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A Roadmap To Transform Radio – Digital Gabe
Digital Gabe
Cutting Edge Commentary On All Things Media

A Roadmap To Transform Radio

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Radio broadcasters, like their TV brethren, are under assault from digital media.  Audio streaming now takes a 35% share of total listening time in the US, and streamed podcasting is poised to disrupt talk radio the way the music side has been for the past decade.  To radio’s credit, despite these headwinds they’ve been able to Band-Aid their way to flattish revenue over the past 5-6 years.

However, there are warning signs about an industry which could be at the beginning of a long-term decline.  For some anecdotal evidence consider Cumulus’s recent sale of the iconic KLOS-FM in Los Angeles for $43M.  While that seems like a hefty price tag for a single station, it’s half the $86M Cumulus paid to purchase the similarly-sized KPWR/Power 106 in LA during 2017.  You don’t have to be a math wizard to understand the problem – the market value of radio stations has dropped dramatically over the past few years.  This is a sign of investors’ lack of confidence in radio’s future.

To address these challenges radio needs to transform itself.  Recently a company called Revenue Analytics outlined a five part plan that could serve as radio’s roadmap into the future.  Here are some quick hits from the report:

  • Diversify Into Digital: Just focusing on selling over-the-air broadcast spots is a ticket to nowhere.  Broadcasters need to diversify their ad product mix with a heavy emphasis on digital and sell the cross-platform bundle.
  • Redefine Selling: Commission-only comp plans and monthly budgets incentivize reps to just sell the lowest hanging fruit – simple marketing plans focused on the now.  To change this radio reps need to be paid at least a partial salary, be goaled quarterly and with an annual kicker, and be retrained (or re-hired) as digital-first sellers.
  • First Party Data: The very nature of radio’s one-to-many distribution system creates a huge data barrier.  Broadcasters must overcome this by incentiving listeners to provide their data for something like a rewards club, streaming registration, etc..  Then that data could be used to deliver more personalized content recommendations, station promotions and advertising.
  • Transition To Programmatic: Every year more audio impressions are being sold programmatically.  Broadcasters need to get their impression embedded in the DSP-to-SSP programmatic piping, and have specialists on staff who can set up their own private marketplace (PMP) deals.
  • Deregulation Imperative: Radio, like TV, is still tightly regulated by the FCC.  Conversely digital publishers have very little regulation.  While momentum is picking up to eventually regulate certain parts of digital media, its equally important for broadcasters to receive some deregulation to level the playing field.

I know this looks like a daunting list, but it’s at least a path forward to radio broadcasters if they’re truly committed to staying relevant in the age of digital media.


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