THE ADVANTAGE OF SCARCITY

October 3, 2022

Last month’s Open Letter to Radio, which outlined the opportunity for stations to win back lost listening, found a receptive audience. However, one of the unexpected responses revealed a crisis of confidence by some who still believe that AM/FM is at a disadvantage compared with satellite or Spotify.

The scarcity inherent in radio stations playing non-skippable content stands in sharp contrast to unlimited, on-demand, subscription-based streaming platforms.

As it turns out, too much of a good thing isn’t always a good thing.

Take for example all you can eat buffets, which peaked in popularity during the 1980’s with chains like Golden Corral. With razor-thin margins, profitability for buffets is as elusive as healthy portion sizes for those looking to get their money’s worth. Even in Las Vegas, which brought the smorgasbord concept to America in the 1940’s, it’s typically a money-losing proposition. The purpose is merely to keep people at the casino.

When you can feast on everything, too many options actually makes people less likely to be satisfied with their choices. It’s known as the Paradox of Choice and radio can use it to help repatriate lost listening.

Years ago, you could go to the grocery store and pick between three types of milk: whole, 2% or chocolate. Chances are you left the store feeling pretty good about the choice you made. Today, not only do you have to pick the percentage of fat (1%, 2%, skim, etc.), but also the flavor (chocolate, strawberry, vanilla, regular, etc.). In addition, milk no longer comes from just cows (almonds, soybeans, oats, etc.).

Even the most confident decision-maker is left mentally fatigued and wondering if they picked the right combination. This scenario is playing out in more and more facets of daily life.

Spotify and other streaming platforms are not exempt from this reality. Despite the initial enthusiasm and inherent joy of having access to an unlimited music library at your fingertips, too much of a good thing, ends up still being too much.

As reported in The Guardian last week, “[With streaming] there’s endless accessibility, but you’re not really listening to anything. At least that’s what it started feeling like to me. I’m experiencing so much music, but am I really listening to any of it?”

The article goes on to say, “This idea that you can just turn on a faucet, and out comes music. This type of streaming is something that leaves everyone taking it for granted.”

Tasked with choosing the day’s soundtrack, users find themselves endlessly searching for something to play, but nothing perfectly fits the moment. It calls to mind Voltaire’s perspective that, “perfect is the enemy of the good.”

Deleting their Spotify and Apple Music accounts is one way that consumers are taking back control.

According to Barry Schwartz, author of the Paradox of Choice, “this plethora of choice in the modern world is actually causing people to be less happy with their decisions.”

With only one piece of content going over a station’s airwaves at a time, radio stands in contrast to the world of infinite choice.

Offering a curated, local product that is created for the enjoyment of a select audience is the type of message you’re more likely to find at a microbrewery than on a radio station website, but it applies to both.

As for life beyond Spotify, as one young professional stated, “The choices are very limited. But it’s actually freeing.”

Radio has long been an oasis for listeners in the car and during the workday. Let’s use our strengths to our advantage. The Paradox of Choice reminds us that more isn’t always better.

On behalf of Catherine JungTony BannonJen Clayborn, and everyone here at DMR/Interactive, thank you for reading and driving radio forward.

Onward,

Andrew Curran
President and COO
DMR/Interactive


Open Letter to Radio: It’s Time to Repatriate Lost Listening

August 31, 2022

September 1, 2022

An Open Letter to Radio (7th Edition),

As we get set to embark on another Labor Day weekend, questions grow louder regarding audience erosion, declining PUMM levels and the corresponding impact on Ratings and Impressions.

Answering the bell is going to require working smarter and harder, both individually and as an industry.

PUMM was in steady decline long before the arrival of COVID.

What’s different in this moment is the growing awareness that although life has returned to normal, millions of workers have shifted to fully remote or hybrid work schedules and that looks to be permanent.

This reality is especially problematic for an industry that relies on commuters to drive consumption and benefits from traffic jams and congestion.

appleHQ

Let’s look at Apple as a cautionary tale. The tech giant built Apple Park, a luxurious $5 billion headquarters, which opened just 5 years ago. Yet, Tim Cook is having problems convincing employees to return to the office just three days per week.

It’s hardly an isolated case in corporate America. Kastle, the company that provides keycard security for 2,600 office buildings and 41,000 companies nationwide, has been closely monitoring office foot traffic.

The Kastle Back to Work Barometer notes that while TSA airport traffic and OpenTable reservations are nearly 90% recovered to pre-COVID levels, workers in high rises and office parks remain less than 45%.

Kastle

This sustained shift to remote work also has a ripple effect on the radio friendly small businesses in the service sector located in downtown areas and near suburban office parks that exist to serve large concentrations of workers.

All of which begs the question, how do we get more listening?

Radio’s Q Score

For decades, Q Scores have measured the popularity of personalities and brands, but what about radio itself? How’s our consumer appeal and emotional connection these days? Not compared with other stations, but against platforms offering personalization and subscriptions such as Spotify, SiriusXM and/or Pandora?

