An Open Letter to Radio: $20 billion by 2022 (#20×22)

September 5, 2016

Below is an open letter to the radio industry: Published Labor Day 2016

Hello,

As a radio professional, regardless of your title, market size, level of influence or years left until retirement, this is for you. As the media landscape continues to rapidly evolve, radio’s ongoing vibrancy in a mobile world will be hard fought, just as it has been for every generation dating back to Marconi. The talent, dedication and passion for radio that exists in our industry will serve us well. In fact, together, we represent the proverbial “cavalry.”

With the arrival of another football season, the words of Coach Lou Holtz ring out, “In this world you’re either growing or you’re dying so get in motion and grow.”

Yet, according to PWC’s annual Entertainment & Media Outlook report, radio revenue is projected to grow just .84% per year between 2016 and 2020 ($17.8 billion to $18.4). That level of growth won’t even keep up with inflation.

According to Coach Mike Ditka, “In life, you get what you tolerate.”

Radio must focus on sustainable growth, which means as dollars shift between media each year (more for Facebook, less for print), we need to be winning dollars not from radio stations across the street, but from other media, specifically print, local TV and Pandora.

If the experts are predicting, .84% avg. annual growth, we can do better. Radio’s aim should be $20 billion in annual revenue by 2022 (#20×22), which can’t be achieved by cannibalizing ourselves (avg. annual growth of 2.05%). Some might say this is not ambitious enough, but let’s add the first $2 billion in revenue and grow from there.

In order for this growth target to happen, radio needs to rediscover its swagger. This includes continually telling a compelling story to our own industry, to our listeners who have ever increasing media choices and most importantly to the advertising and financial communities. Right now, in the midst of the key Sept/Oct/Nov PPM ratings and fall diary book, is the perfect time to start.

In fact, this Labor Day provides an opportunity for those of us who work to create and monetize the power of radio to stop and consider the unique competitive advantages of our medium and double down on bringing them to life for advertisers and listeners. At the end of the day, the most important story is the one you tell yourself. Are your beliefs moving radio forward or holding radio back?

Every quarter hour of every day, radio delivers “Can’t Miss Moments” that audiences tune in to hear and advertisers pay to be part of.
                                                  
(1) Radio has an actively engaged audience, which efficiently generates results for advertisers. You don’t hear it the first time, it’s gone. In a world of 8 second attention spans, radio stands out. Take TV, which is much more passive in part because there’s a digital safety net. Viewers can be less engaged knowing they can pause and rewind to catch anything they missed, not to mention the ability to skip ads altogether. In a similar way, digital platforms freely acknowledge that 50% of impressions never get seen by human eyes. For the other 50% of digital ads, they are viewed in the midst of display and pop up/pre roll clutter.

In addition, the lack of a safety net in radio, works to benefit on-air talent as they broadcast live without a “second take” and always have to be at their best. Unlike TV, which records and edits many shows until they are just right, (Stephen Colbert’s premiere on CBS made headlines because it almost didn’t make it on–air with all of the edits), radio benefits from a more relatable experience as both talent and audience know it’s the broadcast equivalent of a 2 minute drill in football.

(2) This authenticity strengthens radio’s relationship between the audience and the on-air talent.  These one to one  connections help raise money for well deserving charities and drive response to an advertiser’s call to action. In addition, radio’s core audience is full time employed, which means they have more income to spend with advertisers and are active mobile consumers visiting retailers.

(3) As these relationships drive more tune-ins and avg. daily cume, the ability to increase the size of the audience without adding incremental delivery costs is a tremendous competitive advantage compared to digital platforms. In fact, not being burdened by these variable bandwidth costs helps radio make money and ensure healthy margins, as other ad supported digital audio platforms can’t turn a profit despite significant audience growth.

Radio is the 800 pound gorilla of audio and will continue to lead the industry forward as we deliver “Can’t Miss Moments”  on the way to #20×22.

As President and COO of DMR/Interactive, I have the privilege of working with radio groups across markets and formats. Each day we help build and strengthen the relationship between radio and the listeners who matter most.  

The passion that listeners have for radio’s “Can’t Miss Moments” can inspire an industry wide conversation that is strategically shared internally and with the advertising and financial communities.

