Planting Brand Seeds

Radio - all radio, AM/FM, Internet-Only/Internet Simulcast Streaming - is about to learn about its next great challenge for listeners in-car.

It's no secret that AM/FM radio's final bastion of exclusivity - the car - is up for grabs.

Today's smart phones have legitimately removed the need for Wi-Max/Wi-fi for streaming radio consumption in-car. With my iPhone, I can listen to any Internet stream through my car sound system.

Ford's Sync system developed by Microsoft will be capable of providing in-car passengers the great personalized experience of Pandora.

So, how does traditional radio or any audio content found on the Internet get a leg up on its competition?

Ford's Sync system is a pioneer in in-car audio content delivery and its voice-activated capabilities, though limited for the moment, will expand very soon to provide for safer driver-audio system interaction. Most auto makers are making a 'reasonable effort' to minimize in-car distractions for motorists.

Paul Green, a professor at the University of Michigan Transportation Research Institute who studies the effects of distractions for motorists says that Ford's system should make it easier for drivers to keep their attention on the road.

This is why voice activation for selection of your personal audio entertainment is coming and all audio content providers must figure out how to tackle this challenge.

If I want rock music and I simply say "Rock" to my in-car system, what type of Rock music will it select. Who will categorize these descriptors? Which streaming station will be fed to me? How will this work?

All indications now are that motorists will preselect a limited bucket of 'stations' or channels they wish to have access to and thus the system will recognize the voice command. This may be as many at 50 preselected channels.

So, brand continues to be the secret sauce in this ever expanding "infinite dial" of options for in-car entertainment and strength of brand will continue to dictate popularity.

Meanwhile, radio's electronic measurement system - Arbitron's Personal People Meter - seems to be confining what traditional radio offers. The science of the device does not seem to encourage experimentation in programming and radio brands are becoming too generic which may inevitably hinder stations' ability to compete in the new world of voice search in-car.

But the branding process starts long before the new car owner uses this voice activated system.

Frankly, it starts long before now. It started yesterday.

Consumer habits are being formed every day and brand trust and expectation will go a long way for any content provider to land-grab in-car real estate.

If your company is competing in this brave new world, brand development and the delivery of the brand's promise should be job One starting today.

Because what you sow today will surely bear much fruit far down the road.

The Decade of Radio Cannibalism

What is the most interesting/startling/eye-opening thing I've learned this year about the radio business?

There are no leaders - only followers.

The conversion of a highly independent-thinking, proactive industry to a defensive, lack-of-self confidence one didn't happen overnight. It's been nine years in the making. Sort of like James Cameron's "Avatar", only this time it ain't pretty.

Up until 2000 when the Internet bubble burst, the radio industry was robust, creative and ballsy, i.e. it took on all 'comers' who wanted to threaten its very existence and it took each and every one on with gusto. It thrived in that environment and it made its members love their business that much more.

The bubble burst and there were no more $1000 spot rates from Internet start-ups.

9-11 halted everyone's business, but radio never recovered because around the same time Napster taught our kids that they didn't really need radio...

The Internet proliferated as high speed access surpassed the tipping point of 50% of households...

Internet radio, You Tube, Smartphones, subscription radio, technology and...

Arbitron's PPM. The last straw.

Audience measurement systems for any consumer product have always been a reflection of usage; no more-no less. Once delivered, it was up to the customer to interpret the data.

What changed with the introduction of Arbitron's PPM service?

The methodology influences the business.

PPM is arguably more accurate, yet it has its limitations just like the diary-system does.

It allows programmers and managers alike to dissect audience movement down to the minute and to over-react to changes in listening behavior. The cause of that change in listening is not measured, yet programmers can make assumptions which may not prove accurate.

The science of Arbitron's meter system has taken advantage of radio management's building inferiority complex by eliminating the 'long-tail' or product variety evident among radio's vast potential listening audience.

The most mass-appeal stations are the victors in PPM rated markets.

The stations that take the least risks to create exciting, compelling listening perform best in this metered world.

PPM has surgically removed radio's best traits: it's abilty to respond quickly to consumer trends and to offer entertainment faster than any other medium. This ability to read its audience from gut and sound research, kept interest in radio at high levels before technology brought new competition.

Perhaps the worst part of this is that the industry has been led by its nose into this quagmire without a fight. And now it has a ratings system which does not fully support its business potential.

If the motion picture industry followed this path, we would be presented with only the most bland, smallest common denominator movies. And while there's certainly a place for them, consumers would never have been exposed to such interesting films as "Momento", "Eternal Sunshine of the Spotless Mind" or "Requiem for a Dream" over the last decade.

And this secret sauce which the radio business held in high esteem is what is missing in today's newly competitive landscape.

A new study from Bridge Ratings suggests that radio is not dying on the vine it's just sharing usage with other media and tune-in is as high as ever.

This is the time for creativity, risk and reward. Results of this study show that radio consumers like the ease-of-use and the pervasiveness of over-the-air radio. In fact listeners of all ages are pulling for radio, and want it to be better, funnier, more stimulating.

Consumers are pulling for radio because they know it can do better.

The industry is ending a decade of cannibalism. We have seen the disease of "no confidence" coupled with "less courage" seasoned with a measurement system that doesn't support the creation and delivery of many potentially popular radio formats.

During times like these it is strength, courage and the ability to think independently that is needed.

Perhaps it is not too late to embrace those traits that brought the radio industry its greatest successes. There are options to Arbitron's meter methodology; options that would measure the totality of the interests of radio's consumer base.

For 2010, we look for a more positive landscape for all business to operate, and the radio business, specifically, has a chance to be reinvigorated.

