic thinking, via research and consultation. Down the hall, sales has typically eschewed this approach, opting instead to design new rate cards, reconfigure sales staffs, and focus on tactics and packaging rather than strategies.
If Groupon, Facebook, and Google don’t force new thinking, innovation, and strategic thinking in the cubicles, radio will deserve its shrinking slice of the advertising pie.