Tag Archives: Advertising Pie

Best Suggestions for Radio’s Purpose in 2022 & Beyond

This week, I will review the best suggestions sent in by readers of this blog about what Over-The-Air (OTA) radio needs to do in order to survive and thrive in a 21st Century world.

But first, let’s set the stage for these ideas with something Dale Parsons wrote in the comments on my blog site:

“Every time someone asks what radio needs to do to become relevant again, I hear the old chestnut, ‘be live and local.’ Everything you listed Dick, is a live and local function that is now being done better by another platform. Just being live and local isn’t going to make it. We need to discover the compelling reason for people to use their radio. In the 1950s, when the electronic eye of TV put the whammy on radio, that compelling reason became music and news. Now the online platforms can do that better and faster.

Here’s the scary part concerning radio’s future. You and I have been in the business for about the same number of years. I realized yesterday that we have only one working radio in our house. It’s a palm sized Sony and the battery is dead. Where I live there is little radio coverage, however, when I visit town on the other side of the island on which we live, I find that I tune in streaming choices, rather than radio stations. I find no compelling reason to listen to the radio.

We have always considered radio to be a useful household appliance, much like a toaster. My compelling reason to pull out the toaster is because I need toast. My compelling reason for pulling out my radio was to be entertained and informed.

There’s nothing on the horizon that will be replacing my need for toast, but if a better way of delivering that toast comes along, I’ll probably switch to the new appliance.

People have a compelling need for entertainment and information. In the future, those needs might just be satisfied by a new appliance.

Hopefully, radio won’t be discarded like my toaster will be.

Ramblings from out here in Hana Maui jungle.”

[Dale Parsons was the program director that would transition WNBC-660AM in New York City from a music-intensive to a full service radio station when he took over in 1984. WNBC featured Imus in the Morning, Soupy Sales in middays and Howard Stern in afternoon drive. There was no other radio station, on AM or FM radio, that sounded anything like it. It was one-of-a-kind.]

Curtis LeGeyt, President & CEO of the National Association of Broadcasters (NAB)

The new leader of the NAB Curtis LeGeyt, appearing before a recent Congressional hearing, was asked to explain the viability of radio in today’s multi-media world. Here’s what he said:

I think where radio can stand out and where it will remain very, very viable in today’s media landscape is with a hyper-focus on local and a service to a demographic that simply can’t afford those subscription fees through other services. I believe there’s a really unique value and niche that we fill that none of our other competitors are hitting.

Hyper-Local Maynard Meyer

Maynard Meyer, or “Mr. Radio” as he is known to his listeners in Madison, Minnesota started in radio the same year I did, 1967. In 1983, he and his long-time friend, Terry Overlander, put KLQP-FM on the air.

Maynard is a member of the local Chamber of Commerce, the Kiwanis Club, a member of the city council, as well as serving on numerous boards and participating in several community activities. His dedication to radio and serving the community are credited with shaping the city of Madison, as well as much of western Minnesota, into what it is today. Maynard was inducted into the Minnesota Broadcasting Hall of Fame in 2011.

Responding to my question of “What is Radio’s Purpose in 2022,” Maynard wrote:

In rural America we are doing radio pretty much the same as we did when I started 50 years ago (as far as content goes), and the formula still works. Perhaps it would still work in larger markets, but, unfortunately, a couple of generations of programmers have led people to believe that radio is a music medium…there are a lot better ways to get music and people have found them.

The physical involvement of you and your staff in your community is as important, or possibly more important, than the content of your broadcasts. Everyone needs to know who you are and you need to become an indispensable part of the fabric of your community. You can’t just sound ‘local” you have to BE local. That formula continues to work for us in small town America where radio is often alive and well.”

Maynard Meyer certainly sounds like the type of broadcaster Curtis LeGeyt is referring to.

Randy Black, Radio Host

Another blog reader put it this way:

“You are going to have to personalize it for it to work. Included listeners. Cater to them. Put them on the air. Involve them. I am talking music stations here. Be informative. Be fun. Involve. Make it as 4d as possible.”

