19-7-2012
This may support the theory that committing too many resources to digital just isn't worth it yet. Or depending on how you look at it, it may also support the theory that radio is only getting a small portion of digital because of a lackluster effort. BIA/Kelsey is forecasting a 12.1% increase in digital revenue for radio in 2012. Certainly, that's a nice bump. However, the total dollar amount still remains small.
In 2012, BIA/Kelsey says that 12.1 % increase will bring radio up to $491 million, up from $438 million. What's hard to determine is how many of those dollars would have been spent on over-the-air radio if digital wasn't an option. Many in the industry are debating, discussing and meeting to decide how they can maximize revenue from their digital assets.
Another interesting part of this debate involves something you may not even be aware of. In the recent focus group conducted by Edison research, some of the digital advertising agencies he spoke to said they do not like to use radio websites because the stations are still hung up with posting the "babe of the day" photographs. These pictures, and this mentality for a radio station website, may be creating a sense of unprofessionalism for the entire industry, hampering radio's ability to grow digital revenue. If you haven't yet, you should watch ALL of the Edison videos.
At the Radio Show in Dallas, an entire day was dedicated to the digital discussion where broadcasters heard from vendors and digital experts on what they should do with their digital assets. The meeting was not part of the Radio Show agenda and neither the RAB or NAB sanctioned the meeting. No decisions were made other than an agreement to meet again.
Not everyone is sold on ad-insertion as of yet. Most broadcasters tell us they know they need to be streaming, but without scale, selling digital ads is not too lucrative for them. Vendors say the lack of willingness to invest in the technology or salespeople is the reason the numbers are so low. One vendor told us just this past Friday that a CEO was unwilling to spend one hour toward selling digital. He said that one hour alone would have resulted in tens of thousands of dollars in revenue. He added, "all industries face this sooner or later; when disruptive technology comes along, some will embrace it and succeed and many won?t and they eventually fail. That?s just the nature of how markets work but it doesn?t make it any easier when you are living in it." Radio people are pressed to do a lot more these days. Not to mention, the industry is hardly short of over-the-air inventory.
Among some of the other "digital" campaigns, many broadcasters we speak to seem to be more interested in is texting. Campaigns where stations can directly touch listeners, gather their opt-in user information and sell a sponsorship to a local sponsor. And with a texting campaign, you don't have to worry about music playing over commercials or 8 minutes of PSA's.
Just to make a comparison, for anyone interested, Pandora is projecting revenue for its current fiscal year to be $425 to $432 million.
(10/8/2012 2:23:24 PM)
What Al said...
If not us, who? If we don't supply the digital alternatives/additions for the clients' campaigns, someone else will. Is not every significant newspaper or TV station out there also pitching digital? Frankly, the fact that we as an industry get what we do with a "part time" sales staff is pretty impressive. What do the better radio sellers spend on digital, 5% of their time? Without dedicated digital sellers the percentages will stay small.
(10/8/2012 2:13:06 PM)
I think Radio has some smart managers and will improve at the brand extension side of Radio. It has become an expectation of heavy users of any product. I believe Radio is stuck in the classic "Innovator's Dilemma" where they are too close to the problem to see the solution. They start with a very large audience that many more profitable industries would be envious of-now there based solutions to create dollars for traffic that integrate seamlessly into Radio. One will have to go first.
(10/8/2012 12:01:51 PM)
It would be interesting to see the ratio of time/effort spent to achieve that revenue vs. the time/effort spent to achieve the broadcast revenue.
Given the amount of effort most broadcasters are putting into digital I'd guess that digital actually has a better ROI right now.
There is no debate here. Radio will use its traditional assets to become a local digital player or its share of media time and revenue will stay flat or fall. Why? Because radio audiences want to be served with digital products. We do it or others will. The only issue with the development of digital by radio stations is the commitment of top management. Anything new and disruptive needs focus. Some managers and owners get that, other don't.
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