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HD Radio – The Answer to the Question No One Was Asking

I was reading about how HD Radio was celebrating its 15th birthday recently and that had me scratching my head as HD Radio is older than that. In checking the records, I saw that the Federal Communications Commission selected HD Radio as America’s digital standard in 2002. By comparison, Steve Jobs introduced Apple’s iPod in October 2001, XM Satellite Radio began service in 2001 and Sirius Satellite Radio in 2002.

Radios Go High-Definition

This was the headline that appeared in the Baltimore Sun on January 7, 2004. Unfortunately, unlike HDTV (High Definition Television) HD Radio never stood for “High Definition.” And possibly that was the first mistake. HD Radio was simply a name they chose for the digital radio technology, but even today, many people still think it means “High Definition” or “Hybrid Digital.”

Sadly, by 2004, America’s digital radio was late to the party and if the industry is now marking the date of 2006 as its moment of birth, it was really late!

Remembering 2006

In 2006, Facebook opened up its social network to everyone in the world. The original requirement that you be a college student enrolled at a specific university was eliminated and the only requirement now was that you were over the age of 13 and had a valid email address.

In just 15-years, Facebook has grown to over 2.85 billion active monthly users.

Let’s look at what else was born in 2006 that competes for our attention:

  • Twitter was launched in 2006 and today enjoys 199 million monetizable daily active users.
  • Wii game system was introduced with its handheld motion controller that got families off the couch and in motion doing all kinds of sports in front of the TV.
  • PlayStation 3 came online to provide strong competition to XBOX 360. (Video gamers spent about eight hours and 27 minutes each week playing games, which is an increase of 14% over 2020. The video gaming industry predicts revenues of $100.56 billion by 2024)
  • Google bought YouTube in 2006 and now has over 2 billion users, the channel grosses over $19.7 billion in revenue and users are uploading videos at the rate of 500 videos per minute with over a billion hours/day spent watching videos on the platform.
  • The one billionth song was purchased from Apple’s iTunes, the dominate source for music lovers in 2006. (Two years later Spotify would arrive and not only disrupt how music was sold but how it was listened to in general.)

When we look at 2006, it becomes easier to understand why HD Radio wasn’t such a big deal to the average media consumer.

Solving a Problem That Didn’t Exist

What HD Radio did for FM radio stations was solve a problem that listeners to FM didn’t feel existed. No one who listened to FM radio was complaining about the quality of the sound, they were complaining about other things, like too many commercials. And for AM radio stations, it meant people buying radios for a service that didn’t offer anything they really wanted to hear or couldn’t get elsewhere. AM radio was now the service of senior citizens who already owned AM radios, who grew up with AM radio’s characteristics and whose hearing was not the best now anyway. So, HD Radio for AM wasn’t anything they were asking for and worse, AM radio stations that put on the new digital signal found it lacked the benefits of skywave and often interfered with other company AM radio stations as the industry quickly consolidated radio ownership.

Industries Most Disrupted By Digital

In March 2016, an article published by Rhys Grossman in the Harvard Business Review listed “Media” as the most disrupted by the growing digital economy. Turns out, if you’re a business-to-consumer business, you’re first being most disrupted by digital. The barriers to be a media company used to be huge, but in a digital world they are not, meaning that the business model that media companies depend on has not adapted well to the digital economy.

Elephant in the Room

But the elephant in the room remains the broken media business model. Newspapers, magazines, radio, and television – any media that is ad supported – will be challenged to find a way to capture revenue to continue operating.

Walt Disney famously said “We don’t make movies to make money, we make money to make movies.”

Broadcasters of my generation had that same attitude about creating great radio.

Do the people owning and operating today’s radio stations still embrace that concept?

* In 2021, it’s estimated there are 3.78 billion social media users worldwide.

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Can Algorithms Be Fair?

A while back, I wrote a blog article about “The Fairness Doctrine.” After the January 6th siege on Capitol Hill, many people began wondering if this policy, originally enacted by the Federal Communications Commission (FCC) in 1949, but then eliminated under President Ronald Reagan, should be re-instated.  

To review, this doctrine required the holder of a broadcast license to both present controversial issues of public importance, and to present these issues in a manner that was honest, equitable, fair and balanced.

In other words, broadcasters were supposed to not only uncover what the people in their broadcast service area should be aware of, but also to present both sides of the issue.

The Fairness Doctrine only applied to radio and television licensees and no other form of media. Even if it was still in place today, it wouldn’t have applied to Facebook, Snapchat, Twitter, Instagram or any other forms of non-broadcast communication. The problem with social media is that what we read, see, and hear is all controlled by algorithms.

The Challenge of Controlling Algorithms

Unlike most innovations that human beings have designed, algorithms are not static and easily defined. You can’t say that one algorithm is good and the other is evil. They are like a living organism, in that they can learn, adapt and change over time.

