While commercial radio is working hard to have Congress pass a law mandating AM radio in every vehicle (a vote in the House is scheduled this coming week), the U.S. Supreme Court gave its blessing to the FCC’s expanded interpretation of the lowest unit rate charge for political advertising.
In other words,
Expect to hear a lot more political ads on commercial radio stations!
It’s Not Free Speech to Tell Lies
Ten years ago, SiriusXM suspended conservative talk host Glenn Beck for agreeing with one of his show’s guests, who asked, “what patriot will step up to remove Donald Trump from office if he’s elected president and oversteps his authority?” SiriusXM, operator of America’s two satellite radio services, suspended Beck because they worried the conversation might “be reasonably construed by some to have been advocating harm against an individual currently running for office.”
Yet, political candidates can say anything they darn well please, pay the lowest unit rates for that very airtime, and your FCC licensed local radio station can’t do a thing about it.
Ad Clutter
One of the big turn-offs for radio listeners is “ad clutter”; too many radio ads packed into each hour of the broadcast day.
Political ads are considered by radio listeners to be the worst of the worst, when it comes to advertising on the radio. This type of advertising causes:
- People to be stressed, annoyed and tired
- Listeners dislike the hostile tone, name-calling and negative attacks
- Relentless campaign messaging causes widespread frustration and mental exhaustion
Killing The Golden Goose
You may remember Aesop’s fable of the goose that laid the gold eggs, but in case you forgot, the Cliff Notes version is this: it’s a story about a farmer who discovered one of his geese could lay gold eggs. Not wishing to wait for this bird to lay just one gold egg per day, the farmer decides to cut open this goose and get all the gold eggs at once, only to find there are none. The goose is empty.
Well, once upon a time, owning a radio station was like owning a “golden goose,” where a radio station’s profits were like golden eggs. Every day, through the selling of radio ads for money, big profits were produced for a radio station owner.
Thirty years ago, the Telcom Act of 1996 deregulated radio and allowed buyers to own as many radio stations as they could imagine. Greedy investors and consolidators, not wishing to wait for each day’s golden eggs, cut open their golden geese by firing the very people who produced all the riches; the talented air personalities that broadcast over them.
The moral of Aesop’s fable is if you focus only on the golden eggs and neglect the goose that lays them, you will soon be without the very asset that produces the golden eggs.
Since the era of consolidation, several major U.S. radio broadcasting groups have filed for Chapter 11 bankruptcy protection (some, more than once), heavily impacted by shifting advertising markets and intensifying competition from digital streaming platforms.
Less Is More
Radio investors probably thought the moral of the fable was, the more geese you own, the more radio ads you add to the hour, the more effective your R.O.I. (Return On Investment) will be. But ironically, it was the principle of “Less Is More” that in the end rules the day.
To be truly effective, you need to maintain the balance of what is produced (golden eggs/revenue) with the producing asset (your goose/radio talent).
The 7 Habits of Highly Effective People
Stephen Covey covers this in his 7 habits book, saying when people fail to respect this critical balance, “they decrease organizational effectiveness and often leave others with dying geese.”
AM In Every Vehicle Act
The radio industry is once again focusing all of its efforts and treasure on the wrong issue. AM radio is NOT the future.
Coal ain’t coming back
and neither is AM radio.
In an article I wrote back in 2017, I made the case for the radio industry to move towards the future and stop trying to resuscitate the past. You can read that article here: https://dicktaylorblog.com/2017/08/20/coal-aint-coming-back-neither-is-am-radio/
Since A.I. (artificial intelligence) supposedly has all the answers, I put the question to it, and here’s what it said:
“Commercial broadcast radio’s future relies on a high-tech hybrid model driven by cloud virtualization, AI workflow automation, and digital revenue streams, all while fiercely leveraging its core moat: live, hyper-local human connection. While traditional over-the-air spot advertising faces pressure, radio remains a dominant force, particularly in vehicles. The industry is shifting from a pure legacy broadcast model to a multi-platform audio ecosystem.”
So, yes, reaching listeners in their vehicles continues to be important to the radio industry’s future, but NOT the AM RADIO platform. Around the globe, AM radio signals are being turned off, even FM is going away and being replaced by Digital Audio Broadcasting.
The key to the future of broadcasting is to reach listeners on the very platforms THEY use.
During this year’s football season, viewership to the NFL games was down. A lot of reasons were offered as to the reason why. I’m sure you have your own theories. But when it comes to the Super Bowl – “America’s party Sunday” – surely that would again show an audience increase. It didn’t.
DickTaylorBlog 