Steve Rixx, The Wake Up Morning Show on KSAM

“Radio in 2022 still serves its purpose by serving its local communities…IF it’s done correctly. My stations lean into the local, and are deeply involved with our people. Our listeners LISTEN because we are the source for everything happening in our area, and we support our youth and charitable organizations…and we just happen to play great music. BE the change you want. STOP complaining that ‘it’s not like it used to be.’ Most things aren’t. You can stay on the sidelines or get your hands dirty…you choose which.”

Darryl Parks on WLW’s Jim Scott

Can radio do this in a major market like Cincinnati? Yes, as Darryl Parks told us on his blog about the impact that Jim Scott made on the listener loyalty to The Big One – 700AM – WLW.

Darry wrote:

“Cities like Cincinnati are extremely provincial. Neighborhoods are strong. Some say our communities are closed to outsiders. Some of that maybe true. But, if you stick it out, once you belong, you will find the closest of friendships. Our little area of the Midwest is a very special place.

Now imagine that close friendship with over 2 million people. That’s how many people Jim Scott considers his friends – the entire market. I’m guessing that’s how many people might consider Jim a friend too.

As the radio story goes, when Jim first arrived in Cincinnati from WKBW in Buffalo, he made it a point to introduce himself to everyone.  And I mean everyone.  He’d finish his morning show on WSAI and then head to Cincinnati’s Fountain Square where he’d hand flowers to women and ask them to listen to him.  Other days, Jim would literally knock on doors, going house to house, neighborhood to neighborhood, introducing himself and asking those that answered if they would listen.  That was decades ago and he never stopped.

Years ago, at a wedding reception at Cincinnati’s beautiful art deco Union Terminal, I was standing with a small group of people, including Rich Walburg, my programming partner in crime at 700WLW. Another in the group noticed Jim going table to table introducing himself.  The fellow said, “Is that Jim Scott?  I want to meet him.”  Rich in his driest delivery replied, “Stay here.  He’ll make his way over.”  He eventually did and Jim introduced himself.

Jim has a way to make everyone feel special and he really is interested in how you’re doing.  He has a deep compassion for people.

He’s a radio personality who understands his on-air role, the importance of being an active member of the community and the value of his personal brand in the market.  He treasures his relationship with listeners and advertisers.  He knows ratings must come with revenue.

Jim is actively involved with many of our community’s service organizations and charities, because he knows how important it is to give back. Being involved in community service is normally the job of a radio station’s Market Manager.  That wasn’t the case at 700WLW.  I joked over the years, we had no idea what he did.  We just knew at night he was representing the station at a fundraiser and the next morning he was on the air at 5am.

Year after year, decade after decade, Jim gave himself to his radio audience, everyone of them considered dear friends. He was there during good times and bad. Sunny skies or snow. Jim Scott is a radio personality to study from. There will never be another like him.”

[Jim Scott retired from radio in 2015 after more than 50 years in broadcasting.]

It was 18 Years Ago…

So, nothing about what radio needs to do in a 21st Century world is all that different from the way it all began. Oh sure, the technology has changed dramatically, the ways of sending our content out to our listeners has multiplied and also made it possible for anyone with a computer and an internet connection to become a entertainment/information provider.

It was at a Federal Communications Commission (FCC) hearing 18 years ago, that Maynard Meyer sounded the warning about radio’s future.

On May 24, 2004, the FCC held a “Broadcast Localism Hearing” in Rapid City, South Dakota.  The president, general manager and co-owner of KLQP-FM licensed to Madison, Minnesota (population 1,767) addressed the commission.  (I’ve edited his comments. The full text can be found here.)

“Localism in radio is not dead, but it is in dire need of resuscitation in many areas.  I have been involved in the radio business in announcing, sales, engineering and management for about 36 years, all of my experience is in communities of 5,000 people or less.  We personally live in the communities we serve so we know the ‘issues,’ we work to address them in our programming and have been doing so for the past 21 years.

A few years ago, many stations operated this way, but much of that has changed for a variety of reasons.  I think the beginning of the end of local broadcast service started in the 1980s when the Federal Communications Commission approved Docket 80-90.”

Mr. Meyer went on to explain to the FCC how many communities which “on paper” had a local radio station, but actually had a transmitter that was being fed from another location tens of miles away.  Mr. Meyer went on to say:

“I don’t think this is the best way to promote local radio service.  From what I have seen through my personal experience, as soon as a hometown studio is closed and relocated, the local service is relocated as well.”

