Memo to Commercial Radio Broadcasters: It’s Not Working

With reports of flat to 1% year over year revenue increases, what will it take for commercial radio broadcasters to change direction?

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With reports of flat to 1% year over year revenue increases, what will it take for commercial radio broadcasters to change direction?

A recent headline in a radio industry trade magazine read, “Radio only lagging television and digital in the minds of media buyers.”

Now that is some kind of spin. Kind of a “Congratulations, you’re third!” Or, “Yeah! We beat print!”

The problem is; this isn’t the Olympics where a bronze medal is a face-saver –especially when there are only four participants in the race.

The media buying game is more like the Miss America Pageant. They crown a winner, and there’s a runner up.

The runner up is important because, as we have been taught, she takes over should Miss America be unable to perform her duties.

But what happens should the runner up prove unable?

The answer is: no one gives a hoot because it never happens.

And that’s what’s going on now with radio. The advertising community, for the most part doesn’t give a hoot. They can get huge audiences with TV, and laser-focused advertising solutions with new media.

In a horrible economy, with splintered audience and down ratings, the television upfront brought in a year-over-year increase of as much as 15% at some networks. Cable just brought in a record number of dollars, too.

New media companies may be struggling with business models in many cases, but as an aggregate, they are eating up more and more of the revenue pie. For example, look at the bellwether auto category. Borrell Associates forecasts that a full 32% of local auto ad dollars will go to interactive digital. That’s a huge change for a category that radio is over-reliant on.

Unlike TV and new media, commercial radio is posting just 1% year-over-year gains – and last year’s numbers weren’t exactly awesome. Now, in case you’re not a business school grad, a 1% year-over-year increase means that you will lose money. Cost increases will well outstrip 1% gains. More consolidation. More layoffs.

While television trots out new shows and new technologies every single year, and new media offers hyper-targeted ad solutions and buzz-worthy ideas, commercial radio resembles a deer caught in headlights.

There's an old saying: If every tool in your toolbox is a hammer, then every problem looks like a nail.

While TV and new media pour hundreds of millions of dollars annually into content development, radio’s fearful management and old school consultants ineptly puzzle over statistically unsupportable PPM data, recommending the same thing they’ve always recommended – less of everything.

Less variety, less talent, less innovation, less excitement.

The result? Less money.

Most commercial radio players are so thoroughly confused, they still spend each day trying to beat other stations in their market.

What, you’ve got a three-share? Congratulations! You’re the tallest elf! (Okay, perhaps that was a little too flippant.)

Meanwhile, research study after research study shows growth for new media competitors, including a recent release by Burns and Associates show that people are now rating the music on Pandora basically on par with their P1 radio station.

Radio managers can console themselves that they still have lots of cume. But it’s an increasingly passive, disaffected, and dissatisfied cume – just the kind of audience that advertisers hate.

The good news is, it’s not the medium. It’s the execution. Public Radio continues to grow – in ratings and revenue.

With anemic growth while competitors advance, basically one of two things is happening at commercial radio: 1) The content is so utterly lacking in buzz the agencies have gone to sleep, or 2) radio is attracting an audience nobody wants or can easily be reached elsewhere.

Commercial broadcasters would do well to look at the broader media competition for solutions. The best practices are out there. It’s time to be honest with yourselves: It’s not working.

Time to clean house. The old-line consultants and many of the veteran senior programming managers have shown you their plan. But their defensive, take-cover tactics have delivered 1%. It’s not working, and they need to move on. The game has passed them by.

It’s time to get back to research and development and execution. Time to give a hoot.

- Paul Marszalek