Cornell University online behavior scholar, J. Nathan Matias, put it this way:

“If you buy a car from Pennsylvania and drive it to Connecticut, you know that it will work the same way in both places. And when someone else takes the driver’s seat, the engine is going to do what it always did.”

With an algorithm, it changes with each human behavior it comes in contact with and that’s what makes trying to regulate it, from a government standpoint, such a challenge.

Broadcast radio and television was an unknown when it appeared, and government was challenged to regulate it. It used as a model, the regulations that had been developed to oversee America’s railroads. In fact, that’s where the concept of requiring radio and TV stations to operate in the “public interest, convenience and/or necessity” comes from. It’s also why no one has ever been exactly sure of what this phrase actually means when it comes to broadcast regulation.  

Closing the Barn Door

The old saying “It’s too late to close the barn door, once the horse is gone,” might be the type of problem facing regulators trying to bring fairness to today’s internet dominated world.

The European Union’s first go at trying to regulate Google Shopping, demonstrated how the slow moving wheels of justice are no match for the high speed technology of today. By the time regulators issued their decision, the technology in question had become irrelevant.

20th Century Solutions Don’t Work on 21st Century Problems

We all learned in school how America’s Justice Department, and in some cases individual states, broke up monopolies in oil and the railroads. Historically, what government was trying to do was breakup price-setting cartels, and lower prices for consumers. But with entities like Facebook and Google, no one pays to use their service; it’s free!

Promising Technology or Dystopian Reality?

When commercial radio was born a hundred years ago, it was greeted with the same exuberance that the internet was and people thought radio would connect people, end wars and bring about world peace.

Then American radio would give a voice to Father Charles Coughlin, a Detroit priest who eventually turned against American democracy itself through his nationwide radio broadcasts, opening the door for the FCC’s Fairness Doctrine coming into regulatory existence.

A Collaborative Solution

Media regulation in the 21st Century with algorithms that act like living organisms maybe should be regulated in the same way we protect our environment.

As an example, how would you go about improving a polluted river?

“To improve the ecology around a river, it isn’t enough to simply regulate companies’ pollution. Nor will it help to just break up the polluting companies. You need to think about how the river is used by citizens—what sort of residential buildings are constructed along the banks, what is transported up and down the river—and the fish that swim in the water. Fishermen, yachtsmen, ecologists, property developers, and area residents all need a say. Apply that metaphor to the online world: Politicians, citizen-scientists, activists, and ordinary people will all have to work together to co-govern a technology whose impact is dependent on everyone’s behavior, and that will be as integral to our lives and our economies as rivers once were to the emergence of early civilizations.”

-Anne Applebaum and Peter Pomerantsev, The Atlantic, “How to Put Out Democracy’s Dumpster Fire

Now you know why bringing back “The Fairness Doctrine” will not work in a communications world controlled by algorithms.

We need to think differently.

Albert Einstein said it best,

“We cannot solve our problems with the same thinking we used when we created them.”

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Only Change is Here to Stay

Every night, the music of Enya lulls us off to dreamland. One of our favorite songs is “The Humming.” A line from that song is “only change is here to stay.”

I’ve often written in this blog about the only constant in life is change, and that if you’re not changing your life for the better, you’re changing it for the worse, for nothing stays the same. Nothing.

Changes in Communication

Watching the Ken Burns documentary on “Country Music” it was very clear the important role that radio played in spreading the popularity of this musical genre. But that was then, today the smartphone is at the center of everyone’s life.

Smartphones

The latest from Edison Research now says that 88% of Americans over the age of 12 own and use a smartphone; 250 million, to be exact.

The wireless phone companies will tell you that today we use our smartphones primarily for data. Edison Research tells us that 82% of Americans are now active on social media platforms, the top three being Facebook, Instagram and Twitter.

Smart Speakers

While 32% of homes in the U.S. don’t have a single AM/FM radio in them, 47% now have a smart speaker.

Today, 193 million Americans – or 68%  of adults 12 years of age and older – digitally consume audio using one of these smart devices.

Car Radio

AM/FM radio’s last place of dominance is the vehicle dashboard. WFH (Work From Home) eliminated the need to commute for a lot of people, thereby causing them to spend less time with traditional radio in their cars.

McKinsey Global Institute says at least 20% of people currently in the WFH mode won’t ever be returning to an office after the pandemic ends. Just as alarming for radio station owners is the recent report by Edison Research that shows the percentage of people who listen to audio on their smartphone in their cars is now at 50%.

“We’re recovering to a different economy.”

-Jerome H. Powell, Federal Reserve Chairman

ZOOM

Before COVID-19, we already were doing video conferencing and phone calls on platforms like Go To Meeting, Face Time, WebX, or Skype. But then the world was shut down by a novel coronavirus and it was ZOOM that suddenly became the dominant platform for teaching school, conducting government, running our courts, attending church, working from home, celebrating our weddings and birthdays, and just about everything else we used to do in person.  

