Radio Revolution1 Dec, 2010 By: Patrick Cauley Response
Satellite, the Internet and mobile apps are changing the face of DR radio.
While there’s been extensive discussion and debate regarding the changing landscape of television advertising, radio too as a medium has seen quite a shakeup in recent years — given the expanding outlets and options for music and content, especially at a time when even the term “Napster” now seems like a distant memory. And while these changes may have put a stranglehold on some record label executives’ bonuses, nimble advertisers are finding that the juice is worth the squeeze. And in the world of radio, there’s still quite a lot of juice.
“Radio doesn’t work for everybody. But when used thoughtfully, delicately and properly, I don’t think there’s anything that can touch it,” says Daniel Granger, a Los Angeles-based Clear Channel Radio account executive. He went on to say that radio is one of the most effective vehicles in driving sales and works for anyone who has a product or service that appeals to the masses along with a compelling offer.
“Radio has really recovered very successfully and quickly, relatively speaking, in 2010 and as we’re headed into 2011. It’s getting its mojo back, and instead of just taking any deal that the check clears, they’re starting to get more selective. For a lot of folks that have been living off the pure remnant approach, they’re starting to find that there isn’t so much remnant out there, and it doesn’t have the price elasticity that it used to have,” says Buck Robinson, CEO and president of Glen Allen, Va.-based Robinson Radio. Robinson believes this is going to have a cleansing effect in the space, and thus help DR agencies that are committed to the radio space for the long haul, as opposed to those dabbling solely opportunistically.
“Radio still has a level of intimacy with its audience that other media don’t have, even television. We all know the power of television, but for the most part people don’t generally have loyalty to one network. I can tell you about people who listen to our radio stations all day long — it’s their station. They’ll spend more time with a radio host than they will with their own spouse. With talk radio, it’s a long-form medium; it’s not just sound bites. I don’t think anyone has gotten close to that level of intimacy with their audience as what can be achieved on radio,” Granger says. He argues that because of that intimacy, there’s a deeper level of trust. And because of that level of trust, there’s a greater openness on the part of the consumer to open their wallet and make purchases at the direction of the medium that’s telling them to.
Doug Frankel, CEO of Santa Monica, Calif.-based Broadcast Communications Media, finds that like any other medium today, radio’s only gotten bigger. “One of the things that’s gotten bigger about it is that there are more listeners now online due to all the mobile applications that we now have available. It just creates so many more opportunities for listening, that people can now almost program their own online listening. It gives the customer, the consumer, the listener a lot more choices,” he says. Frankel describes how Clear Channel has a whole division that’s nothing but mobile applications, creating even more means for various types of radio distribution.
Opening Pandora’s Box
In cubicles and at water coolers across the country, you’ve probably heard rumblings of a little thing called Pandora, an online destination with automated music recommendations that allow listeners to have a personalized session. As of March 2010, Pandora had 700,000 tracks in its library and 48 million users who listened for 11.6 hours per month on average, according to The New York Times. “The biggest change I’ve seen is Pandora. And the change there is simply a personal observation of increased popularity,” says Brett Astor, vice president of Portland, Maine-based Strategic Media.
Robinson describes Pandora as a whole new way of listening to radio. “It’s not just iTunes; it’s not just some place that’s technically using the Internet as a means of delivering an audio message. It’s not only better suited to the individual listening, but it also ran straight in the face of where radio and the music industry as a whole were always in bed together. Because now all of the sudden smaller acts that didn’t have the power of big promotion could still get access to listeners and get showcased in a way that would help them break through,” Robinson says.
He contends that traditional radio had always been the doorkeeper of sorts, and that the current shifts with Pandora and other new platforms of distribution have really challenged radio’s stranglehold on content, relevant to music as a commodity.
With Pandora, which now has audio and banner-based advertising, Frankel is all for testing and seeing if the performance warrants continuation. However, the shift in music monarchy has allowed the radio industry and its advertisers to focus their attention on where they do hold ultra-leverage: with talk and personality radio. And when it comes to emerging radio trends where DR undoubtedly has lucrative penetration, marketers should look no further than Sirius/XM.
The Tribal Merge
Broadcast Communications Media was one of Sirius’ charter advertisers. Frankel explains that even through the trials and tribulations negotiating advertising rates pre- and post-merger, he continues to spend a lot of money with Sirius because it works.
“We do the same thing with Sirius that we do with any other radio buy: We analyze, we look at clients, and it becomes a very good testing ground because we can spend low dollars and get an assessment because we’ve had a really good track record there for a few years. We took a client that’s a lead generator — they were almost off the air — and we tested them with Sirius, and they now spend $18,000 a week on that outlet alone with us. Because the quality of the audience is good and the performance is good, it generates leads every day. We tested this for them a year-and-a-half ago, and it saved the client,” says Frankel.
Why so good? For starters, the qualitative and quantitative nature of a subscriber-based audience is a little bit better. Robinson believes Sirius is probably having its best quarter ever right now. “Now they’ve created economies of scale that actually make it worthwhile, especially with the penetration that they’re starting to get with play both inside and outside cars. The reality is that most Sirius users don’t dabble in it. Once they start listening to it, very few fall out,” he says.
For many consumers, Sirius’ content quality is worth the price, especially for people in smaller markets that may not have as many options for radio diversity. Robinson contends it’s great for DR because the traditional agencies don’t really believe in the model yet or don’t have enough quantifiable evidence to show why their big brands should be on there, making it a relatively easy playing field for DR to compete in.
Bill Sullivan of Milburn, N.J.-based William Sullivan Advertising views Sirius as a small radio network in the scheme of network radio. “They have sizzle; everyone likes to talk about Howard Stern,” he says. However, Sullivan warns that marketers must be prepared with the proper back-end infrastructure when dealing with network radio.
