Day of Reckoning

20There’s an old saying “Nothing lasts forever.” Do you remember flying on TWA or Pam Am? How about shopping at Woolworths? Broadcasters will remember names like Group W Westinghouse Broadcasting, or Taft Broadcasting, or Nationwide, or RKO General that would put the successful Bill Drake Top 40 format (with the non-stop innovations & promotions of 93-KHJ’s Ron Jacobs) in major cities across North America. They’re all now a memory.

In a time of limited radio signals, radio could control its inventory and increase stakeholder ROI by raising rates as it increased the size of its audience. That’s now a memory.

Next came the Local Marketing Agreement (LMA) to soak up all those Docket 80-90 FM signals that were squeezed into the FM band but found themselves economically challenged. More signals meant a new way to make more money. That’s now a memory.

LMAs were “training pants” for the Telcom Act of 1996 that would unleash a consolidation of radio and television ownership like the world had never seen. Companies would rush to acquire as many radio signals as they could as fast as they could. And do what with them? They would figure that out later was the common response. Owning more stations was a way to make more money, until it wasn’t. That’s now a memory.

You might have thought that would have sent a message that there are limits. It didn’t.

Today the game is translators. And the number of radio signals continues to grow, all seeking funding through advertising, just like every other form of media out there today.

So is the ad pie growing? Not according to Adam Levy at Motley Fool who saw advertising drop nearly 4 percent in the second quarter of 2015.

When the advertising pie isn’t getting bigger, two things usually happen: 1) budgets get cut and people lose their jobs and 2) more spots are added to the hour. Unfortunately, all through consolidation and the Great Recession radio companies have been doing both. They are like the Federal Reserve wondering what you do when you already have cut the interest rate to zero to stimulate the economy. Not a fun place to be.

Suggested Solutions

 Not to be all doom and gloom on you, I think there are some things that can be done to turn things around. The first thing is to focus on something and own it. Steve Jobs would put it this way “Just get rid of the crappy stuff and focus on the good stuff.” The way Jobs took Apple from near extinction to the world’s most valuable company was by his relentless focus on creating a small number of simple and elegant products.

Seth Godin calls it finding and serving your tribe. Radio needs to give up the quest to be all things to all people and learn to be something some people can’t live without.

Some stations can be the national brand in town, but everyone can’t. Likewise if people can get what you do someplace else, then why do they need you? This is the secret of “less is more.”

Radio stations need to have the agility to make decisions on the front line. Top down management is out, front line management is in. Mary Berner, the new CEO of Cumulus gets it. She has been reported in the trades saying “Cumulus will rely less on top-down management and more on letting managers do the job they were hired for.”  She also understands that while IoT (Internet of Things) is the future, it’s not the place Cumulus needs to focus on today. It’s about changing the culture and the way the company operates first. Getting the programming right and improving sales of those radio programs next.

I remember when I starting working for Clear Channel and hired to turn things around in my market, the company had a big push on selling the web and developing that component. I told my sales manager after the conference call ended that was not going to be the case for us. First we needed to get the programming and radio sales on fire and then – and only then – would we begin tackling our web based program. It worked too.

The hardest thing sometimes is not doing things, but figuring out what to stop doing. Jobs was good at this at Apple. You need to invest some serious thought about what you need to stop doing in your radio property. Again, less IS more if done right.

And the last suggestion I have is directed at colleges and universities. We need to be focused on the business model of radio and putting more of a focus on the business side of radio and radio sales. Radio owners and operators I talk with aren’t clamoring for more DJs or news people like they are for more sales people and innovators that will create the next revenue stream for their property.

In the end, your audience size won’t matter if you don’t have a business model to monetize it.

 

15 Comments

Filed under Education, Mentor, Radio, Sales, Uncategorized

15 responses to “Day of Reckoning

  1. Dick what is the industry forecast for radio?

    Liked by 1 person

    • Flat is the new “up” Victor. Estimated radio ad sales for 2015 $16.1 and for 2016 $16.2 (billion).

      Like

    • Borrell Associates 2016 Local Radio Advertising forecast: “is likely to see a 1.2% decline this year, despite the fact that more than 90% of adults listen to radio at least once a week and it remains one of the least-expensive media choices. Its key problems are the loss of its mainstay advertisers, auto dealers, and heavy competition not only from print and digital media, but also from fellow radio stations. Some markets have four dozen or more radio stations — three or more stations per format.”
      (as reported in All Access today)

      Liked by 1 person

      • One thing no one is discussing, is what media works as best ROI for what industry or company. I’ve had this discussion with a former print media director who is stuck in the glory days when print was king. With media and content now being everywhere the noise level is higher and highter. I know Roy Williams is big on radio as one if not the most effective media and I think there is some truth to it but if I’m doing a 3 million dollar ad buy, I’m going to look at the facts. To quote Deming, “Anyone witthout data is just another person with an opinion.