ZOOM is the best example of how fast our world changed when COVID-19 struck.

How did ZOOM do it? By investing the time to know what their video conferencing customer wanted, knowing it better than anyone else and then delivering it best when the critical moment – a global pandemic – arrived.

“Spend a lot of time talking to customers face-to-face. You’d be amazed how many companies don’t listen to their customers.”

– H. Ross Perot

Your listeners are changing, your advertisers are changing, your world is changing. So, you’d better be listening carefully to understand how you must change to be relevant to their wants, needs and desires.

Because as Enya sings “only change is here to stay.”

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F’ing With the Magic

Those that know me, know I don’t use profanity. But former radio CEO Mel Karmazin, upon learning about Google’s automated advertising sales algorithm, verbalized what every nervous media and technology CEO was thinking when he said to Sergi Brin, Larry Page and Eric Schmidt “You’re fucking with the magic.” I read this in Ken Auletta’s 2009 book titled “Googled: The End of the World as We Know It.”

Media Advertising – The Last 10 Years

If we measure media advertising as a percentage of GDP (Gross Domestic Product), we see that in the last decade, media advertising in the United States was down 25% according to the Progressive Policy Institute. This think tank is reported to do some of the best research that uncouples advertising expenditures from the rest of the economy.

What caused this drop? Low cost digital ads, as compared to advertising rates in traditional media, what many of us used to call trading traditional media dollars for digital dimes.

Unfortunately, as traditional media, especially print, was seeing its advertiser base disappear, it compensated for fewer advertisers by raising its prices. Television did this too. They were assuming they held an impregnable position with advertisers. Unfortunately, they completely ignored the digital reality exploding all around them.

Radio’s Expansion

Similarly, the radio industry went about over-populating the AM and FM broadcast bands without acknowledging the growth of digital alternatives. The FCC’s “MM Docket 80-90” added over 700 new FM radio stations in the first three years after the law took effect in 1987. Then LPFM (Low Power FM radio signals) were added to help AM radio stations, as well as to provide local non-profit radio stations to communities that had no local radio service.

If that wasn’t enough, radio broadcasters began to embrace HD Radio (digital radio signals) when they learned that the same law that allowed for an AM radio station to rebroadcast its programming on an FM signal also allowed HD Radio broadcasts to be rebroadcast on an analog FM signal.

To be clear, in 1927 there were 705 commercial radio stations on-the-air (all on the AM band and most with transmitter power of under 1,000-watts). Today we have 25,819 radio stations (21,209 FM / 4,610 AM).

While all of this was going on at a frenetic pace, no one was paying attention to the 800-pound elephants in the room aka Facebook, Google, and Amazon.

Time Spent vs Ad Expenditures

It stands to reason, that the more time a person spends with a particular form of media, the more likely they are to be exposed to more of the advertising content it runs.

Ten years ago analyst Mary Meeker showed in her annual “State of the Internet” slide show, how things were trending negatively for traditional media.

For print, our media attention in 2010 was only 8%, but print commanded 27% of ad dollars. By 2018, our print attention had dropped to only 3%, and print’s ad dollars fell to 7%.

For TV, in 2010 it garnered 43% of our media attention, and commanded 43% of ad dollars. By 2018, both attention and ad dollars had fallen to 34%.

In 2010, for radio, we gave this medium 16% of our media attention and it collected 11% of the ad dollars. By 2018, our attention had fallen to 12% and radio’s ad dollars slipped to 8%.

Where did those ad dollars go? To digital media, as this Mary Meeker chart clearly shows.

More specifically, to mobile digital media.

In 2010, the smartphone in your pocket took up about 8% of our media attention and a paltry 0.5% of ad dollars spent. But by 2018, mobile digital media was commanding 33% of our attention and collecting an equal 33% of ad dollars, soon to be eclipsing TV in both metrics.

Too Little, Too Late

It’s easy to look back 20 years into the beginning of the 21st Century, and say what should have been done, but the fact of the matter remains that traditional media companies were in denial. The denial of the coming digital media world wasn’t just in the ad-supported mediums such as print, radio and TV, but also in companies like Kodak, which actually invented the digital camera in 1975, but whose leaders were in denial about it being the future of photography, and worried about cannibalizing its lucrative print film business.

Culture eats strategy for breakfast.

-Peter Drucker, legendary management consultant

Radio’s golden assets were its radio personalities and the relationships they built with the listeners. In the rush to expand, and appease shareholders who wanted accelerated growth, radio owners killed their “golden goose,” while enlarging its nest.

Radio continues to jettison the very people that connect its stations with their community of license.

Simon Sinek said, “People don’t buy what you do; they buy why you do it. And what you do, simply proves what you believe.”

