Radio Advertisers' Digital Dilemma

Broadcasters are touting the fact that, after a multi-year slump, advertising revenue is looking up. The Radio Advertising Bureau reports that advertisers dropped more than $3.7 billion (estimated) on spots in the second quarter of 2012 – representing a total investment of $6.8 billion for the year so far, and up 1% from 2011. The fastest-growing segment where advertisers are spending their money is in the digital realm: up 7% this year compared to last.
This does not, however, mean that those who are in charge of allocating radio advertising dollars are necessarily satisfied with what they get for their investment. An illuminating compendium of video interviews with media buyers, produced by Edison Research, suggests that radio lags far behind in its knowledge and exploitation of the digital media environment.
Alicia Abele, Media Director of Brothers & Company, thinks radio “continues to be a stepchild in many aspects in terms of the overall look of the presentations and what they offer.” Chris Kuenne, founder and CEO of the interactive marketing agency Rosetta, describes working with radio advertising reps on digital campaigns has been “frankly a pretty frustrating experience.”
This frustration stems from the fact that many who sell radio simply don’t understand the world of digital media, much less where radio might advantageously fit into it. Brad Bernard, the vice president of online media and analytics for Harmelin Media, made this brutal observation: “If they’re going to have credibility in the online space, they need to learn the lingo better….[they’re] using the [digital] language of five or six years ago,” referring to things like “hyperlinks” which most marketers (and Internet users, for that matter) take for granted today.
This knowledge-gap can sometimes be stunning. For example, many radio stations still don’t know how to design proper web sites. Bernard describes the majority of them as “cluttered. Too many advertisers on there….Too many party pics of scantily-clad women. It’s not the environment that advertisers want to be in.” Media buyers report that they’ll actually turn down placement on station sites – even if such placement is offered for free – rather than potentially harm the brand of the client they’re working for.
This makes it very difficult to organize effective advertising campaigns that meld on-air spots with an online presence. Abbie Korman, president of Impact Marketing and Promotions, says her experience with cross-platform radio campaigns is that the number of people who actually hear a spot and then interact with a station’s web site is “appallingly low.”
In the streaming space, local broadcasters don’t seem to have any idea how to express the value of having an online outlet. Aggregate numbers of listeners remain small at the individual-station level, so much so that to advertisers it’s almost worthless. Said Korman: “Seriously, I had a New York station show me 480 people listening. I’m trying to reach millions. Why am I going to bother to spend my time?”
Most media buyers consider Pandora and Clear Channel’s iHeartRadio aggregator to be the most effective destinations for streaming adverts, with Pandora being the “behemoth” in the marketplace. Lisa Adams, a vice president and managing director of Allen & Gerritsen, thinks this is why the strength of radio’s ability to be local is “probably the biggest [advantage] that radio needs to hold onto.”
Abbie Korman agreed. “The panic of the industry as a whole is kind of taking away the fun of radio and they’re kind of killing themselves….It makes me sad to see the way the industry is running away from itself…Stick with local radio and continue to invest in that.”
Ironically, this is not where broadcasters are making their investments. Also note that not one media buyer mentioned HD Radio in their critique of radio’s plays in the digital space. It emphasizes the disconnect between where broadcasters think their future is: at the recently-concluded NAB Radio Show, HD’s proponents hammered broadcasters to implement “Artist Experience” – i.e., the ability to broadcast still pictures to a radio receiver – as if that stands to break digital broadcasting out into the mainstream.
Considering that it took years for HD Radio to attain such “functionality” (which is built-in to ‘net-based streaming platforms), and it still takes as much as four hours for a broadcast engineer to implement AE on any given HD station, it smacks of a fool’s errand more than a great leap forward.
It’s easy to brag about the radio industry’s revenue growth in the digital realm, especially when the comparative data-point is zero. The future of this slice of the pie is still a wild-ass guess, because radio’s digital dilemma is so deep-seated and multi-faceted.