Into Thin Air5 Feb, 2010 By: Doug McPherson Response
As good as the Beachbody story is, and as impressive as listener numbers are these days (2009 Arbitron data reports radio is reaching 235 million listeners ages 12-plus in an average week — up from 210 million listeners one year ago), dollars are shrinking. Radio is suffocating in its own air. Time Magazine reports that, in 2000, the industry was worth $20.1 billion. In 2009, that figure dropped to $14 billion. In 2008, radio’s revenue fell 9 percent, followed by another 11 percent shortfall in 2009.
Why? Some say the consolidation that swept radio in the mid-1990s — large companies buying up radio stations to increase profits by centralizing sales and programming — began the downward spiral. That move, says Ken Dardis, president of Audio Graphics Inc., a Google News and Yahoo! News source that analyzes radio, was disastrous.
“Consolidation ruined radio ads and their credibility with listeners. When you increase the number of commercials, you increase production, and that decreases the quality of commercials — employees who can’t write copy and produce commercials,” Dardis says. “It hurt programming, too. Programming became less relative. It stopped providing a service to the public and lost sight that it was a local medium — that’s what kept it relevant. Less local programming means detachment from the audience. So people started moving to the Internet, which is more relevant to them.”
Robinson agrees and says before mega-groups rose, radio really was a locally owned, operated and focused medium.
On-paper consolidation looked good, but Robinson says a look at current stock prices of the mega-groups compared to their historical highs explains why Wall Street is seeking a divorce from radio. “Groups suffered enormous debt from their buying frenzy,” he claims.
Robinson is waiting to see how it all plays out during the next couple years, but he predicts the end result could be a medium that’s far more locally oriented with a broader mix of music and programming to bring listeners back and to secure radio’s future.
A ‘Painful Metamorphosis’
So what exactly does radio’s future look like, and perhaps more importantly, how can DR marketers profit from any rebirth?
Rather than a slow death, Robinson calls radio’s dilemma more of a “painful metamorphosis.”
It’s a change from traditional AM/FM radio to something more relevant to today’s consumer, something with more opportunities to reach consumers than ever before.
And playing a leading role in radio’s makeover is technology, specifically the Internet and satellite. “The audience isn’t leaving audio content, it just isn’t getting 100 percent of that content from the trusty radio in the house or the car,” Robinson says.
Instead, Robinson predicts that as handhelds and smart phones become more multifunctional and their usage grows, the radio and the phone will become indistinguishable.
Eyal Goldwerger, CEO of TargetSpot, a company that’s bringing advertising to Internet radio, couldn’t agree more, but with an Internet radio twist. “Online radio advertising and mobile marketing are on a collision course, in a good way,” Goldwerger says. “Part of what makes Internet radio so exciting right now is its ability to reach listeners on the go through mobile devices. Eventually, Internet radio will make its way into every mobile technology.”
More on Internet radio shortly. Meanwhile, it appears logical that the massive demand for iPhone apps from stations is helping radio remain a player.
“It may have taken them a while, but the stations are now embracing technology to create new ways of interfacing with their audiences,” Robinson says. “That’s a good thing for radio and a great thing for DR marketers, because it presents even more opportunities for them to deliver their messages to a given audience. The vast majority of Americans — 80-plus percent — still use radio daily, and yes, it’s encountered an enormous amount of competition from alternative audio vehicles, such as CDs, iPods, audio books, etc. But the audio nature of programming is more relevant today than ever — both offline and online.”
One example is tracking the online sales that result from offline radio advertising. “That’s improving,” says Brett Astor of Strategic Media Inc., a DR radio company in Portland, Maine. “And it’s a hugely impactful trend.”