For me, radio was a passion to make something great come out of a person’s radio speaker. It’s why I made radio broadcasting my career and why I went on to teach broadcasting at a university. It was my passion to create great radio!

What is radio’s WHY today?

I think that’s the question the industry needs to ask itself.

“If you keep your eye on the profit, you’re going to skimp on the product.

But if you focus on making really great products, then the profits will follow.”

-Steve Jobs

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The Better Advertising Mousetrap

Ralph Waldo Emerson is said to have coined the phrase: “Build a better mousetrap, and the world will beat a path to your door.” When it comes to advertising, social media has built the better mousetrap, and you and I are helping them to improve it every day.

The Social Dilemma

There’s a new documentary on Netflix called “The Social Dilemma” about how social media is impacting our lives, and is truly eye-opening. I encourage you to watch this documentary if you subscribe to Netflix, but especially if you’re in advertising and marketing. In fact, it would pay you to subscribe to Netflix just to view this documentary; it’s that important!

This blog won’t be about many of the important social issues raised in the documentary, but instead I plan to focus on how traditional media, like AM/FM radio broadcasting, is fighting a battle for advertising with the internet companies that isn’t a fair fight. Broadcasters are in essence coming to a gun fight, wielding a knife.

This shouldn’t come as a surprise to regular readers of my blog, because back on February 25, 2018, I wrote an article titled “Radio Has an Addiction Problem,” that quoted MIT professor Sherry Turkle’s 1995 book “Life on the Screen, Identity in the Age of the Internet” saying “computers don’t just do things for us, they do things to us, including ways we think about ourselves and other people.” Turkle said that computers weren’t just a tool, but were sneaking into our minds and changing our relationship with the world around us.

Monetizing Social Media

Social media quickly realized that in order to sustain itself it needed to monetize its service. Google’s search engine business was a Silicon Valley marvel for not only harnessing the power of the internet but simultaneously building a revenue engine that grew right along with it. Tim Kendall, now CEO of Moment, was one of the early people at Facebook, charged with coming up with a way to make money. He said that he decided that the “advertising model was the most elegant way.”

Advertising

The advertising business has always been about selling exposure to the people who use the product. Newspapers sold access to its readers, radio sold access to its listeners and television sold access to its viewers.

“Half the money I spend on advertising is wasted;

the trouble is, I don’t know which half.”

-John Wanamaker

Businesses have always wanted to get the biggest bang for their advertising buck, but realized that in the world of advertising, there were no guarantees, that is until social media came along. Mel Karmazin, former broadcasting and satellite radio CEO put it this way when he met with the founders of Google: “You’re messing with the magic of sales.”

Jaron Lanier, who wrote the book “Ten Arguments for Deleting Your Social Media Accounts Right Now,” explains that what social media is doing more effectively than traditional media is “changing what you do, how you think and who you are…it’s a gradual, slight, imperceptible change in your behavior and perception.” It’s similar to a magician performing slight-of-hand tricks, and making you believe things that aren’t real.

“This is what every business has always dreamt of, to have a guarantee that if it places an ad it will be successful. That’s (social media’s) business, they sell certainty. In order to be successful in that business you have to have great predictions. Great predictions begin with one imperative, you need a lot of data.

The internet has given us a new kind of marketplace that never existed before, a marketplace that trades exclusively in human futures. Just like there are markets for pork belly futures, or oil futures, we now have markets that trade in human futures, at scale, and those markets have produced the trillions of dollars that have made the internet companies the richest companies in the history of humanity.”

-Shoshana Zuboff, PhD, Harvard Business School

Author of “The Age of Surveillance Capitalism”

“Any sufficiently advanced technology

is indistinguishable from magic.”

-Arthur C. Clarke

Getting Your Attention

Every company whose business model is to sustain itself through the selling of advertising is competing with other companies for your attention. Traditional media is competing with every social media company to get as much of your time and attention to their platform as they possibly can. Remember, when you’re not paying for the product, you are the product.

The advantage social media has over traditional media is their development of persuasive technology. It’s designed to intentionally apply to the extreme behavior modification in the user, and cause them to take a desired action. It does this through the use of positive intermittent reinforcement, just like a casino slot machine lures you into thinking the next pull of the handle will release its fortune. Social media works to create an unconscious habit, programming you for a deeper level of control than you even realize is happening.

Social media has learned how to exploit a vulnerability in human psychology, which even when you know how it works doesn’t inoculate you from its power to change you.

No longer is social media a tool we use, but is a tool that uses us, creating this technology based environment designed for mental addiction through psychological manipulation.

“There are only two industries that call their customers ‘users’:

illegal drugs and software.”

-Edward Tufte

Most concerning about this change is that it’s being driven by a technology that’s advancing exponentially. In contrast, our human brain has not really advanced at all over the same period of time. The rate of change is beyond our human comprehension, even for the very people who are designing and building these computer networks.

