Did video really kill the radio star?

Well, that’s what they sang in the 1980s, but if the Buggles were still around now in the 21st century the name of their song would be:

Who killed radio?

According to Wall Street analysts, press and industry insiders, the prime suspects are satellite radio, streaming radio, the internet bubble, radio consolidation, uninformed ad agencies and the iPod. But, was there actually a crime committed by new media technology against radio? Is radio really dead? The answer is no. It seems that radio has been on life support and is ready to wake up and take lead vocal.

The battle for radio’s survival began when the industry finally realized it had a problem and began taking a close look and trying to understand how and why its revenue model was failing.

Deutsche Bank analysts cite that radio’s revenue growth and decline in the U.S. over the last four years is as follows:

2003 +1.0%
2004 +2.1%
2005 +.3%
2006 +2.3%

This compares rather anemically to the growth of the entire U.S. advertising industry:

2003 +5.2%
2004 +11.5%
2005 +10.0%
2006 +5.3%

The disconnect between radio’s growth and the growth of the advertising industry clearly shows that radio must broaden its sales focus.

Chicago’s radio market has followed the national growth trends over the last two years with annual growth of 2 percent. However, two Chicago radio stations, Q101’s WKQX-FM and The Loop’s WLUP-FM, have enjoyed 9% annual growth over the last two years. More than 30 percent of this growth was generated from their websites. Demand from clients for programs that combine radio spots with website ads has doubled over the last two years representing 14% of total station revenues. This tells us there is a gap waiting to be filled. It is just not enough for a radio station to offer radio; they need to offer a full range of media options.

For radio to succeed it must successfully compete in multiple categories of advertising including: television, internet, direct mail, yellow pages and billboards. Radio stations not only need to maximize their share of radio advertising dollars but must also successfully compete for interactive media, video and street marketing dollars.

The Wall Street Journal’s April 11, 2007, article discussed that media owners (like radio) have become a huge threat to the media buyers’ business. “If we are not doing a good enough job bringing ideas to media owners and in turn together bringing them to clients, then why wouldn’t the media owner start saying, ‘why do I need them,’” said Matt Sieler from PHD. Sieler’s fears indicate that competitors are feeling the pressure from radio’s growth and clients are looking for top-line innovation in their media buys.

So can the success of stations like Q101 and The Loop be duplicated by other radio stations in other markets?

The answer is yes.

It will require a commitment from senior station management to redefine the business model for their entire company, both in products and sales. Radio stations must begin training their listeners to have an expectation of interacting with the station on-air, online and on-site. Once these relationships mature through training, audiences can then be packaged up by radio sales department and directly sold to clients as powerful, targeted, niche audience groups that can be and want to be reached across customized multiple media channels. By offering marketing solutions to clients that use a multiple media approach, radio can then tap into multiple media budgets.

Sound simple?
Not so.

Old habits in radio programming and sales are tough to break. Programmers must consistently push listeners to station websites. Sellers must ask better questions and offer customized marketing solutions versus spot packages. Station owners must invest dollars in web designers and streaming even though the financial returns may be far down the road. Finally, change will have to be lead by radio’s top executives and managers even if it means replacing the non-believers with new talent.

There is chaos in the advertising marketplace

The Internet is growing, television is fragmenting, newspapers are losing readership and radio is under attack from the iPod. Where there is chaos there is opportunity. The radio stations that embrace change will not die; they will live successfully and play a new song using multiple media channels.

--John Foyer is a VP of MWW Group, a Chicago-based public relations and marketing agency that works with Emmis. The views expressed are his own.