Search This Blog

Wednesday, December 27, 2006

Decision Stress - Traditional Radio's Friend

2006 has been the year of extensive reportage about the demise of traditional radio. Many of these stories focus on all the wonderful choices listeners to traditional radio now have and how these choices will whittle away at radio's tune in and time-spent.

Research we have conducted this year with over 12,000 listeners of traditional radio all across the U.S. has uncovered a little secret that I'll let you in on. Radio's got a friend called "decision stress". Not a new term, this marketing term originally coined by Alvin Tofler in the classic book "Future Shock" gets to the heart of choice in the human brain. In his book written in 1970 about life in the future, Tofler examines what he foresaw as the overstimulated individual, the bombardment of the senses, information overload and the decision stress associated with all of this over stimulation.
If traditional radio has done anything right, its brands are comfortable and recognizable.
Related to today's entertainment choices, decision stress plays a major part in how the average consumer selects what they will view, read and listen to. When faced with too much decision, the average person will respond by attempting to postpone decisions or reduce the choices - sometimes logically, other times emotionally. In most cases, most consumers faced with this decision stress, will gravitate to brand strength to aid in easing the decision-making process. It clears the stress of making a decision even though considerable thought may allow them to choose more wisely. Nonetheless, brand strength can be the antidote to decision stress. In study after study this year, over 80% of the time consumers we interviewed about their radio and digital options chose brand over generic.

Why is this important? If traditional radio has done anything right, its brands are comfortable and recognizable by the average consumer and when placed in a position to remember or choose, for example, from among thousands of Internet sources for music and their traditional radio station(s), they choose to recall terrestrial radio brands. As you know, building brand takes years and there are only a handful of products competitive to radio whose brands have broken through the consumer psyche - Apple's iPod is one.

Reading media reports this year, you'd think traditional radio needs all the friends it can get in order to succeed into the future. Perhaps one of radio's most important friends, decision stress, has not been considered by those in and out of the business when considering all of the tools from which radio benefits.

Tuesday, December 26, 2006

2007: Content is Not King; Distribution is

Content was king for a while, but it's fallen to #2 on the hit parade of what's going to garner listeners, viewers or readers in the foreseeable future. Now distribution is king! It's not that content doesn't count; it's just that in 2006 distribution became more available to the masses thus surpassing content in importance.

We heard good news last week that year-end statistics reflect that traditional radio's on-line listening hit something of a tipping point this year with significant increases in listening to terrestrial radio's on-line streaming - and that's a good start.

But the public has access to all sorts of distribution. It could be the death of old time media if we don't get it right next year. Even my 89 year old mom is aware of new channels of distribution. THIS is the story. And it's magnified 100 fold for the youth generation that's losing interest in traditional radio as one of their distribution choices. Ever try to remember a dream when you wake up? You know how fleeting the memory of it is? That's what is happening to 12-21 year olds. They're slowly forgetting we even exist.

Get your brand, your best content & your most entertaining talent OUT THERE to the masses on as many channels of distribution as you can. It's distribution that will keep you competitive. What good does the best content in the world get you if that content can't be heard by the greatest potential audience. Guess what? Your 100kw transmitter alone can no longer compete! Today, the battleground is access to the public on as many distribution channels as possible. Traditional radio has a unique opportunity to spread its content. Let's not blow this one!

Traditional media and many new forms of digital distribution are not mutually exclusive either. Use them to power each other and expand your reach.

May your 2007 be your most exciting and successful yet.

Friday, December 22, 2006

The Reluctant Broadcaster

For many of us who have been in this great radio business for more than three years, the idea that the paradigm is/has shifted out from under us is a bit like feeling your first earthquake. It's crazy! Unlike most natural disasters, earthquakes give you the feeling that you are no longer in control - that there is, indeed, a greater force at work and you can't do a damn thing about it. Welcome to the world of traditional radio 2.0 - the new reality.

Does traditional radio's senior management have trouble seeing that their legacy businesses can not only peacefully but constructively co-exist side-by-side with digital media? The combination can be quite potent:
  • Broadcast towers + any digital network = greater reach.
  • Professional DJ's/hosts + user-generated content = more compelling programming.
  • Being "local" + being virtually local, national, even global = vast audiences.
  • Scheduled programming + time-shifted content = convenience for listeners.
  • Over the air or streamed transmission + recorded, shared or networked = greater distribution.
  • Single programs with many listeners + many large niches of listeners = listener super-serving.
  • A radio receiver for AM or FM + many digital delivery devices = traditional radio can be everywhere.
  • Only ad revenue + content revenue + fees + upsells = multiple revenue streams and recovery of lost traditional dollars.
  • A 'receive only' or one-way system + an interactive system = greater listener satisfaction.
The transition from old to new requires a juggling act of sorts. Traditional radio must maintain its current "legacy business" while quickly adapting to this new reality. Develop the new with the resources of the old. It can be done - they are not mutually exclusive.