“The race to keep people’s attention by social media isn’t going away. Our technology is going to become more integrated into our lives, not less. The AI’s (artificial intelligence) are going to get better at predicting what keeps us on the screen.

How do you wake up from the matrix when you don’t know you’re in the matrix?”

-Tristan Harris, Center for Humane Technology Co-Founder

“Whether it is to be utopia or oblivion

will be a touch-and-go relay race

right up to the final moment…”

-Buckminster Fuller

Today, the internet is a more efficient way to sell our attention to advertisers.

Now you know why.

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Where Have All the Baby Boomers Gone?

Baby BoomerBill Thomas, a media and branding idea expert and broadcast & radio veteran (@BillThomas), shared a link on Twitter to an Ad Week article about three brands that bought ads in Super Bowl 54, targeting the 50+ demo. It’s not surprising, as the author of the article points out, that this is the age group that is most active and ready to spend online. Any guess on what the three brands are, that were targeting this Baby Boomer age group? Do you think it was iHeartMedia, Cumulus, and Entercom? Stay tuned.

Citizen Insight Academy

The City of Winchester holds a Citizen Insight Academy annually, and I signed my wife Sue and I up for the 2020 edition. We’re only nine weeks into this 16-week program and Citizen Insight Academyit’s been illuminating learning about our city and the way it operates. The other evening, we had a session with the city’s Emergency Management and E-911 departments.

You can imagine my reaction when the head of the E-911 department began her talk with “People don’t listen to the radio anymore, but they’re really into social media.” She went on to say how she grew up listening to the radio but how other forms of communication, like social media, have replaced that habit. Much like smartphones have replaced people’s landline telephones.

She told us that most calls into the city’s 911 switchboard come from wireless phones versus landlines. The percentage was something like 75% wireless to 25% landline. I myself have been a cellphone only household for over a decade, and our class of 35 had only about four people who still have a landline.

Traditional Radio Stations Have Lost Faith of Listeners

If I thought our city’s 911 Director was tough on radio, the BBC’s head of radio and education, recently said “Radio as we’ve always known it, has lost the faith of listeners.” He explained that “where once it was everything, now it is not. In fact, for many listeners, it is no longer their default.”

BBC Chief

BBC Radio Chief, James Purnell

In 1920, when commercial radio service began in America, you were lucky if you had a single choice for wireless communication. In many localities, you might have only had radio service after sunset via the AM skywave phenomena.

As more radio stations came on the air, Americans began to develop a radio habit. Radio listening was something we did while working, riding in the car or while we were at play. It provided the audio accompaniment to our lives. But everything’s changed. Now radio stations need to create an experience that earns a place in someone’s day.

NuVoodoo on Media Addictions

I wasn’t surprised to see NuVoodoo releasing some data from their latest research that shows all age groups today are addicted to their Smartphones. But what caught my eye was how Millennials, Gen X and Gen Z groups were more addicted to a favorite FM or AM radio station than Baby Boomers.

NuVoodoo Addiction to Media 2020

Which got me to thinking, why were the very people who grew up with radio and few other choices, be the age group least engaged with the medium today?

Boomers Know Great Radio When They Hear It

Real Don Stelle

The Real Don Steele

Baby Boomers grew up during a time when great radio personalities dominated the airwaves. Broadcasters like Harry Harrison, Robert W. Morgan, Larry Lujack, Dan Ingram, The Real Don Steele, Ron Lundy and so many more filled our lives with information, entertainment, community and companionship. It was a time when radio stations had local news teams, great promotions, exciting radio jingles, stationality and air personalities. Personalities, so important in our lives that we wanted to meet them more than the recording artists that created the music they played.

Radio for Baby Boomers isn’t like that anymore, so they’re moving on.

The boomer generation now embraces smartphones, smart speakers and social media with a vengeance, taking all their dollars to spend right along with them. Baby Boomers hold around 70% of the disposable income in the United States and they make up 50% of sales for all consumer package goods.

The Big Three

So, who were the media companies that want to gain a larger share of the 50+ demo? The ones that know that Baby Boomers are the most active and ready to spend their dollars online?

Google, Amazon and Facebook, that’s who.Facebook Amazon Google Logos

Facebook advertised during a Super Bowl television broadcast for the very first time in 2020. They hired as pitchmen, Chris Rock (54) and Sylvester Stallone (73). Both men are iconic celebrities and are part of this powerful consumer demographic, the 50+ audience.

Meanwhile, radio continues to jettison the very people that connects them with their local audience, the radio personality.

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The Birth of Radio in America

Early Radio ListeningWhen World War I ended, it didn’t go unnoticed what a powerful role radio communication had played in the outcome. Led by the General Electric Company, the Radio Corporation of America (RCA) was formed in October of 1919. With guidance from the federal government, RCA brought together GE, Westinghouse, and AT&T to develop the radio broadcasting industry in the United States.