“Wednesday Was Not A Great Day for Radio”

That was the headline Radio Ink ran with its article recapping the previous day’s Congressional hearing on Respecting Artists with the American Music Fairness Act. What made it a bad day for the radio industry? Maybe because all of those things that were presented as reasons radio needed to be protected from the recording industry, are things that only a handful of radio broadcasters actually still do.

Gloria Estefan speaking on behalf of recording artists explained that music has value and the very people who create those popular songs – artists, singers and studio musicians – see no compensation for their efforts that are fueling a billion dollar radio business. Their songs are being used without their permission or compensation.

Estefan did credit her career’s success to radio, but also went on to point out how much the business model had changed since she had a hit record with her Miami Sound Machine song Conga (1985).

The Advertising Pie

Before the COVID19 pandemic gripped our world, Gordon Borrell hosted a webinar in early 2019 and told of how the media pie is today sliced too thin.

To put things in perspective, Gordon shared how an over-populated media landscape is impacting local advertisers.

  • 1,300 daily newspapers, 6,500 weeklies
  • 4,700 printed directory books
  • 4,665 AM radio stations, 6,757 commercial FM radio stations
  • 1,760 Class A TV stations
  • More than 1,000 cable systems with local sales staffs
  • 660,000 podcasts were actively produced in 2018
  • 495 NEW TV shows were introduced last year in addition to what’s already on
  • PLUS, local ad sales are taking place on Facebook, Google and Amazon

For radio broadcasters, Gordon Borrell said the solution to the future of media expenditures would be a process of “thinning the herd.”

Borrell said, the way advertising buyers are responding to a world of media abundance is by:

  • Decreasing the number of companies from which they buy advertising from 5 to 3.5, and
  • 90% of their media buys are being made with companies who can bundle traditional and digital advertising.

Quality Over Quantity

I believe that we’ve reached a point where quality will beat quantity. Whether we’re talking about Netflix vs. Disney+ vs. Apple+ etc. or ABC vs. NBC vs. CBS etc. or magazines, newspapers, TV stations or radio stations. The day of reckoning is arriving and only the best will survive.

For radio stations that have always operated like Maynard Meyer’s, there’s no reason to fear the future. Stations that aren’t just saying they’re local, but proving it every day by their total involvement in their communities. Great radio means being dedicated and invested in operating in the public interest and fulfilling, as Dale Parsons said, “a (listener’s) compelling need for entertainment and information.”

 “In the struggle for survival,

the fittest win out at the expense of their rivals

because they succeed in adapting themselves to their environment.”

-author unknown (often attributed to Charles Darwin) updated 2/13/2022 thanks to Tom Asacker

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What Do Radio Broadcasters & Almond Farmers Have In Common?

Last week, an article in The Atlantic titled “The Well Fixer’s Warning: The lesson that California never learns,” was a terrifying read about the water supply used to irrigate the almond orchards on the farms of Madera County. So many of the farm’s wells were coming up dry and the farmers were puzzled as to why water flowing out of their wells had been reduced to a trickle and were mostly producing sand.

Matt Angell is not only an almond farmer himself, but owns Madera Pumps, a company that drills wells and repairs well pumps. He knows that droughts, like the California sunshine go hand-in-hand, and as John Steinbeck wrote: “no one (forgets) the last drought faster than the farmer.”

Since the middle 1970s, almond farmers have persevered through at least five droughts and their solution to the problem was always the same – BUILD MORE DAMS.

BUILD MORE DAMS

Those three words stopped me cold. Who else thinks like this? Radio people, that’s who.

Today in America, there are now 26,076 radio stations on the air, 2,500 of these stations are broadcasting in HD which adds another 2,100 multicast radio channels to the mix. That’s about a 93% increase in the number of radio signals from when I started in high school.

The radio industry and almond farmers, have both felt that the way to grow is by adding more and more and more. Almond farmers added more acreage of almond trees and radio owners added more signals.

Aquifers

The dam reality was the San Joaquin River already had a half-a-dozen dams diverting its water, so the next solution to obtaining more water for almond irrigation was to drill down to the aquifers beneath the farmlands. Unfortunately, it didn’t take long for the farmers of Madera County to pump out the easily available ground water and see their wells coming up dry. As they were drilling deeper and deeper into the earth, a hidden lake beneath the farmlands was discovered in 2014. It was shocking to see it pumped dry in only seven years.