Join the conversation or start one of your own. Use hashtag #20×22 and contribute your thoughts. You can also email dmr360@dmrinteractive.com and together we’ll continue to create a vibrant future.

Sincerely,

Andrew

Andrew Curran
President/COO
DMR/Interactive


P&G Scales Back Targeting for Reach: “And Now the Rest of the Story”

August 29, 2016

The Wall Street Journal recently reported on changes that P&G is making to its Facebook advertising strategy.

The highlight that many in radio have grabbed onto is that the world’s largest advertiser is scaling back on targeted ads in exchange for more reach.

Radio regularly promotes itself as the largest reach medium in America, so you can imagine the high fives in the hallways and people proclaiming, “Reach is back, baby.”

However in the immortal words of Paul Harvey, “And now the rest of the story.”

While Marc Pritchard, P&G’s chief marketing officer makes the point, “We targeted too much, and we went too narrow,” he continues, “and now we’re looking at: What is the best way to get the most reach but also the right precision?”

According to Peter Daboll, chief executive of Ace Metrix, which tests ads for effectiveness and works with Facebook, “The bigger your brand, the more you need broad reach and less targeted media.” However the article continues, “Targeting is paramount for advertisers trying to get users to download a game app or a small business trying to appeal to local customers.”

Most radio advertisers aren’t billion dollar brands. They are small local businesses that thrive when ad platforms deliver their message to enough of the right target customers … that’s the power of local radio.

Takeaway #1: P&G wants the “right precision”

Despite radio actively promoting itself as the largest reach medium, that’s not our best strength. Unless a client is buying ads in the same quarter hour across every rated station in a market (along with appropriate frequency), you don’t have true reach.

Instead, local advertisers have great results buying a handful of stations with a combined share of just 15-20% of the market, which means that 80-85% of the radio listeners will never hear the ad. Radio offers the “right precision” and best of all, the target audience the advertiser is reaching is employed with money to spend.

Meanwhile, how’s our continued focus on reach doing in terms of driving revenue growth?

Last year, while radio was down slightly year over year, Facebook’s ad revenue was up 49% and hit $17 billion. In 2016, Q1/Q2 revenue for FB surpassed $11.7 billion, well on the way to $20-$25 billion for the year.

Takeaway #2: Despite disappointing ROI, P&G isn’t cutting back on Facebook, they are investing in it

How many times have radio sellers been told by a prospective local advertiser, “I tried radio and it didn’t work.” In reality, the campaign was likely underfunded with a bad schedule, not to mention copy that was written by the customer.

Following a campaign, the first question to a client shouldn’t be, “Do you want to run the same schedule again?” Instead, the question should involve understanding if the investment surpassed the agreed upon business objectives.

In addition, we know artists love hearing their song on the radio, how about your advertisers? Surprise and delight them with an MP3 file featuring the last few seconds of a great song, a DJ interacting with a winner, followed by the client’s ad in the first position of the break. Making the investment aspirational and something they want to talk about, not a race to the bottom for the lowest rates.

“Business owners want today the same thing they have always wanted when it comes to marketing and advertising, they want it to work. They want to see sales increase or leads increase, they want a return on their investment. Sales people that are focused on helping business to achieve that ROI will become more and more valuable,” according to Matt Sunshine, Managing Partner at The Center for Sales Strategy.

On the programming side, despite the universal recognition of ratings volatility, programmers are not often given the freedom to develop and optimize station marketing. The funding gets pulled and allocated elsewhere, even after it works. Worst of all, programming jobs are lost as the search for the mythical magical bullet continues in earnest.

In the WSJ article, “A Facebook spokeswoman said its partnership with P&G “grows every year” and the two companies learn from one another. “That has always been the spirit of how we work together and challenge one another,” she said.

External collaboration and consistency are keys for both sellers and programmers.

Insight #3: Winning Brands Invest in Themselves

The article discusses the merits of reaching one million people compared to 5,000 people with a more targeted ad. This conversation is built upon a premise of consistent advertising budgets and execution … it’s what winning brands do.

While radio knows its best customers consistently run schedules, as an industry we aren’t practicing what we preach. With budget season about to begin in earnest, how many groups will make funding station marketing a real priority in 2017?

