I was so heartened to hear Oaktree Capital Management’s Andy Salter’s comments at the Dickstein Shapiro-sponsored Broadcast Financing 2008 during the NAB Radio Show a couple of weeks ago. He is bullish on radio and was particularly focused on interactive opportunities.
Tom Buono, founder and CEO of BIA Financial Network, echoed those sentiments in his recent RBR interview. As RBR noted,
“This is a time for innovation and hard work to find ways to better serve advertisers, help those advertisers get through this difficult economy and make radio more valuable to them going forward – and that doesn’t limit “radio” to being a business that just sell on-air spots for years to come.
RBR has jumped on the multiplatform bandwagon too. If you read RBR, you can’t help but notice Buono’s interview, which was video-recorded at the recent RAB Show in Austin. It appears as a podcast on RBR.com as well as a featured story in the RBR morning epaper. Listening to the interview, I can imagine hearing Smokey Robinson and the Miracles’ “I Second that Emotion” playing in the background.
That would certainly be the tune that comes to mind for members of the Media Financial Management Association (MFM). In fact, the ways that radio stations are using their multiplatform capabilities to provide competitive and effective advertising opportunities was a hot topic during a discussion of “NTR,” – non traditional revenue – at the Annual Conference for MFM and its BCCA subsidiary. While our members typically focus on the accounting principals affecting NTR, financial executives also are very interested in hearing from their peers in ad sales about new ways to support advertisers and grow the business. After all, they need to understand what they are spending their stations’ money on and to be able to evaluate the revenue potential.
As Janet Stilson, editor of MFM’s bimonthly magazine The Financial Manager, observed, “NTR can manifest itself at radio outlets in many different ways these days, from special events and contests to discount cards and Web advertising.”
Numbers explain why their gravitational pull is getting stronger, explained Stilson, who also analyzes advertising trends for the industry. For example, terrestrial radio stations can expect to see an average advertising revenue decline of almost 1% annually between this year and 2012. For all forms of radio, the compound annual rate of decline will be.6%. The biggest year-to-year drop-off is likely to occur in 2008, – a 6.1% decrease – according to PricewaterhouseCoopers’ recently released “Global Entertainment and Media Outlook: 2008-2012” report.
The number of stations looking to collect revenue from streamed advertising is one example of radio’s embrace of NTR via multiplatform opportunities. As MFM members learned during our Dallas Conference, as many as half of the country’s 13,000 radio stations are already streaming. This number is courtesy of Robert Maccini, COO of Ando Media, which provides tools for Webcast ad insertion and audience data. Moreover, Bridge Ratings predicts the Internet radio audience will expand from 100 million to 180 million people by 2020.
The ad dollars for online, which are projected to grow in double digits for several more years, are already flowing into streamed radio. Katz Net Radio Sales currently reps more than 1,000 Internet radio stations, and on a national-network basis, they are garnering CPM rates of $5 to $10 for impressions, and those numbers are “moving up,” according to Jennifer Lane, the Katz unit’s president.
Of course, web sites are integral to streaming, and many stations are using the mass reach of their broadcasts to drive additional online revenue opportunities. One of the ways that Clear Channel stations are monetizing their Web sites is through a cross-platform discount card promotion. DJs drive listeners to the station’s Web site, where they can purchase cards from a local restaurant or retail outlets valued at $50 for only $25. The advertiser become the “featured deal of the week” by supplying $5,000 worth of the $50 cards in return for on-air and online advertising and promotion. The stations sell the cards for $25, often through a third party like Clearmart, and keep that revenue.
Another cross-platform NTR program for stations that MFM members learned about involves on-air contests that encourage listeners to text message a preset number, typically for a prize. The station pays a monthly fee for third-party software that creates a database of phone numbers from the texts and a randomizer for selecting winners.
Listeners that text the advertised number receive a bounce-back message that’s customizable by campaign, often asking them if they want to join a club list and to receive additional information about an advertiser’s product or promotion. The software also generates reports that meet the advertiser’s proof of performance requirements. The text-message contests have been quite successful for Clear Channel Radio’s Dallas outlets.
MFM members will be exploring additional ideas supporting the advertising community and growing their business through multiplatform opportunities at our upcoming Regional Seminar. The seminar, “Follow the Money – Give Advertisers What they Want,” will be held on Thursday Oct 16th at the Penn Club in Manhattan. It will feature insights from a number of leading experts representing the advertising and ad sales communities, including executives from such industry leaders as AOL, AvenueA|RazorFish, Beyond Interaction, blip.tv, INVISION, MediaBank, Magna Global, Pando, Publicis Groupe, the TVB and YouTube. The seminar will be well-timed for media companies looking to capitalize on opportunities in our down market.
More information about this seminar and other MFM programs devoted to NTR is available on MFM’s web site, www.mediafinance.org. As RBR and BIA Financial’s Buono noted, radio was already facing challenges from new media before the additional burden of an economic downturn. But if there is any group that has the creative talent, collaborative relationships and track record for innovation these times require, it’s radio, the original portable and personalizable medium.
–Mary M. Collins, President & CEO, Media Financial Management Association
