Tag Archives: digital advertising

Ho, Ho, Ho…Go, Go, Go

Job CutsSadly, it’s that time of the year when radio station budgets are being finalized and staffs are being cut before the start of a new year.

Hubbard Radio’s Chicago VP/GM Jeff England recently told the trades, “As technology evolves, we have to look for ways to use it to our advantage. The difficult decision to reduce staff is an effort to remain competitive in a very challenging environment.”

General Motors

The large radio companies are faced with the same challenges that America’s large car companies are faced with, a rapidly changing marketplace.

GM’s CEO, Mary Bara, announced that General Motors would be shuttering seven plants around the globe to focus on increasing production of new electric vehicles. More than 14,000 GM workers will be out of a job as the company laid them off without any warning.

An outraged GM worker told the press, “You’re going right into Christmas. You’re looking for a celebration and that’s not there now.”

Sadly, I’ve known lots of radio people who can identify with how the workers at closing GM plants feel. I am one of them, as Clear Channel showed me the door without warning, just before Christmas 2009.

What makes these plant closings so impactful to their communities is not just the GM workers out-of-work, but the additional downsizing in the support businesses in those communities and elsewhere. As many as seven more people, for every GM worker, could see their jobs eliminated at businesses such as food services, retailers, healthcare, etc. All the businesses that broadcasting depends on for advertising.

Focused on the Future

Mary Bara, in a statement, said of GM’s decision to close some of its plants, “The actions we are taking today continue our transformation to be highly agile, resilient and profitable, while giving us the flexibility to invest in the future. We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success.”

Is this any different than what any other industry, including broadcasting, needs to be doing?

Top Tech Trends for 2019

I just sat in on a Juniper Research webinar about the “Top 10 Tech Trends for 2019” and it was mind numbing in many ways.

I try to stay up on the latest trends, but I must admit I needed a second browser window open during their presentation to understand what the heck they were talking about. They were using terms like chatbots, loot boxes, RPAs, RCSs, etc.; like these were common everyday terms.

Here’s what I learned about tech’s future as it may impact radio and broadcasting:

  • Digital, blockchain, robots, voice assistants, 5G wireless and artificial intelligence (AI) are where everything is headed.

Intel is working with China’s Alibaba (an internet service that connects buyers with sellers) to develop artificial intelligence to enhance EDGE computing power in the internet of things. China is a huge market for American companies. In the case of General Motors, they didn’t build car assembly plants in China to ship those vehicles to America, they built them to sell vehicles in China. In the first nine months of 2018, GM sold 2.7 million cars in China compared to 2.6 million cars in all of North America.

Amazon’s digital voice assistant, Alexa, will be deployed in more devices. Currently voice assistants are in 9% of the households worldwide according to Juniper Research. That percentage is even higher in developed markets and VA’s will become a service-led market going forward.

5G wireless will enable RCS (Rich Communication Services) that will compete with services like Facebook messaging and is expected to bring people back to messaging directly via their smartphones, due to a more vibrant, media-rich platform. RCS is the successor to SMS text messaging that we now use.

Digital Advertising in 2020

Salesforce Research in their latest insights into the new era of advertising and media buying report says that:

“Consumers and business buyers receive more messages, through more

channels, then ever before. Cutting through the noise requires advertisers

to deliver hyperpersonalized messages that resonate at the individual

level. Now, advertising is undergoing a transformation — the biggest

revolution since the launch of digital ads in the 1990s — driven by data.

 

To effectively reach audiences and interact with them in a smarter, 1-to-1

manner, advertisers must connect and make sense of a myriad of data

sources. Of course, achieving this requires a shift in dynamics; advertising

and marketing can’t live in vacuums. Technology can’t be an afterthought.

The winners in this new era will coalesce the right teams and technologies

to harness data, more precisely track their efforts, and measure progress

to evolve their strategies at the pace of the consumer.

 

Dominant channels — and thus budgets — are shifting, too. Increasingly,

advertisers will rely on major platforms under the Google and Facebook

umbrellas to deliver their messages. And success isn’t measured only by clicks and impressions, but also lifetime customer value.”