Radio’s lack of consistent investment in marketing is taking place at the exact time when mobile usage of other audio platforms is exploding and there is more competition for both audiences and advertisers.

Not to mention the elephant in the room, driverless cars. Ford has just announced mass production by 2021. Uber has already accelerated the timeline by rolling out driverless vehicles this month in Pittsburgh.

Going back to the earliest days of Marconi, radio has continued to face emerging threats and new competition. Today is no different. Tomorrow, the pace will likely quicken.

As an industry, we already have our running shoes on, now’s the time to lace them up a little tighter.

Andrew Curran, President and COO, DMR/Interactive


The Download on Podcasting: Teaming Up with Texas A&M

August 22, 2016

During the past decade, podcasting has established itself as an increasingly formidable media presence. With more than 60,000 active podcasters on iTunes, generating almost 30,000,000 minutes of content last year alone and 20% of Americans listening each month, podcasting continues to expand, attracting new talent, audiences and advertisers.

With the ongoing growth of podcasting, DMR/Interactive and Texas A&M University’s Digital Media Research and Development Lab are partnering to examine the podcast space during the 2016-2017 academic year. The result will be “The Download on Podcasting,” a series of insights and perspectives released during the next twelve months.

According to Andrew Curran, President and COO of DMR/Interactive, “Radio’s traditional capital intensive barriers to entry including an FCC license, broadcast tower and studio facility, don’t exist in the same way anymore. As a result, the theory of scarcity has undergone a paradigm shift to a model built on abundance.”

Dr. Billy McKim, Assistant Professor, Texas A&M University and Director, Digital Media Research and Development Lab believes, “When examining such a shift, it can be helpful to take a step back and look outside of radio. For example, craft beer now generates $22.3 billion dollars in sales each year and continues to gain market share. What was once the hobby of beer enthusiasts has become big business. Podcasting is on the verge of experiencing a similar growth trajectory.”

Areas to be studied include the effort to develop industry wide audience metrics, increased competition for talent and audience, the continued role of consumer mobility in distribution and consumption, and case studies of best in class podcasts.

McKim continues, “If you want to contribute your voice to The Download on Podcasting, we’d love to hear from you.” To participate, email podcast@dmrinteractive.com


Nintendo and Pokémon Go: Mobile Lessons for Radio

August 1, 2016

Nintendo began as a card game maker in 1889. Although it has evolved during the last 125 years, the latest Pokémon Go craze might just prove to be both the biggest opportunity and challenge yet for the company.

pokemon

Some observers are cynical about Pokémon Go, but in the immortal words of the Quad City DJ’s, “Please don’t knock it, until you ride it”.

After all, the numbers speak for themselves.

Since launching last month, Pokémon Go has already become the biggest mobile game in U.S. history. With more than 21 million daily active users, generating $2 million per day of in-game purchases, the stock price for Nintendo has increased 120% and added $23 billion in market cap.

Yet, Nintendo’s transformation into the mobile game space is far from complete or guaranteed.

According to The New York Times, “Nintendo’s drive has helped the Kyoto-based company produce some of the world’s most beloved games and play a major role in creating the modern global video game industry. Yet that same stubbornness and perfectionism led to missed opportunities. It skipped smartphones and app stores and dismissed partnering with other companies with potentially better ideas.”

As a result, after several years without a hit, while video game players started playing on mobile phones instead of consoles, Nintendo was forced to partner with Niantic Labs, a former Google company to launch Pokémon Go.

The NYT article continued, “It’s quite a big change,” said Serkan Toto, a game industry consultant in Tokyo. If Niantic had pitched Pokémon Go two years earlier, he said, “Nintendo wouldn’t have just said no, they wouldn’t even have listened.”

A recent Fast Company article paints an even starker picture of the challenges ahead, “Here’s a fact that many analysts have glossed over: Nintendo didn’t make Pokémon Go (Niantic Labs) …  As for publishing, those honors go to the Pokémon Company, which markets and licenses the franchise … Nintendo’s vague involvement in Pokémon Go isn’t a magic shortcut.”

Even when you add $23 billion in market cap in just two weeks, a feat that publicly traded radio groups would be fortunate to emulate, there is no such thing as a magic bullet. In fact the mobile game space is mostly one hit wonders for the developers including Angry Birds, Candy Crush and Draw Something, which has Nintendo further considering if they want to be the masters of their own destiny in mobile gaming or make huge profits licensing their characters such as Super Mario to others.