“The problem with network is that you really can’t control the spikes in calls. So a lot of calls from network get wasted at a telemarketing company not prepared to handle it. When I do a spot buy, I can control the volume of calls that come in in 10 seconds, in a minute, whatever it takes. When you do a network spot and it’s 300 spots on 300 stations at once, you really can’t control the number of calls coming in in 10 seconds,” he says.
However, Sirius does offer a variety of options for marketers. “Some of the channels they have, like Mix, which is programmed by Clear Channel, actually offer advertising options that you do not find on other channels, such as 5- or 15-minute commercials that are done in a quasi-interview manner. So not only are they willing to offer commercials, but they’re breaking out of the idea that it has to be a 30-second or a 60-second spot and branching into hybrid ideas that are good programming that are also meant to generate response. But they also are going to offer a unique option of why an advertiser should come on board and spend money on satellite — because they’re going to give us options we can’t get anywhere else,” says Robinson.
It seems in a lot of ways that long-form radio is rapidly finding its sea legs, as program directors are starting to see that it can be engaging and not diminish the quality of a product.
Which begs the question, what exactly are station program directors and audiences looking for and responding to in DR radio?
To Call or Surf …
“The biggest consideration now is the increasing percentage of response that occurs via online rather than just the telephone. Five years ago that percentage was much smaller: Whatever you saw coming in via the phone was about 80 (percent) to 90 percent of your total orders,” Astor says. “Now, that range is anywhere from 20 (percent) to 60 percent, depending on the category, ad copy and a host of other issues, which means that 40 (percent) to 80 percent of revenues are coming via the online channel as a result of offline radio advertising. Therefore, direct response radio advertisers had better be paying close attention to setting up, testing and optimizing Web presence to maximize revenues.”
Furthermore, he argues that since so much response comes via online, it is more important than ever to have the necessary Web tracking infrastructure in place so the radio advertising campaign can be optimized using all response data and not just phone data, which could represent less than half of all response. “Otherwise you will not be able to assess the success of a test or optimize your campaign profitability once you roll out,” says Astor.
Broadcast Communications Media engaged in guinea pig testing with three or four big clients to test the efficacy of online radio in delivery and performance. “The response to a telephone number, an 800 number, was not very good. So we changed the ads to make them more Internet-friendly — we decided to make the ads go to the Web site, a separate URL, to see what would happen,” Frankel says. “We found that most of the people, because they were listening online, were responding online and not dialing an 800 number. The problem that we had was some of our clients weren’t giving us credit,” says Frankel.
These findings speak to the bigger issue that a lot of DR marketers are wrestling with online, which is making sure credit is given when it’s due.
But still, even for traditional radio, it seems the debate on appropriate calls-to-action lingers on. Sullivan has found that response for radio ads that push to the Web receive only half of response someone would get over the phone. Robinson contends that clients will never be able to maximize their use of radio only using an 800 number.
“You’re literally throwing away somewhere between three to 10 times the potential response you could be getting from that commercial simply because you want to limit the option of how to respond to a phone number,” he says. “The more that you’re skewing toward 18-25 year olds, the more you can almost throw away the 800 numbers entirely. It is much more cost effective to just have URL, and we’re now testing with text response,” he says.
Call-to-action mechanisms aside, there are a few radio mainstays that the experts always fall back to whether placing ads online or not.
Aside from clarity and authenticity, Granger notes having a representative from the company voice an ad directly to the customer and try and make the sale themselves can be key to successful radio creative.
Robinson warned that some categories, such as debt relief and tax relief, still lean too heavily on the “yell-and-sell” tactics to their own demise when they begin to all sound interchangeable. “Others are trying to be more creative and engaging with their message, giving it more character and not trying to immediately punch you right between the eyes. It’s still DR and response-driven, but in a little more creative and a little less abrasive way. To attract a certain type of client you need to have a more professional message,” he says.
Frankel advises that with new distribution mechanisms, you have to be nimble enough to figure out how to integrate the pricing with what’s out there. “Terrestrial radio still works, and it’s the best-kept secret out there. As far as DR performance, I don’t think Internet radio does anywhere close to the performance of terrestrial and satellite yet,” he says.
Testimonials and hosts in ads are not a new thing, however with radio they can accumulate greater advantage. “The difference I think is that radio is the best-case scenario for testimonials because it’s really at the forefront of using a central personality where they are the king of their own audience. They have a constituency and sometimes that constituency consists of millions of people,” says Granger.
For Sullivan, most of his DR radio campaigns run for two-to-four years, every day with very little seasonality. “Always the most successful radio spots have been the best lead generators. It’s been very tough to get some advertisers to go to lead-gen. Very infrequently do they succeed in soft sell,” says Sullivan.
No Static On The Horizon
In a way it almost seems that radio has actually forged ahead of its peers in other advertising media having an epiphany moment in terms of embracing and coping with change. “That’s one of the reasons I think you see the kind of turn around in all facets of radio right now where there’s a lot of languishing going on with the TV side,” says Robinson.
Over at Clear Channel, it seems Granger and team agree with those sentiments and don’t recoil their passion for radio, regardless of whether it’s terrestrial, online or satellite. “Radio is a different kind of experience, and I’m not saying it’s not changing or becoming increasingly fragmented. It is but not in such a way that anyone’s beat it. The reality is that we’ve got a megaphone that connects with and talks with people in a very intimate way,” says Granger. “And so even if the shape of the megaphone changes, the relationship between an influential figure and their loyal audience is never going to end.” ■