Salesforce says that advertising and marketing are converging, and that the same team now performs both functions and shares the same budget. Companies now are over the tipping point (57%-59%) internalizing their ad spend decisions for Facebook/Instagram and Google search. 94% of companies now use Customer Relationship Marketing (CRM) data to target their advertising. The main benefactors of this change are Facebook and Google, with an estimated 66% of digital ad spend going to just these two.

Click HERE to get your copy of the full report from Salesforce.

Strategy, Tactics and Radio’s WHY

I asked the question in the fall of this year, “What’s Radio’s Why?” I asked that question because it often appears that radio is employing lots of tactics without first having a grand plan; a strategy.

GM and Ford both see a future where SUVs, trucks and electric vehicles will be their primary focus. Ford plans to eliminate all but two of its car lines and GM announced that it would be terminating many of its car models too. Both of these car companies have a future strategy, and I would contest, have found their “why.”

In order to have a profitable strategy for radio, the industry must first answer what its WHY is,  and that it fits into the needs, wants and desires of a 21st Century listening audience.

 

 

 

 

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The Past is Not Prologue

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Thomas Kuhn used the duck-rabbit optical illusion, to demonstrate the way in which a paradigm shift could cause one to see the same information in an entirely different way.

One of my favorite weekly reads is Tim Moore’s “The Midweek Motivator.” You can sign-up for Tim’s weekly wisdom here.

This past week, Tim wrote about how people inside radio stations are asking him, “is radio failing?”

Now Tim’s a student of history, and he responded with “If you care about history (because the past is prologue) here’s the simple truth: some large groups are faced with debt loads that will either force bankruptcy or massive reorganization.”

Tim’s analysis about how America’s two largest broadcasters dug huge debt holes that can’t be re-filled by current operating revenues is spot-on. With radio, like a lot of businesses, it’s a matter of buying it right from the get-go. Start out upside down and most likely you won’t have a good day.

A system that is over-reliant on prediction through leverage, hence fragile to unforeseen “black swan” events, will eventually break into pieces.

-Nassim Taleb

Technology

Crystal balls are hard to come by but my tea leaves are leading me to believe that mass mediated communication is confronting more than just debt loads. What we are also dealing with is “paradigm paralysis.”

Radio’s leaders are holding onto a set of beliefs and views that radio is invincible.

Thomas Kuhn coined the term “paradigm shift” in his influential book “The Structure of Scientific Revolutions” in 1962. The business world adopted this terminology of “paradigm shift” to describe a profound change in a fundamental model.

Paradigm paralysis, on the other hand, is the inability or refusal to see beyond the current models of thinking.

Let Me Share a Story

John C. Harrison told this story at the First World Congress on Fluency Disorders held in Munich, Germany in 1994. See if you see a parallel to radio and the advent of satellites, streaming, podcasts, and smart speakers.

In the late 1940s a man walked into a laboratory of a major photographic

manufacturer in America to demonstrate a new photographic process.  But

he didn’t bring along a camera or film.  He brought along a red box with a

shiny steel plate, a charging device, a light bulb and a container of black

powder.  The picture he created was faint but discernible.

 

“But where’s the film?” they asked.  “Where’s the developer?  Where’s the

darkroom?  Why, that’s not really photography!”  And so, the company

passed up an opportunity to acquire the process for electrostatic

photography, or xerography…a process that has grown into a multi-billion

dollar industry.

 

Why did they pass up such a great opportunity?  Because the people who

saw the process were suffering from PARADIGM PARALYSIS.

 

Call Me an Outsider

Joel Barker wrote a book called “Paradigms: The Business of Discovering the Future.” Joel says that anyone who develops a new paradigm is often labeled an “outsider.”

Truthfully, when you’re running a cluster of radio stations, you don’t have time to think let alone take a step back and look at things with a fresh eye. I know. I’ve been there.

What teaching and now blogging have given me the opportunity to do is listen to everyone talk about the prevailing paradigm of radio broadcasting, in all of its subtleties and contrast it, to what I’m witnessing taking place before my eyes and ears by the end users of mass media.

And what I sense may be happening, is the radio industry being on the verge of a “black swan event.”

Black Swan Events

Credit card companies, who amass tons of data on their customers, still managed to miss the huge financial crises in housing back in 2007-2009.

When a tidal wave struck Japan’s Fukushima nuclear plant, the predictive model used to calculate how high the protective wall should be built, provided for a 20-foot wave. Yet, the wave that struck the plant was 24-feet high.