You can’t see their impact in PPM because these platforms don’t encode, but in diary markets, it’s already being captured. 

In market after market, when you compare Analysis Total and Market Total in a Nielsen Ranker, what appears? ENORMOUS LOST LISTENING.

Here’s a typical example, an East Coast CDM market reports 11,800 AQH Persons, 3.3 Rating Points and 27 Shares of A25-54 listening in PRIME that no longer belongs to AM/FM radio.

Realistically, not all of that listening is recoverable from satellite and streaming, but there’s enough to make a meaningful impact on your ratings and revenue. Imagine your cluster recapturing 50% of that listening. That’s 6,000 AQH Persons, 1.7 Rating Points and 13.5 Shares, which is more listening than the Top 2 stations in the market combined.

It’s “game on” for radio in both diary and PPM markets.

For all of the ongoing concerns about PUMM levels and the permanent shift to remote work, help is within reach.

With limited marketing budgets, your first priority is correctly spent focusing on existing heavy radio listeners.

However, as you plan for 2023, there’s an opportunity to develop a one-two punch by also funding the marketing investments necessary to repatriate listening back to your key revenue brands. With a unique and sustained messaging strategy that targets select listeners who have drifted away from radio, there’s significant ratings and revenue growth potential.

The existing marketing messages that resonate with your current audience won’t carry the day with people who have moved away from radio. You need to understand the daily life of these listeners and develop a compelling and personalized value proposition that forms the basis of your marketing strategy to recapture lapsed radio listeners.

Individually and collectively, we’ve got plenty of work to do, which is appropriate as we head into this holiday weekend.

On behalf of Catherine JungTony BannonJen Clayborn and everyone here at DMR/Interactive, thank you for reading and working to drive radio forward.

This open letter is the 7th installment in an annual series that began in 2016 to coincide with Labor Day, radio’s unofficial holiday. Earlier editions are available here: 20162017201820192020, 2021.

Onward,

Andrew Curran
President and COO
DMR/Interactive


RADIO’S ACHILLES HEEL

August 8, 2022

AM/FM radio has one of the greatest business models ever created – the audience can quadruple in size and your operating costs do not materially change.

If a restaurant experienced similar exponential growth, the costs would skyrocket. The owner would need to hire more employees, order more inventory and expand the parking lot.

Radio has no such constraints with its highly efficient business model.

Yet, the digital age has exposed radio’s Achilles heel.

The over-the-air audience is anonymous. Meanwhile, social media platforms are just the opposite, they know each user and record every impression and click.

In fact, Silicon Valley is mining user data in unprecedented ways to predict and shape consumer behavior, while selling clicks and impressions to the highest bidder.

What’s all that data mining worth? This year in the U.S., Google and Meta alone will generate $130 billion in ad revenue. That’s 10x the radio industry.  

Not to be outdone, Spotify and SiriusXM are aggressively leveraging their subscriber data to grow listening and revenue.

Radio has no shortage of large sources of first-party audience data, but they are routinely overlooked and undervalued.

As Nielsen has been highlighting this summer, increased levels of A25-54 AQH are coming from streaming across PPM markets and formats. With DMR/Interactive’s Identity Resolution suite of data analytics and marketing services, we’re transforming listening data that historically has been anonymous.

Another source of granular audience data involves group contesting. With millions of entries each week, the overall participation rates look impressive at a glance. Yet, we know from crunching large sets of data that not all listeners are created equal and without a specific messaging strategy, 50%-60% of players churn between contests. In a world of increased fragmentation and higher audience acquisition costs, leaving millions of records unexamined and unattended from contest to contest is unsustainable.

A third, largely untapped source of first-party data involves your station email database. Enhance the dollars you currently generate with it by driving premium revenue from your best advertisers and offering Privileged Access to your best listeners.

As a quote made famous by Mark Twain in the 1890’s goes, “There’s gold in them thar hills.” More than 125 years later, it still rings true. Back then you needed a pick axe. Today you need to mine your first-party data with insights, analytics and touch points powered by DMR/Interactive.  

The anonymous nature of over-the-air audiences is not without a cure. We need to do better than selling digital ads on platforms we don’t own with audiences we are renting. 

Will radio groups that mine first-party data from streaming listeners, group contest players and station email databases generate $130 billion next year like Google and Meta? The answer is obvious. However, capturing 2% of that pie would increase our industry revenue by 20% along with the corresponding lift in ratings as you monetize your own audiences that you’ve grown and cultivated.   

Our Identity Resolution capabilities are transformational in growing and engaging your audience, while Privileged Access connects your best clients with your best listeners.

Learn more today.

On behalf of Catherine JungTony BannonJen Clayborn, and everyone here at DMR/Interactive, thank you for reading and driving radio forward.

Onward,

Andrew Curran
President and COO
DMR/Interactive