Not a simple question for an organization that views itself as “a company of Kyoto craftsman.”

Key Insights for Radio

Regardless of Nintendo’s future mobile direction, Pokémon Go has leveraged several recognizable characteristics to become a cultural phenomenon: Engagement, Retention, Virality, and Monetization.

These are lessons from the game that stations can strategically consider.

Engagement

According to Tech Crunch, Pokémon Go, “offers a quick ramp up that teases a lot of front-loaded rewards to get the player to come through the door and shut it behind them. That’s important to grab their attention, but there are also multiple layers of rewards that keep players wanting to stay in the game … There are different layers of currency built into the game that progress along different time curves, giving each layer of progression its own speed and flavor.”

In the same way, the relationship each P1 and P2 has with your station is not only unique, but each person is at a different point in their journey, not just with your station, but in their own lives.

When your core demo is 25-54, that represents people experiencing multiple life stages: before kids/early in their career, with kids/advancing their career and as an empty nester/with retirement coming into focus.

The value proposition of your station with these subsets of your core demo are going to vary.

Fortunately, we are no longer broadcasting to anonymous cume. We have the tools to build relationships and get to know your Super-Fans by name; while generating engagement, which keeps them coming back.

Retention

Right now, Pokémon Go is rapidly finding its way onto new devices at a rate of 4 to 5 million installs per day, but this pace won’t continue. The typical mobile game sees an attrition rate of 70% of its users after the first day. Meaning that 7 out of 10 who install it, never come back. For Pokémon Go, the tables are flipped and the game is seeing 70% of users return after the first day.

The ability to get more occasions from existing users will define the ultimate success of Pokémon Go.

Same with radio. Heavy listeners turn on the radio just 31 times per week. Your ability to win more of these occasions is critical to your ongoing success. A lot of time and effort goes into extending TSL, but it all begins with your brand being top of mind, as they seek out audio content on the infinite dial (playlist, podcast, Pandora or your station).

Virality

As this game design gets people off the couch and into the world, people are seeing people play and hearing people talk about it, which gets them to download the app and start playing it too. As reported in Tech Crunch, “A lot of people consider it to be an augmented-reality experience, and in many ways you could consider it to be that. But it’s not just an experience that uses your camera to play — it’s an experience that crosses the boundary between an imaginary universe and the real world.”

This concept isn’t new. Radio calls crossing the boundary between imagination and reality, “Theater of the Mind.” Just like Pokémon Go, radio’s ability to take the audience in and out of both worlds is a key reason why people seek us out.

In fact, we’ve long been creating content that gets people talking around the “office water cooler.” Now we have the opportunity to identify these Amplifiers by name and leverage them to bring more people to the station. Across markets and formats, 75% of the people who engage with the station after being invited by a friend are brand new to the station.

Monetization

In Pokémon Go, the best features aren’t gated behind a paywall. As a result, “Players don’t feel compelled to spend money, and instead they’re offered a delightful experience when they elect to spend money.”

In a similar way, Facebook regularly surveys users on the types of ads they specifically want to see, because FB understands that ads impact user engagement and retention.

FB Survey

Not only is Facebook delivering relevant organic content to individual users, but undesirable ads will cost more to serve, if they get seen at all. Delightful experiences and relevant ads are the standard on mobile. When the device is with you 24/7 and you check it 150 times per day, apps that serve irrelevant content (paid or organic) won’t last.

Compare both of these monetization strategies with the knowledge many stations have that their spot load is too high without even factoring in whether the individual ads are relevant and engaging to the user. Streaming with all of the PSA’s creates an even bigger issue of providing relevant and engaging paid content. The overall streaming experience is problematic and part of the reason that it adds so little to overall listening.

Yet there are great ways to offer deals and experiences that money can’t buy to your Super-Fans. We call it Privileged Access and along with bringing in additional revenue from your best advertisers, it deepens the connection between Super-Fans and the station.

Radio is no longer being judged on smart phones by what the competition is doing up and down the dial. Your listeners are comparing their experience with you to their favorite digital brands including Netflix, ESPN, Amazon, Facebook and Pandora.

