Economies Of Scale
October 1, 2013
Just about everybody in radio would agree that 2013 will go down in history as another year of forced, accelerated change. The unfortunate and often necessary cutbacks that radio has been forced to make have certainly reduced the number of personalities and great content available. But there must be an investment in talent, content and overall product development so current market conditions can be exploited.
Regional programming has brought about considerable cost reductions, but has also resulted in less localized, relatable content. While we've embraced the Internet to extend our brands, most stations do not have highly interactive sites that allow for listener-contributed content. And those few that do, do so at a price. A price most stations or groups are not willing to pay.
Each group has a role to play in moving the ball forward in order for radio to survive. Small owners are faced with a choice to either get programming from some of the syndication firms, voicetrack or invest in finding and developing local air talent and programming. Major corporations also have the ability to operate great local clusters as well, but high financial expectations are placed on major corporations so you generally see less risk taking in finding local air talent and more corporate network programming. We're hoping that large and small owners can find great banking partners who know enough about the business to allow them to take the proper risks and have realistic expectations. If they want to survive in this new age of media consumption they need to learn how to make the right changes and take the right risks.
What has caused this risk aversion is technology. And technology will continue to spawn new gadgets such as the iPad, new research and new competitors. The ultra-competitive multi-media landscape eaves little margin for error these days. .As the audience for AM and FM radio declines, start-up entrepreneurs and giant media companies search for the "next radio" -- ways to make money by helping listeners discover new music. Online music providers such as Pandora, iHeart Radio, Imeem and Last.FM provide an early glance at that next chapter in our history. As in other areas of media the music industry is recognizing the difficult truth that we live in a world in which consumers expect information and entertainment to be free.
We're all affected. The age-old question of how to reap the benefits of customer proximity as well as economies of scale returns. The decision-making process drags on. The right judgment calls aren't always made and overhead costs sprout at every node in an attempt to support cumbersome management processes.
What can we do, since we can't control it? We can only attempt to understand and embrace it. Within the Urban formats is a lot of diversity from a number of musical blends. That's part of what has changed in 2013, along with new research areas. . Research now should include Hispanics, many of whom are bilingual and love our music. One of the keys to building cume and reach is to find the songs and the blend that will be welcomed by a broader audience.
In marketing Urban stations, reach beats frequency. Reach is media's gift to marketing and is a fundamental part of how mass advertising works. When money is tight, casting a wider net is not as attractive as highly focused advertising targeted to specific demos, which no one does better than radio. Advertising is most effective when it reminds listeners who happen to need a product or service about a new or established brand.
It's the difference between reminding and remembering. Reminding is a stimulus that can be controlled; remembering is a response that cannot be controlled. Radio's role is reminding, but not when used as a frequency medium. Frequency -- contacting one consumer three times with a message -- is not as effective as reach. Contacting three consumers at once. This is because one consumer is far less likely to need the product or service than any of the three would be.
DNA & The Target Consumer
Who is your station's target beyond age and gender? Often it turns out there's a huge difference between what you consider to be the target and who is being attracted to the station. Successful Urban stations learned to develop a prototype listener in the late '90s. Since then there have been many advances in targeting, but most of them have been ignored up to this point. They have been ignored for the obvious reasons. Programmers have been just too busy to concentrate on them and like so many things; they just slipped through the cracks. But they're too important to ignore if you want to win.
You need to know things about your listeners, beyond demographics, age and sex. You need to know, for example, how they use the media, whether or not they're media-savvy or mostly "iPoders." It takes keen observations and solid research to build the most important clusters to your station. Wal-Mart knows there are three kinds of listeners. So do Coca-Cola, Home Depot and McDonalds. These genetic codes are like your station's DNA.
Like people, radio stations have a genetic code. It wasn't passed down through generations of ancestors. Instead it was created based on everything you're doing and everything you've ever done ... at least everything your listeners remember about your station. Your station's DNA is determined by the audience. It's what they see as your defining moments.
That is why we say that branding is a noun, not a verb. It's not something you do to others. It what your listeners do to you. Your DNA or brand is the emotional connection between you and your listeners, based on the intangible aspects of the station. It's the soul or the concept you develop to communicate and become the brand your listeners perceive you as being. A brand lives in the mind, not in the ear.
Secrets Of Reach Planning
Now we want to examine the benefits of reach planning. It is this broader base that can make a reach difference, but in order to make that difference, you have to tweak the format with higher rotations and rotational patterns that are constantly evolving. With both Urban formats, you not only have to find the right songs, you also have to rotate them higher and give them the impressions they need for the listeners to become familiar and comfortable with them.
When you're thinking about your potential new listeners, you don't always want to simply say you're going after the 18-34s or the 25-49s, although those are cells that are extremely important to the formats. There's a new, particular audience who likes to stay on the cutting edge. That's an audience that wants to hear some of the familiar songs they grew up with alongside the new songs. It's also a lifestyle thing.
Most Urban stations build cume by being full-blown, current-based, hit music outlets. It's a misnomer to think women don't like hip-hop. They just like to hear hit rap songs that are familiar, melodic and tuneful. To build cume with females, there has to be that balance.
We're in a numbers business, one of cume numbers and reach numbers. In today's cume and frequency jungle, you have to find out how you are doing before it's too late. The current Arbitron PPM measurement system shows the true impact of cume and reach. With the diary, the unaided recall process was different. An Arbitron diary can't really measure Time Spent Listening (TSL). At best, it measures memory.
Reach planning increases the number of stations, reduces the number of weekly insertions per station and, if necessary, pays the higher cost-per-thousand (CPP). For the higher reach schedule. This higher CPP is still far lower than television, particularly with highly rated Urban stations.
In the busy, fast-paced world in which we operate, there is often a tendency to want quick, bottom-line answers. We're all looking for a new and fast way forward. The new way forward for Urban stations means placing more emphasis on reach and a new focus on advertising. But advertising can't do it alone. Today's media planning focuses us more and more on the consumer's role in making advertising work. Ads on the radio work best when the consumer is receptive. That notion should tell planners that reminding many consumers is better than lecturing a few. Smart Urban stations in 2013 must embrace reach and develop a wide-angled view of evolving technologies and their prospective impact.
And finally, economies of scale notwithstanding, we still need mentors, advisors and counselors to help connect the next generation of programming executives to the realities of our industries.
And while the solutions to many of those realities are tied directly to experience and historical perspective, they are also tied to the type of people involved. Good people do for themselves; great people do for others. Our industry needs more great people