In the early 1920s, no one knew what radio might become. RCA would be the entity to coordinate the manufacturing and sales of all radio receivers. They held all the patents from GE, Westinghouse and AT&T and it was RCA that would authorize others to use these patents to produce radio receivers, as well as collect and distribute the royalties to the patent owners. GE, Westinghouse and AT&T could manufacture equipment for their own use, as well as build and operate their own radio stations.

The Interstate Commerce Commission

Initially, the regulation of radio broadcasting fell under the jurisdiction of the Interstate Commerce Commission (ICC). In 1920, interest in broadcasting ranged from amateurs to experimenters and businesses. Some talked, some played music, and some began broadcasting news of local interest and weather reports. In an effort to bring some order to what had become a chaotic broadcasting environment, the ICC decided to place amateur broadcasters into the less desirable air space, below 200-meters, as well as restrict the type of broadcasting they could air. Amateur broadcasters had to agree that their radio stations could no longer air weather or market reports, music concerts, entertainment, speeches, news or other similar information. The ICC would begin to issue a new broadcast license on the 360-meter band for radio broadcasters that would be licensed to provide such services. All the members of RCA, including RCA itself, would begin to build radio stations. Westinghouse would be the first to establish one of these new radio stations, with their own inhouse amateur radio enthusiast Dr. Frank Conrad, and what became KDKA in Pittsburgh on November 2, 1920. Westinghouse followed this station with WBZ in Springfield, Massachusetts and WJZ in Newark, New Jersey.

However, Westinghouse management quickly realized that merely providing a superior broadcast service, which would create demand by the public to buy the new radio receivers they manufactured, would be futile if their broadcasts were harassed and interrupted by uncontrolled amateurs disrupting their ability to be heard.

Quality vs. Quantity

The ICC now had a new problem on its hands. Broadcasters interfering with other broadcasters, and what kind of culture should America’s new, growing middle class, be hearing through their radio sets? Since the decision had been made to not have radio be government controlled in the United States, broadcasters said they needed the government to regulate radio in order to help establish order and control.

Westinghouse proposed a solution to the ICC, to create two classes of commercial radio service.

Broadcasters on the current 360-meter band would become Class A broadcasters and a new service on the 400-meter band would be reserved for Class B broadcasters.

In order to qualify as a Class B broadcaster and receive higher power authority (500 to 1,000 watts), the licensee would need to never play phonograph records on the air, or any other kind of recorded material. Class B broadcasters would only air live talent and performances. Such a requirement would insure the public was receiving radio entertainment that was unique and original and not available on any other radio station.

The new license would also mean that only wealthier and more established organizations would be able to afford to operate radio stations under these new conditions.

Westinghouse’s concept, having government and business working together, was a way to “improve” radio broadcasting through restricting it to “responsible” parties without stepping on anyone’s First Amendment rights as to what a radio broadcast should consist of.

The Radio Act of 1927

This act laid the foundation for what radio broadcasting in America would be for the next several decades. The first being that radio broadcasting would not be open to everyone, but restricted based on quality. The feeling being that Americans would be better served by a few quality broadcast radio stations, rather than a plethora of mediocre ones. The new act also introduced the hard to define concept of “operating in the public interest.”

Radio, unlike newspapers or the movies, was to become a government regulated medium, with decisions about quality and public interest being made through an alliance of government and private interests.

And it was with the Radio Act of 1927, that America decided that radio broadcasting would be a commercial medium operated in private hands. Radio would support itself through the selling of advertising.

Today’s Radio Marketplace

From June 1927, when 705 commercial radio stations were on-the-air in America (all on the AM band and most with transmitter power of under 1,000-watts) to June 2019, we now have 25,819 radio stations (21,209 FM / 4,610 AM) with transmitter power up to 100,000-watts on the FM band and 50,000-watts on the AM band.

The concept of quality over quantity is certainly no longer the guiding principle.

The Ad Pie

As I read about how radio revenues are doing, I’m struck that both public and private radio broadcasting companies are reporting that local advertising revenue is dismal for Q2. However, major radio stations that enjoy eating from the national trough, saw this category of advertising as their only bright spot for radio ad revenue.

While digital revenue is hoped to be a new area to grow advertising revenues for radio broadcasters, the reality is that Facebook, Google and Amazon are already gobbling up about 90% of those dollars, so how fertile is this area for broadcast radio?

Reading comments being made about radio advertising conditions, I was struck by what Beth Neuhoff, CEO of Neuhoff Communications had to say when Radio Ink asked her, “what are local advertisers saying about the economy?” She responded by saying: “Local advertisers seem less focused on the economy and more concerned about over-saturation of the competitive landscape.”

It’s something that I believe the radio industry should be just as concerned about when it comes to OTA (over the air) broadcasting.