For more information on Privileged Access, which connects your best advertisers with your Super-Fans, contact us today.

On behalf of Catherine Jung, Doug Smith , Tripp Eldredge and the rest of the DMR/Interactive team, thanks for reading.

– Andrew Curran, President and COO, DMR/Interactive


UPDATED FACEBOOK ALGORITHM: Opportunity for Radio to Leverage Biggest Fans

July 3, 2016

Each year radio stations provide Facebook with millions of dollars in free exposure, often promoting the social media platform ahead of their own station website. After spending most of the last decade building Likes, it is becoming increasingly difficult for stations to organically reach their fans on Facebook.

facebook45The latest changes to the Facebook algorithm will further reduce organic brand visibility on the platform in favor of content posted by users. This continues a trend dating back to January 2015 of the company giving preference to content from individuals over brands.

Station posts about an upcoming event or on-air feature that would have previously reached 10,000 fans, regularly now reach less than 500.

Meanwhile, Facebook remains the 800 pound gorilla of social media with platforms such as Twitter providing a fraction of the audience.

Facebook is the virtual version of the conversation around the office water cooler. As a result, stations have an opportunity to engage their most passionate and active listeners as a cornerstone of their social media strategy.

Here are insights that stations can use to build vibrant online communities of passionate fans following the latest changes announced by Facebook.

  • Know Your Audience by Name: Look at the names of the people in the target demo who are consistently liking and commenting on current posts. Reach out to them directly in the voice of the brand, thanking them for their interest and enthusiasm. Ask them to be part of the station’s social media advisory board. If the first responsibility of members is to promote relevant and engaging station content, they will gladly do it.
  • Invite your fans to select your posts as a “See First” pick:
    1. Hover over “Following” or “Liked” near their cover photo
    2. Select “See First”
    3. Keep in mind, your content needs to be consistently worth “Seeing First” before you ask people to take this action.
  • Super Serve Contest Winners: When someone wins a prize, before they get off the phone, ask them to post about it with a specific hashtag, “#(Station name) loves me.” Winners are excited, yet they are an underutilized social media asset. Best of all, since it’s content from an individual, it won’t be suppressed. In addition, when winners pick up their prize, stations should encourage them to take pictures in the studio on their smartphone. Once again, they are willing to share their excitement and it’s user-created content that will be Liked and Commented on by their friends.
  • Like and Comment on Content Created by Your Super-Fans and Amplifiers: Social media is a two way street. Just as fans Like and Comment on station content, be part of their conversations as well. Especially when their posts embody the lifestyle of the brand. It’s another way that stations can use the algorithm to their advantage, while engaging directly with P1s.

Radio has tremendously passionate and enthusiastic fans. This most recent Facebook announcement is a great opportunity for stations to build deeper relationships with those who matter most. For more information on how to maximize the latest Facebook changes and drive results with social media, email dmr360@dmrinteractive.com. Read the rest of this entry »


Olympic Moms: The First Gold Medalists of Rio

June 6, 2016

Proctor and Gamble is the world’s largest advertiser, spending $8.3 billion per year. By comparison, GM at #2 spends $5.1 billion.

In recent years, P&G has put its advertising under tremendous scrutiny and review as it has reduced its annual overall investments by $1.4 billion since 2013.

What hasn’t changed along the way is the company’s relentless focus on its core customer and winning the Moment of Truth whether in the grocery aisle or increasingly on Amazon.com.

In fact, the bigger the stage, the more focused the message. This summer during the Rio Olympics, P&G is once again putting the spotlight on Olympic moms.

In support of this ad, which has already received almost 15,000,000 views on YouTube, the company said:

“It takes someone strong to make someone strong. This summer, as we celebrate the world’s athletes at the 2016 Olympic Games, let’s not forget the person whose strength inspired them along the way: Mom.
Thank you, Mom.”

As a longtime Olympic sponsor, Proctor and Gamble has simultaneously earned the priceless position of “Proud Sponsor of Moms.”

According to Adweek, “The final onscreen lines of the new spot are perfect, too: ‘It takes someone strong to make someone strong.’ That’s an even better exclamation point than the ‘Best Job’ coda (‘The hardest job in the world is the best job in the world’).”

