It needs to rethink what business it’s in and the services it offers
October 5, 2015
Radio is lucky in one important regard. It has so far escaped the devastation that has swept through the print industry, brought on by the rise of digital. But the question is, for how much longer? Radio’s problems extend beyond the threat from Pandora and other digital offerings. It has shown a stunning lack of initiative in rolling out digital offerings while cutting back on the live local talent that so endeared radio to listeners, media buyers and advertisers. These coming years offer great opportunities for radio, but to take advantage of them radio must undergo dramatic change in how it does business and how it sees the world. Gordon Borrell warns that radio companies that do not commit to change face the very real risk of extinction. Borrell heads Borrell Associates, which tracks local ad spending, and local media is an area he knows well. In this interview, Borrell talks about where radio fits into the local media landscape, the mistakes and missteps it has made, and what it must do to take advantage of the opportunities that changing landscape has to offer.
This is one in a number of stories on radio in Media Life’s ongoing series “The new face of radio in America,” examining all the changes taking place in the medium. Click here for earlier stories.
How generally is radio faring in local markets in light of all the turmoil and changes in local advertising?
In our survey of 7,200 local advertisers earlier this year, more were pegging newspapers and yellow pages for cuts than broadcast media. I think that’s due to pricing and targetability.
Radio is cheap and offers exposure to strong affinity groups.
With newspapers down so much in terms of share of ad dollars, what opportunities does this offer radio? Is radio gaining from this? Can it? Or put another way, is radio in a position to gain a significantly larger share of local ad dollars?
The only way radio can grow market share is to lose its blind love of radio and adapt to a marketing environment that doesn’t believe the “radio is best” story anymore.
Stations can grow market share again if they adopt an extremely aggressive approach to digital. That means building a digital-centric offering that includes radio as a “magnifier” of that marketing plan.
Unfortunately, most radio stations still see things the opposite way — radio is the center and digital the add-on.
Those stations (and newspapers and TV stations that hold that same “would you like an order of digital with that” mentality) will continue to lose market share.
Do you see radio’s share of local ad spending rising or falling over the next five years? The next ten? Why?
Radio as we know it will continue to lose market share until it’s nearly gone entirely.
I’d give it 15 years, when the majority of cars on the road have dashboards with way too many fun options to radio.
There will, however, be survivors.
I suspect that they will be companies like Entercom and Townsquare, who have started to think like blacksmith shops did 100 years ago.
They realized their business wasn’t serving people who owned horses but serving the transportation needs of those people.
Broad investments in digital services units are very similar to blacksmith shops a century ago, installing gas pumps and tire bays, preparing for the inevitable.
How has consolidation impacted local radio? Are you seeing any effects of this on ad spending?
I don’t think advertisers really care about who owns who, and I don’t see consolidation affecting important things like rates or ROI of radio advertising.
That’s all advertisers care about.
What key advantages does radio have over other local media in this new media landscape?
Radio stations have two key advantages.
They are the original social media and thus have developed strong audience affinities, as evidenced in bumper stickers. People identify with country or hip-hop or classical music.
And with that affinity comes a greater willingness to do what the station suggests on air. That’s really powerful, and I’ve seen that translate to digital action, which is what a lot of advertisers want.
The radio industry also knows how to pull off promotions and events better than its media competitors. I’d like to see radio parlay that mastery of promotions and events into an events-driven initiative.
Why? Because (and this is an amazing fact) local advertisers see “events” as a bigger driver of new customers than any form of advertising, including online.
Events drive more customers than newspaper ads, TV spots, directory advertising, radio spots, billboards, etc.
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