Yet when I sit in front of broadcast executives and try to help them navigate the future and we discuss how they have the power to adjust, they acknowledge that they need to do some or all of it, but they insist they can't! They just don't have the resources.

Sure, radio matured into a business some time in the 80's, and there's nothing wrong with being a business with positive cash flow and expenses. But, folks, business has sucked the life out of this business. In the 80's and 90's, before consolidation and Clear Channel and CBS Radio's scorched earth policies, broadcast companies figured out how to make money and how to spend it. Something bad happened in 1996. The last ten years have not been good to our business and now we're attempting to fight our way out. The industry has its visionaries who have carefully explained what to do. There's just not enough courage at the highest levels to do what needs to be done. Yet.

Enter your email address:

Delivered by FeedBurner

Monday, December 18, 2006

Three Reasons

I must admit I'm stumped.

I've seen enough research over the last few months that has been predicting radio's woes for years. I saw a study originally released in 1999 that projected that 12-21 year olds of that year would be significantly alienated by traditional radio by 2005. While its specific time-spent-listening projections were off, the point was well-taken: terrestrial radio was not catering to this generation and by 2005 the 12-21 year olds of then (the 19-28 year olds of today), there would be striking changes to terrestrial radio because that generation would be losing interest.

'99 was the year of Napster, you'll recall, and though their P2P model eventually blew up, the damage had been done. The youth market was beginning to salivate over their power: getting what they wanted, when they wanted - on demand; they didn't need traditional radio.

I'm stumped because confirmation studies by this company (Bridge Ratings) and other highly respected radio research organizations during 2006 show conclusively that company operators, general managers and programmers have ignored the signs first seen 6-7 years ago and continue to shield their minds from the reality.

Are there any operators out there today who have the guts and conviction to try to win back these lost demographics?

"Why should we, Dave?" I hear you say. You think that the youth are gone and can't be salvaged so why try?

There are three potential reasons traditional radio has lost its way:

1. They are in denial
2. They don't know what to do about the attrition or are operationally unable to do anything
3. They don't care

Which do you think it is?

As we consider that another year has come and gone, the radio industry can look back on a year where, as a whole, radio stations began to rise to the challenge of all the new media surrounding it. The industry also now knows that it will be an up hill battle to slow the attrition that has seeped into Gen X and Gen Y; that these generations are not leaving because satellite radio is the answer or even that MySpace, Facebook or the iPod has changed communication forever.

The industry must accelerate its most aggressive tactics now - embrace as many new technologies as it can, reallocate its resources to support the understanding that it is a content business and that terrestrial radio is the best at creating content 24/7.

So, which of the three reasons listed above pinpoints the foundation of the lethargy the radio industry finds itself in?

Saturday, December 16, 2006

Radio's 12-24 dilemma - Taking Less to Get More

It's always interesting to follow the trades in our business, especially when the stories are old news. I'm referring to the headlines this week about the Arbitron "fly-in" in which was discussed the fact that the radio industry has ignored the 12-24 year old audience to the point that the very future of the business is at stake because traditional radio has offered this generation nothing for over ten years. This isn't new news!
Our research has shown this age group, in general, doesn't feel like there's any compelling reason to listen to terrestrial radio.
Other researchers have flown this flag, yet the radio industry has just ignored these warnings. Why?!

It should be no secret that the answer lies in top lines, bottom lines and senior management's ability to once again prove their short-sightedness and place the almight dollar ahead of their own future.

Yet, I can't really blame them. The real blame sits with advertising agencies and radio clients who have been brainwashed to believe that 12-24 year olds don't have disposable income. Maybe they understand that this age group has tons of money ready to spend on everything from movies and music to clothing and electronics; these buyers of radio time have simply following the "lemming law" and inadvertantly led the radio industry down a path of self-destruction.

While running radio stations for CBS not so long ago, I recall the frustration we had walking out of buyers' offices when they had explained that this younger generation wasn't their core target for some of the radio clients they represent, yet they had no problem spending money on youth cable networks such as MTV to promote movies, for example. The buyers just couldn't see the same relationship radio had with this active consumer group and so they wouldn't buy radio.

So, over the years, management at traditional radio followed the money and did not develop programming and personalities that would compel this generation of 12-24 year olds to stay glued to their radios like previous generations. Their rationale was, " if we can't get buyer support in 12-24's, we'll go where the money is: the 25-54 family reunion demo." Obviously, radio is a business and businesses need to make profit. But radio's always been in the business of making money and for some reason the industry has ignored the concept that it needs to develop future audiences.

Consolidation led to ownership concentration which led to the concept of cost savings and the dream of leveraging audiences on multiple stations for increased revenue. In other words, greed blinded an industry that couldn't see it had a future. Wall Street forced traditional radio to focus so much on this quarter, this month - even this week's sales, that it forgot its future.

In the words of humorist Kin Hubbard, "the hardest thing is to take less when you can get more," and traditional radio hasn't worked hard enough to take less.