        Liked by 1 person

  2. Newsprint and radio have a lot of shared similarities. Since I have worked in both, I can say I’ve lived through the idiocy of directors driven by goals burn and churn salespeople. On the editorial side all they had were bad niche publications that no amount of graphics or content mills could ever get the necessary scale of readers that were needed.

    The great irony is that The Readership Institute an industry research group were creating many white papers a whole decade before the downward spiral of newsprint due to the internet. I knew there was no hope when the ad revenue industrywide had shrunk 25% and my quarterly revenue quota was 50% increase. I had a product fewer and fewer readers wanted and a director and manager hell bent on meeting their target quotas.

    The take aways are with that busineess model there was zero innovation and just pushing more of what was not working. With the crash of 2008 came the tectonic shift that dried up many of the traditional streams of revenues that never came back. Today many newspapers are scaled back, shut down, or on life support.

    Like

  3. James Heckel

    I can’t imagine any college student telling his radio station GM, “Well, I’d really like to become a radio station account executive.”

    Like

    • Well James, you might be surprised. What I’ve learned since I entered teaching more than 5 years ago is that when students learn what the radio/TV sales career is all about, they self-identify. I also put my students through a talent assessment to better understand themselves.

      I have many successful students who came to the university to become something other than a media sales person, but who changed their career goals (and minor) to focus on this career path after taking one of my classes.

      The calls I get, from both my former students as well as their employers, are all positive.

      Again, I don’t force this career path on any of them. I expose them to it and share my own personal journey from DJ to sales rep to sales manager to general manager/market manager.

      Today I mentor future broadcasters.

      I’m paying it forward.

      Like

  4. Tom

    Hi Dick – First time visitor and will likely stay. I really enjoyed the post and have a few comments.

    First, I totally agree with your comment on future students of this wonderful medium. Many decades ago as a college sophomore, I was lucky enough to have the option of Radio Time Sales class at SF Bay Area community college.The teacher was great. I was already hooked on radio from a High School station, but this got me further hooked. I successfully went into a career of radio sales and management during college and after.( I had to leave the industry for other reasons.)

    Second, the solution to radio woes comes down to compelling local and intimate content. I recently discovered Seattle’s KOMO Newsradio and heard the San Bernardino coverage which also featured KABC’s coverage. It was very well done and executed. KOMO understands their listeners and delivers it in an interesting and compelling way. They seem to have plenty of advertisers.

    Most of today’s broadcasting content, (with a few exceptions) seems much less personal and more of a “radio publisher’s” grab bag created with hope that it will stick to a listener, let alone the advertiser. There is no commitment to either party. So it is not very compelling to a listener or even appealing to an advertiser as an investment or commitment.

    The crushing of rates is horrible and can be only solved if the industry decides to have some firm resolve and hold the line. Be committed and don’t cave. Find a solution that works. Your investors will then be rewarded.

    I still see this work at smaller and medium size stations to this day. They focus on being local and relevant to both the advertiser and listener. They are nimble and focused like a laser on both parties.

    So thank you for the blog post and imparting good lessons your students. I will be back.

    Liked by 1 person

    • Thank YOU Tom for all you wrote and shared.

      I believe we can all learn from each other. I hope my weekly blog posts start people thinking, talking and sharing to make the broadcast medium we all love better.

      Please come back! And thank you again for stopping by and checking things out.

      -Dick

      Like

    • From my myopic perspective publicly traded networks have been decimated by Wall street demands. I reached out to a friend of mine who tried to make it in sales in radio in the New Orleans market. This a highly experienced former media buyer at an ad agency. She worked for 2 small independently owned stations within a 6 month period and she could not make it. The reason was poor management and advertisers that did not trust the station due to the high turn over of Ad Executives.

      At the end of the day without good local programming you have low ratings that you cannot sell your inventory at a premium. This sounds so much like print media.

      Like

      • What you’re keying in on is that it is not one thing that impact the performance of a media property — it’s EVERYTHING.

        Like

      • Radio will always be around but it’s glory days are over. I remember the days of Rush Limbaugh pulling a 22 million listener ship. Those days are gone and never coming back. Radio is another media disrupted by the internet. People still listen to LP’s and some people are trying to revive that product. I say the future of radio lies somewhere between LP’s and CD’s.

        Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s