AIG, an insurance company in the business of predicting risk, missed seeing the financial collapse that bankrupted them.

Digital Advertising

Now Facebook is dealing with a black swan event over their data breach by Cambridge Analytica. Only this black swan could have major implications for how digital advertising is bought and sold in the future. The UK and Europe will put in place in May 2018 the “General Data Protection Regulation,” that will protect their citizens’ personal data or offending companies will suffer stiff penalties and fines.

So, what the Facebook story is doing, is making its two plus billion users aware of such massive collection and abuse of our data, but the fallout from this breach of trust will impact the ad supported business model of everyone in the digital advertising world.

30% of American Homes Don’t Have a Radio

Edison Research and Triton Digital’s annual “Infinite Dial” research just produced this astounding statistic. Close to a third of America’s homes no longer have a radio set in them.

Many people see smart speakers as the way back into the home for radio. But are they really?

Cable TV & Over-The-Air (OTA) TV

In the beginning, cable television was called “Community Antenna Television.” The concept was simple, TV stations were primarily located in big cities and the suburbs couldn’t receive those TV signals. So, antennas were placed high on mountains and cables would carry the signals received to homes in the valley.

TV operators loved this back then. It was like getting a power increase for no money.

Ah, but remember, there’s no such thing as a “free lunch.”

As the cable industry grew, channels such as ESPN and CNN and The Weather Channel were born and would compete with OTA TV.

Then along came streaming video.

Netflix

At the end of March 2017, one year ago, Netflix surpassed cable TV with its number of subscribers. And if you were to add up all the other streaming video services available to today’s television consumer, the lead over cable wouldn’t be a couple million viewers, but tens of millions.

What happens when a household begins subscribing to these advertising free channels? They find it almost impossible to return to ad supported ones.

Smart Speakers

Now we circle back to the smart speakers, Amazon’s, Google’s, Apple’s and Microsoft’s for starters. Instead of a handful of audio choices, the smart speaker delivers an almost infinite choice, and many, advertising-free.

When you put a prime rib steak next to hamburger and they are both the same price, which do you think most folks will choose?

The smart speaker lets you customize your favorites, much like the pre-sets on your car radio does. I’m willing to bet that the average consumer will end up with about 3 to 5 favorite audio streams they spend the bulk of their listening time with.

In fact, Nielsen’s Total Audience Report released in the second quarter of 2017 said that 87% of OTA radio listeners spent their listening time tuned to one of their three favorite radio stations. And 58% of that time was spent listening to just one station, what Nielsen calls their 1st Preference or P1 station.

Why would we expect this number to grow with the advent of smart speakers?

Goldstein’s Words

I think Steve Goldstein summed it up best in his recent blog when he wrote, “Commercial radio should put down the hammer and stop searching for nails. As they think beyond the stream, they will see how people are using audio media these days and create on-demand solutions in-sync with the vast opportunity of the exploding Smart Speaker universe. On Smart Speakers, the listeners are asking for it.”

 

 

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It’s Like Mowing the Yard When the House is On Fire

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Ladies & Gentlemen, we have a problem. Our business model is broken.

Trying to make your daily, weekly or monthly budget while ignoring the 800-pound gorilla in the room is akin to the title of this article.

The Big Disconnect in Local Media

Nancy Lane is the president of the Local Media Association. Her latest article on LinkedIN really caught my attention. Like the fact that only 1% of publishers/station managers/GMs agree that their sales reps do a good job when it comes to selling digital. Why do you think that might be?

Gordon Borrell Knows

LMA research notes that most traditional media sellers have too many things to sell, making it hard for them to be consultative.

I’ve been hearing Gordon Borrell tell broadcasters exactly what they need to do to grow their slice of the ad pie for a couple of years now. At seminars I’ve attended, Gordon always adds that the companies doing the best job of growing their digital sales, employ sales people dedicated to only selling digital. It’s probably why this month Gordon Borrell was quoted as saying, “The pool of dollars is stunningly large, and radio often doesn’t get more than a ladle dip in the shallow end.”

Finding Good Sales People

If you’re a sales manager, director of sales or GM, the best way for you to find good sales people would be if your current staff would recommend working for your broadcast station, right?