Gone are the days when putting another broadcast station on-the-air is a license to print money. People who aren’t use to quality, always will chase quantity.

quote-quality-is-more-important-than-quantity-one-home-run-is-much-better-than-two-doubles-steve-jobs-51-96-69

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Where Have All the Salespeople Gone?

emptydeskFact: the number of people working in the advertising industry is in decline. What makes this noteworthy is that America has been in an economic expansion.

For the past thirty years, advertising jobs have grown in line with the economy, why not now?

I See/Hear Lots of Ads

In my youth during the 60s/70s, it was estimated that the average American was exposed to around 500 ads per day. Those were the days where advertising was delivered by what we now quaintly refer to as “traditional media;” newspapers, magazines, billboards, radio, television and direct mail.

In today’s world of smartphones and internet, digital marketing experts estimate that the average American is exposed to somewhere between 4,000 and 10,000 advertisements per day.

With this explosion in advertising, why are salespeople disappearing?

Google It

Or Facebook it. Or Amazon it.

In reality, the world’s largest advertising companies are these three technology giants and they have realized virtually all of the growth in digitally based advertising.

Programmatic Buying

The advertising business has always been one based on building relationships, be it directly with the business owner or with an advertising agency. Programmatic buying eliminates these relationships by the use of algorithms. This allows for the placement of more advertising, on a variety of platforms, with the need for fewer people.

The downside of programmatic buying is that a company’s ads may be placed in low-quality or even offense editorial material. That’s been very troublesome for advertisers.

The High Tech/High Touch Pendulum

Throughout my broadcast career, I’ve watched the pendulum of change oscillate between a communications industry that is “high touch,” aka people talking to people, to one that is “high tech,” aka machines/automation talking to people. This pendulum oscillates on a fairly regular cycle between the two extremes.

Maybe we’re close to the apex of the pendulum swinging in the direction of high tech, and it will be moving back toward a world that demands people interacting with people again. We’ve been here before.

Digital Truths

In the current generation of digital media, we know that two things are true:

  1. No one is looking for more ads
  2. High Quality Content Rules

So, what’s the answer?

Every form of media needs to look in the mirror at itself and be honest about its advertising content and the quantity of ads it’s running. (Note: Running more low quality ads was never a solution to making your budget number.)

Whether we’re talking about the songs we program, the banter of our personalities, the content of our talk shows or the quality/content of our ads, it’s ALL important in a world where high quality content rules.

Media sales today is more about building partnerships than transactions. It is one where consistency and trust are the foundation upon which today’s sales professional becomes a sustaining resource to the businesses they serve.

Human Relationships

Advertising is influencing and influencing is fueled by relationships.

Whether it’s the relationship between an air personality and the audience, or the sales professional and the client, there’s real value in building human relationships and partnerships.

The airline industry today could save as much as 35 Billion Dollars employing the use of pilotless planes. But according to Fortune “54% of passengers refuse to board a remote-controlled plane.”

Representative

I know I’m not alone when I call a company for help and find myself frustrated having to deal with an automated voice system. Very quickly I find myself yelling over and over and over “REPRESENTATIVE.”

Are we approaching the age of algorithm burnout?

We will always opt for a real live human to work with, over a digital one.

That’s why there will always be a job for media sales professionals who are both knowledgeable and emotionally intelligent.

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The Great Ad Hack

great-hack-netflix-1564144457The other evening, I watched the Netflix documentary “The Great Hack.” It chronicles how big tech is taking our data, that we freely give away online, by both making money with our information and manipulating us.

The documentary makes one realize there’s a lot for us to be worried about.

 

Data Privacy

In an internet connected world, do we have any secrets? Everything about us is being stored, as we share our information via social networks, our credit card companies, our banks, our medical services – just about everyone we interact with online.

During the course of the documentary, professor David Carroll tries to see his data points as collected by Cambridge Analytica. Spoiler Alert: Professor Carroll wins a lengthy court case to obtain his data points. Cambridge Analytica never produces them but instead paid a fine and plead guilty for failing to do so. Not producing the data points was more important than revealing what they knew about Professor Carroll and giving the world an inside look at what they know about each of us.

Now Cambridge Analytica is liquidating to prevent anyone from ever seeing the data points they collected on anyone.

Our data privacy has always been important, but we’ve traded our privacy for speed and convenience in our internet connected world. The documentary points out that collecting and using our data points is a trillion dollar business that last year saw data surpass oil in value, making data the most valuable asset on earth.

The Persuadables

What Cambridge Analytica did was target people whose minds they felt they could change for the purposes of winning elections for their clients. In the military, such a tool is called Black Ops or False Flag tactics. Its psychological warfare used to induce confessions or reinforce attitudes and behaviors favorable to the user’s objectives.

Cambridge Analytica knew they didn’t need to change everyone’s mind, just a critical mass of people to achieve their client’s objectives.

Why did they do it? They wanted to make money, lots and lots and lots of money.