As moms put together their grocery lists, it helps to know that P&G and their 25 billion dollar brands have their back. This position helps brands like Tide, Always, and Crest win the Moment of Truth, even though they are regularly the highest priced product in their aisle.

Who’s the Equivalent of an Olympic Mom for Radio?

Olympic moms represent the moms everywhere that P&G is dedicated to super serving. Who would be your equivalent target consumer and more importantly how do you celebrate them?

Radio listening is done primarily by employed persons. Even millennials, and so much justified concern about their listening habits, utilize more radio as they settle down and start families. After all, they have to evolve and make money to buy all those premium P&G brands like Pampers.

However, winning the workday is not the domain of only a few formats and it’s a stronghold that radio cannot take for granted. In fact, it’s possible that middays will quickly become our strongest daypart once the driverless car emerges, which some predict will happen by the next Summer Olympics in 2020.

Winning the Moment of Truth, the point when someone starts consuming audio, is possible only if they are thinking of you first. If they are thinking of their Spotify playlist, favorite Sirius channel, or another station, you lose that critical tune first occasion.

Consistently getting to know your Super-Fans by name not only maximizes the investment of your marketing dollars, but it gives you a long term competitive advantage.

While you Win the Moment and drive ratings in the current quarter, you are also capturing information and building relationships that will continue to pay dividends in the future.

For more information on how to maximize the impact of your marketing, contact us to schedule a confidential discussion.

– Thanks for reading. Andrew Curran, President and COO, DMR/Interactive


Data You Can Drink: Gatorade Gets Personal

May 9, 2016

“It’s about whether you want to be a premium brand or not. If you want to play in the premium space, then you have to be delivering personalization.”

Coming from a Silicon Valley executive, this quote wouldn’t be newsworthy. Instead it’s a Gatorade executive highlighting the essential role of data analytics for all brands.

 

As Fast Company exclusively reported, Gatorade’s high tech focus can be traced back to 2014 and the decision “to build an internal innovation unit to look beyond bottle shapes and new flavors and toward a higher mission. After all, something had to be done. Gatorade sales in the first half of 2009 had fallen 18% year over year; new competitors such as VitaminWater, Red Bull, and Monster had gained influence and market share.”

The new smart cap bottle communicates with a Band-Aid like smart patch that is monitoring the sweat content of each athlete so that the right nutrients are being replaced at just the right time to maintain optimal performance.

While it’s currently being tested at professional levels including the Boston Celtics and Kansas City Chiefs, a consumer version will be available to weekend warriors later this year. After all, personalization has become the norm if you want to be a premium brand.

Super serving these Super-Fans isn’t just about treading water amidst increased competition. For Gatorade, “the potential for growth is gigantic.”

Another platform with an interesting perspective on the power of data insights is ReverbNation, the online platform that helps 4 million musicians manage their careers with 200,000 songs uploaded per month.

The site, which regularly launches innovative tools, has a new algorithm that identifies specific artists generating unique levels of interest and buzz. As a result, these musicians can be cultivated and a pathway can be identified whether it’s licensing their music on TV shows or the opportunity to appear at a summer music festival.

As Simon Perry, ReverbNation’s chief creative officer and head of A&R says in a recent interview, “We use a whole array of different little signals. The patterns that those signals make tell us something.”

However, even in the world of data analytics there are no magic bullets.

As Perry continues, “You can’t get a load of data and say, ‘This band with this data profile is going to be the next Coldplay.’ But you can say, ‘For this band with this data profile, history teaches us that we should do [certain] things.’”

In a similar way, when you know your heavy P1s by name and study the composition of your ratings, it empowers you to do more of some activities and less of others.

By leveraging data insights, our Audience Management platform empowers clients to personalize the experience of Super-Fans and P1s of the competition. Especially during the 90% of their lives spent not listening to the radio. By Winning the Moment off-air, stations win more listening occasions from those who matter most to their ratings and revenue.

In addition, by building innovative partnerships with companies including PromoSuite and Research Director, we find new ways to help stations incorporate data insights and maximize their ROI.

For more information on how to turn data analytics into your own competitive advantage, contact us to schedule a confidential discussion.

– Thanks for reading. Andrew Curran, President and COO, DMR/Interactive