Well, Nancy’s LMA found in their research that current media employees recommending others to work at their company came in at a 3. To put that number in perspective, the company that does this kind of research for all industries, found historically with all of their clients, that an average score for employees recommending their company as a good place to work was 36. In fact, the company hired to do the research by LMA had never seen a score of 3 before. It was the lowest they’ve ever seen in the history of their research.

That news alone should be a BIG wake-up call to everyone in media, since talent recruitment/retention was cited as the #1 challenge.

Digital is a Marathon, NOT a Sprint

A couple of the hard realities of digital is that it will take a long-term commitment and there still isn’t an overall business model to effectively monetize the audience being attracted.

Another hard reality is that the time to see a return on a company’s digital investment is longer than many CEOs want to hear about, plus the digital margins won’t look anything like the fat margins enjoyed by legacy media companies of the past.

Just One Example

To try and put all of this into a little more in perspective, let me share some of the cold hard facts shared in an article titled “Thinking of Starting a Podcast, DON’T.”

Jordon Harbinger writes “We are in the golden age of podcasting.” So why when asked if everyone should be starting a podcast does he give this super complicated advice: “DON’T.”

Here’s why, Harbinger has been hosting a podcast since 2006 (The Art of Charm) and candidly admits that if he had to start all over again today, he’s not sure he would. “It’s never been easy and it’s not easily profitable,” says Harbinger.

Today, Harbinger says his podcast is grossing about $480k/year, but in the beginning, he was spending around $10k/month with no promise of an immediate return on that investment. In fact, he suspects if you were to add it all up, they’d be just barely in the black after six years.

The Problem is Us

Bob Hoffman, aka The Ad Contrarian, says that technology has impacted all aspects of the advertising business. Before technology, ad folks were flying by the seat of their pants and their gut. However, Bob says now that we have technology, he’s not convinced we still have any better reality of what works and what doesn’t.

Hoffman sums it up this way, “In my mind, advertising technology has lost its credibility for two reasons. First, we haven’t acknowledged the unanticipated consequences of what has ensued. Second, we have refused to act honestly and correct the errors of our expectations. Instead we have created an ongoing crisis of credibility with a constant stream of half-truths, lame excuses, and public scandals.”

If digital is our future, we have to fix this big disconnect.

Going Deeper

The Local Media Association has offered their research report for FREE and you can download a copy by following this link HERE

As LMA President, Nancy Lane puts it, “One thing is clear, the disconnect is hurting the industry’s ability to move the needle when it comes to growing digital. Politics, defensive postures, silos and more still exist. That needs to end tomorrow and only strong leadership will change that.”

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Reflecting on Radio Show 2016

60The radio show was close to home this year, just down the road from my university, in Music City USA, Nashville, Tennessee. Plus, the Tennessee Association of Broadcasters decided to roll their annual convention into an opening event at the Radio Show. So as soon as I finished my morning class, I was on the road to Nashville.

Tennessee Association of Broadcasters Kick-off

Whit Adamson, President/CEO of the TAB, put together an amazing opening reception and event inside the Country Music Hall of Fame. We were welcomed by TN Governor Bill Haslam who declared it “Radio Week” in the State of Tennessee. Then the Mayor of Nashville, Megan Barry, gave us a warm welcome to Nashville where she declared it “Radio Week” in Music City. The “red carpet” was fully rolled out for the radio industry and attendance would set a new record for the Radio Show.

Pillsbury’s Broadcast Finance Forecast Leadership Breakfast

The good news is radio is the “King of Audio.” The bad news is that revenue growth for radio underperformed ad spending post-recession. Radio’s 7% share of all advertising is predicted to decline to 6% by 2019. Why? Digital ad spend will grow significantly (40%) by 2019. And radio will struggle to reach mobile users.

The big takeaways from this session were: Investors want to see new growth catalysts like NextRadio, more event revenue and growth in digital/mobile ad revenues. Investors want no more than 3 to 4 times leverage with more industry consolidation. All of this investors feel will yield more “free cash flow.”

Investors worry about audience fragmentation and Millennial reach, radio’s competition in the car dashboard, the challenges coming from digital/internet, continued uncertainty over royalties and excessive leverage.

Focusing on Your Career Future

The room here was filled with young people. Radio mentors from all areas (except engineering) met with tables full of students and recent graduates to talk about the many opportunities available in today’s radio industry. The mood was once of excitement and enthusiasm.