The Radio Fortune Teller: Teen Radio to Return

I received two interesting calls in the last 24 hours - from 'kingpins' at high levels at two of the biggest advertising agencies in the land. They wanted to apologize.

Apologies from such lofty men and women who control so much of the advertising dollar in the U.S. are hard to come by, so I promised that comments I may use in my blog or in research we do at Bridge Ratings would be anonymous.

One of biggest - and quietest - radio industry issues to come out of the last ten years has been the theory that one key reason radio is experiencing such attrition from teens and young adults is the perfect storm that was created as technology eclipsed radio's lack of compelling youth radio content. The logic goes that if radio had been a bit more aggressive with radio programming geared to 13-24 year olds over the last ten years, it is possible that radio time-spent-listening among this group would not have fallen so sharply.

But, the chicken-and-the-egg fairytale dictates that radio would have gladly pursued such a course of teen programming if ad agencies would have supported it. No big ad dollars for teen radio - not likely money-hungry broadcasters would spend the resources required.

So, what about those calls from ad agency big-shots?

The calls (I just got another while writing this blog) were about the just-released report by TRU, a subsidiary of Research International, that revealed that teen spending in 2006 had reached $179 billion. That amounts to about $180 in disposable income per average teen per month. These media buyers have apparently awoken from a deep sleep (or deep denial) and were asking poignant questions about the possibility of a rebirth of youth radio and what would I recommend.

I pointed them to a Bridge Ratings' study we published earlier this year that glancingly mentioned some new youth radio formats that had tested extremely well. Not really a mystery since the radio formats were put together and researched with the help of a pretty smart group of average 13-21 year olds.

Formats of particular interest to these media buyers had working titles of "Youth News" and "Current Blend".

"Youth News" is fairly easy to figure out - only you wouldn't believe how good it sounded in testing. That's because this new youth information format was written and delivered by no one older than 24 and it had music throughout.

"Current Blend" is a bit more difficult to decipher. However, I can tell you that it's a music-focused radio format that is not currently heard anywhere on the planet on traditional, satellite or Internet radio!

So, I'm excited because there seems to be a glimmer of anticipation on the part of some of the smarter media buyers about radio formats that focus on 13-21 year olds.

It would seem that they have just been waiting for something like this to come along.

I asked these buyers if radio stations began popping up around the country with these two ideas (and more), would they send more dollars - many more dollars - their way, and these buyers gave a profound "yes"! response...."...but only if they get ratings..." they concluded.

I asked, "Where have you been placing youth ad dollars over the last few years?".

They replied, "CHR and Rock stations, primarily. But we know we're missing a tremendous number of these kids because many of them don't listen to those formats."

I have no doubt that traditional radio can regain some of the lost youth listening it has been faced with in recent years. And these formats will do amazingly well with both of Arbitron's methodologies (diary and People Meter).

Which broadcaster(s) have the courage to step up?

I'm waiting for your call. 818-291-6420.

Wall Street's Delusion

Banc of America securities analyst Jonathan Jacoby has just returned from CES in Las Vegas with some good news and some "bad news" for terrestrial radio. He also returned exposing his ignorance of true listener behavior.

Mr. Jacoby says that he "found many new devices/systems that are making it easier to use cell phones and MP3 players in the car." He continues, "several products on display integrate the iPod and cell phone into the car. Our negative outlook for terrestrial radio is based largely on our view that radio's in-car listening base will be eroded by compelling alternatives.

"On the plus side," he adds, "the supply of HD radio units seems to be building. There were more HD radios on display than at last year's CES," and many major audio manufactures have gotten into the game."

Let's address these comments:

1. Mr. Jacoby, as substantiated by Arbitron's People Meter technology and more granular research by Bridge Ratings, terrestrial radio has evolved into more of a reach medium. Radio stations have larger weekly audiences than previously thought. From a radio sales perspective, sales managers will have to finesse a new approach to selling air time with reach as the emphasis over "average quarter hour", but that's not a major river to cross.

The point here is that in spite of the in-car alternatives Mr. Jacoby mentions, Americans still listen to the radio and attrition overall is slight. Terrestrial radio is still a key viable in-car option and only the very young early adopters and innovators in the 16-22 year old age group are significantly more likely to turn off the radio for longer periods of time. But they still listen.

Terrestrial radio competes quite well in-car with other alternatives. The amount of time spent in-car with terrestrial radio depends on quality of content.

2. HD Radio units available seem to be building. Not pertinent. Bridge Ratings estimates that by this time next year, there will be 1.9 million HD radio units in the hands of consumers in the U.S. an increase of some significance over the approximate 1.1 million we estimate were sold by the end of 2006. But it's not enough. The growth is disappointing. We project less than 9 million HD radio consumers by 2010. Hardly something to be excited about when satellite radio will have 30 million and Internet radio will have 147 million.

Let's look at consumer interest in HD radio. In a soon-to-be-released update to its 2006 study, Bridge Ratings reveals that mainstream America, a life group we call "mainstreamies", has little understanding of what HD is or what its benefits are. A disappointing 26% of this group are even familiar with the term and less than 1% know that you have to purchase additional hardware in order to use it. 63% of the entire mainstreamie life group think they already have it!!

No, Mr. Jacoby, your visit to Vegas doesn't seem to have clarified anything for you. It would appear that if Mr. Jacoby represents common attitudes on Wall Street, terrestrial radio has a different problem: those who lead investors by the nose don't have a clear, informed understanding of consumer interest or behavior. That may be the biggest hurdle terrestrial radio has to face going forward.

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.