Advertising is Propaganda

The advertising “mad men” of Madison Avenue came from the propaganda operations of the United States military during World War Two. They took what they learned and applied it to selling cars, refrigerators, homes, soap etc. Great advertising seeks to persuade the reader, listener or viewer to buy a product or use a service.

Is it any surprise to anyone that as social media was born, these same methods would be applied to this platform, only on a level that was not possible through traditional media?

“These platforms that were created to connect us are now being weaponized,” says Carole Cadwalladr, investigative reporter for The Observer newspaper. “It’s impossible to know what is what, because nothing is as it seems,” she adds.

Tech Giants Crush Ad Market

Sara Fischer writes in Axios that the big tech companies like Facebook, Google and Amazon are consuming more advertising revenue than most other ad supported media combined. The reason? They have our data points and know how to effectively use them to get us to do what they want. You can read Sara’s full article HERE.

The eMarketer and Zenith Media data as graphed by Axios Visuals really shows where things are headed. (see below)

Screen Shot 2019-07-30 at 3.36.05 PM

Can Traditional Media Win?

The playing field today is so unlevel, it begs the question, if traditional media – newspapers, magazines, radio, television – can even have a fighting chance to win advertising dollars.

As a consumer, do you think you stand a chance to not be influenced by the tech giants when they are using your own information against you?

I encourage you to go deeper in this subject by both watching the Netflix documentary “The Great Hack” and reading Sara Fischer’s column “Tech Giants Still Crush the Ad Market Despite Looming Threats.”

Then I hope you will share your thoughts in the comments section of this blog article.

The future of our world is being shaped by the lack of data privacy.

I’d love to hear your thoughts.

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Radio Knows What to Do

Munster RadioRon Robinson is a Canadian radio curmudgeon that writes a weekly column in Radio Ink. A recent column asked the question, “Will More Data and Tech Help Radio?I thought I’d take a go at answering this question in this week’s blog.

Spoiler Alert: The Answer is NO

Radio seems to be awash in data and tech, more is not what’s needed. Radio knows what to do but isn’t doing it.

Education that is not put into action, is simply entertainment.

Likewise, having too much information can be as useful as not having any information. Moderation is the key to everything.

People Listen to Radio

I have no doubts that people are listening to radio. Unfortunately, the proliferation of radio stations has fractionalized any one radio station’s listening audience. Gone are the days of big double digit shares of listening to any radio show or radio station.

Nobody cares if your radio station is #1. (They never did.)

Are Your Listeners Responding?

For the advertiser, it’s always been about cash register rings. That’s the ONLY audience measurement they ever cared about.

To accomplish driving this metric, means an investment in the copywriting process. It means advertising representatives who know how to find each advertiser’s unique characteristic that will become their story. It means having relatable communicators who can tell the story in a way that engages the listener and inspires them to action.

I personally have been studying why people do the things they do for over three decades. And have been a disciple of Roy H. Williams aka The Wizard of Ads for almost as long.

Any radio person serious about getting their advertiser results should be investing in their people’s education at the Wizard Academy.

Social Media

I’ve been writing this blog for almost five years now and post it to different social media platforms. Looking at the metrics about where readers come, from #1 would be from Facebook. Facebook not only comes in first, but what comes in after it, is far behind in impact.

I’m thinking that your local advertisers may be experiencing something similar if they’ve used Facebook to promote their business.

Technology

I began streaming music when living in the greater New York City area and WQCD – CD101.9 FM dropped its smooth jazz format. In my radio career, I launched two different new smooth jazz formatted radio stations and fell in love with the music and the artists.

To take a break from monitoring my own radio stations, I’d turn on CD101.9.

When they left the air, I was forced to go online and find a streaming smooth jazz station. So, in essence, the radio industry by removing this relaxing format at station after station, forced folks like me to go elsewhere for their music fix.

You Can’t Go Back

In my many travels, I’ve had the opportunity to hear a couple of OTA smooth jazz radio stations that brought this format back. I found them hard to listen to. Here’s why, they are cluttered, and the streaming smooth jazz channels I enjoy are not.

Much in the way that Netflix, Amazon Prime and YouTube have made television clutter free viewing, streaming audio via my Amazon Echoes has done the same thing for my music listening.

Anyone who’s had a car with an automatic transmission, won’t want to return to the days of shifting, or has had a car equipped with air conditioning won’t buy a car without it.

It’s Innovation Time

Radio needs to do what others are not.

The successful radio stations of the future will be ones where their people are 100% focused on its content, and nothing else. They will be niched to satisfy a defined audience so perfectly, that those listeners will find little need to go anywhere else.

They will be people communicating with other people, live in real time and with relevant content.

Fred Rogers put it this way, “L’essential est invisible pour les yeux.” (What is essential is invisible to the eye.)

More data and tech won’t take radio to the next chapter.

People will.

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