Angell noted that the snow on the mountain had melted two months earlier than “normal,” and the water level of the San Joaquin river was so low, it was now nothing more than a series of unconnected ponds as well as the wells – residential, business and farming – all over the community were running dry.

The reality is, the Madera County underground water table is one of the most over-tapped aquifers in the West, and all those wells had depleted the underground water source, causing the aquifer to collapse.

The Advertising Pie

It was before the COVID19 pandemic gripped our world, Gordon Borrell hosted a webinar back in early 2019 and told of how the media pie (the radio industry’s aquifer, if you will) is over-tapped.

To put things in perspective, Gordon shared how an over-populated media landscape is impacting local advertisers.

  • 1,300 daily newspapers, 6,500 weeklies
  • 4,700 printed directory books
  • 4,665 AM radio stations, 6,757 commercial FM radio stations
  • 1,760 Class A TV stations
  • More than 1,000 cable systems with local sales staffs
  • 660,000 podcasts were actively produced in 2018
  • 495 NEW TV shows were introduced last year in addition to what’s already on
  • PLUS, local ad sales are taking place on Facebook, Google and Amazon

Same Old Answer

Despite the fact that the water from the aquifer and river was being depleted by droughts, climate change and being over-tapped, the almond farmers’ answer was always the same, said Mark Angell, “Plant more almonds and pistachios. Plant more housing tracts on farmland. But the river isn’t the same. The aquifer isn’t the same.”

Listen to radio owners, and they will tell you they too need more and more radio signals in order to stay viable, despite the fact that the advertising pie is finite and media supported by advertising continues to expand exponentially.

“I used to use the word unprecedented to describe what we’re doing to the land,” said Angell, but “now I use the word biblical.” Is it any different for radio broadcasters?

The Solution

For the nut farmers of Madera County, the solution is a hard pill to swallow, it’s “to figure out a way to retire one million acres of the six million farmed, “otherwise, we’re looking at a race to the bottom,” said Angell.

For radio broadcasters, Gordon Borrell said the solution to the future of media expenditures would be a process of “thinning the herd.”

The way advertising buyers are responding to a world of media abundance, Borrell says, is by:

  • Decreasing the number of companies from which they buy advertising from 5 to 3.5, and
  • 90% of their media buys are being made with companies who can bundle traditional and digital advertising.

Killing the Golden Goose

Do you remember the Aesop fable of the goose that laid the golden eggs? Let me refresh your memory of this tale. It’s about a farmer that was poor. One day he makes a startling discovery when he finds a golden egg in the nest of his pet goose. Skeptical at first, he has the egg tested and finds that it is indeed made of pure gold. Even more amazing, each day this farmer awakes to find that his goose has laid another golden egg. In very short order, this poor farmer becomes fabulously wealthy. But then his wealth brings greed and impatience. No longer satisfied with just one golden egg per day, the farmer cuts open his goose to harvest all of its golden eggs at once only to find the goose is empty inside. With a now dead goose, there will be no more golden eggs laid.

In remembering this fable, it sounded so familiar to the world of radio broadcasting and almond farmers. Both possessed a wonderful “goose” that laid daily “golden eggs.”

Unfortunately for almond farmers, in wanting more, they are killing their water supply, and for broadcasters not wishing to wait for each day’s golden egg, cut open their goose beginning with the Telcom Act of 1996, that allowed them to own as many radio stations as they basically wished.

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.

The radio industry’s quest for short-term returns, or results, took their free FCC licenses and ruined them by not maintaining the balance between the production of desired results and the production capacity of the asset.

Aesop’s fable is the very principle of effectiveness. It’s a natural law. Like gravity, you don’t have to believe in it or understand its principles, but you can never escape its effects.

Radio broadcasters probably saw the moral of the fable being the more geese you own, the more spots you add to the hour, the more effective your R.O.I. (Return On Investment) will be.

Almond farmers saw the moral of the fable as planting more trees, install more powerful pumps to withdraw more water and watch your R.O.I. grow.

But ironically, it is 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) and the producing asset (your goose/radio station/almond trees).

Everything in excess

is opposed to nature.

-Hippocrates

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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.

 

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