Brittney Quarles and John Focke both would share their personal radio journeys with students as they shared advice such as: “the industry is small, don’t burn any bridges” and “find a champion for you and your talents” and “be careful who you share your dreams with.” The right mentors are essential to your career.

Beyond Basics – The Prosperous, Professional You

John Bates, Elizabeth Burton and Heather Monahan led a session in how to reach beyond your limits and build a better “Brand You.”

John Bates shared “3 ways to inspire and connect”: 1) logic is not the way, 2) human eyes connect you to another person and 3) be authentic. For example, people don’t connect with your successes, but your messes. You message is your mess. But above all else, “Make A Difference.”

Elizabeth Burton drilled down the importance of your online brand and that today your online activities build your reputation.

Heather Monahan told us that people take only 10-seconds to make an opinion about you when they first meet you. 50% of communication is nonverbal and your attitude is everything. And if you want to know what your personal brand is, ask others this question: “What value do I bring to you?”

The Digital Dash – Improving the Consumer Experience

Fred Jacobs, Steve Newberry and Scott Burnell (from Ford) all shared their perspective on radio in the car. The first big thing is car manufacturers don’t call it a radio in the dash anymore (and probably haven’t for some time) but “the center stack.” Into this part of the dashboard, everything a car owner wants can be accessed.

Steve Newberry (former NAB joint board chairman) really brought the whole issue home with his analysis of the technology revolution by saying there are two kinds of events: disruptive and modifying. Disruptive events would be things like television and FM radio. Modifying events would be things like cassette tapes, CDs and MP3s. Disruptive events change the landscape and prevent an entity from doing things the way they’ve always been done. Television stole radio’s programming and added pictures and radio had to reinvent itself with new kinds of programs. Modifying events such as records being replaced by cassettes and 8-track tape, then CDs replacing both of those to be replaced by MP3s merely modified the way people listened to their own music libraries but not how they used radio. The new digital/internet connected world is a disruptive event and radio needs to once again adapt to this revolution in communication. The future is bright if radio is agile and adapts.

Perception vs. Reality – The True Power of Radio

My first Arbitron rep was Pierre Bouvard. He’s a fountain of information. His presentation on “7 Things Brands Have Completely Wrong About Radio” tells the story in great detail and shows the challenges faced by radio sales people today.

Podcasting

Steve Goldstein did an amazing presentation on podcasting by starting out with this Thomas Edison quote from 1922 “The radio craze will die out in time.”

Today mobile is eating the world. 20% of audio listening comes from the smartphone. For radio, podcasting is all about retention, growth and relevance.

Podcasting is no longer niche. It delivers the demos advertisers want. Podcasting is different than broadcasting. There’s money to be made in podcasting and radio has the perfect megaphone to promote podcasts to its audience. That’s radio’s “secret sauce” that podcasters wish they had access to.

Radio – The Local Media Company of the Future

Gordon Borrell and his research company are doing some incredible studies on the future of advertising. He immediately got the audience’s attention when he said in the last ten years $56 Billion has disappeared in advertising expenditures.

Banner ads are dead. But digital is not.

Local advertising growth is forecast to increase 7.6%, but non-digital will see a 6.9% decline in ad spend and digital will see a 22.4% increase in ad spend. In fact, 2017 is the year that digital advertising will eclipse all traditional media.

Borrell said when advertisers cut ad spend in one medium they spend it in another medium. Radio will continue to be bought, but only those stations who have well-trained representatives that understand the realities of today’s advertising and can put together a total marketing plan that goes beyond simply radio spots. Advertisers will partner with any media company who has reps that listen.

The good news is traditional media – like radio – is still necessary to drive digital advertising goals and deliver maximum digital R.O.I. (Return On Investment).  You can see Gordon’s full PowerPoint deck here.

Final Thought

The mood in the halls and in the sessions at this year’s Radio Show was very upbeat. The things being discussed and presented did not shy away from the realities all ad supported media face.

Anyone who attended came away with lots of action steps that need to be implemented immediately.

Radio currently is the #1 Reach & Frequency medium in the United States of America.

There’s no time to waste. It’s time to roll up our sleeves and “Make A Difference.”

Radio’s future depends on it.

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