I negotiate with broadcast media reps everyday, while bouncing in and out of
voice-over sessions. I have a love for broadcast but I have noticed that it's more difficult for advertisers to generate concrete results. Why? Fragmentation. Take radio. Ten years ago audio books were not a billion dollars plus industry; IPods were not in vogue; satellite radio was not around and there were not as many formats. Some 10 to 29 markets are even supporting two or three sports radio stations (or are they supporting them?)
The good news for advertisers is that most stations have had to lower their ad rates, and thus some advertisers can still justify radio spending... An initial media buy is justified based on data. Then, the advertiser asks if that media buy should continue based on the more important cost per customer, per patient, per case, per client... Often advertisers are diverting broadcast money to interactive media because they're finding their "cost per" is less expensive than in broadcast and print. How can so many stations afford to stay in business (even the ones with low operating costs), especially when their advertising clients must generate real results to continue spending ad dollars?
I wonder when some stations will be forced to go dark. If not now, will stations start going dark when automobiles are equiped with web radio, sites which will be commercial free and cost very little to operate... In other words, will transmitters and towers really be needed? Will business models like www.hulu.com (a true hybrid between TV and interactive) make the most economic sense for advertisers?
I hope that someone will say to me, "Bruce, you're missing one or two important factors and here's why local radio and T.V. stations will prosper." I posed these very concerns to a former radio owner who said that he loved being in the radio business in the 60s, 70s, 80s but he recently told me that he was glad he got out of the business in the mid-90s, and that he agrees with my prediction (unfortunately).
Bottom line? I have a feeling social networks will make narrowcasting
super-narrowcasting and that a number of media hobbyists will make just a little bit of money in their own little highly fragmented worlds. The media money from advertisers overall will stay the same probably but their payments will be delivered to many more vendors in smaller amounts.
www.brucehorlick.com and www.radiostorybooks.com
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Bruce,
ReplyDeleteYou are right on. As soon as the web is available everywhere using low cost cell phone towers and transmitters, that will be the first nail in the coffin of radio. The same goes for TV. If you live more than 20 miles away from a digital TV tower you can't get free TV anyway. Media will be either personality or subject driven. If you are an ice carver or want to be, you'll probably spend some time watching the ice carving channel. If you think Howard Stern is the best radio voice since Sean Connery, you'll listen to that channel on the audio net. Because there will be so many outlets, nobody will make any real money unless they have something special to offer. Ad spending will probably stay the same or even grow a little bit. It used to be if you owned a radio or TV station you "printed" money. Now if you own a station, you'll be lucky to "coin" change.
I think you mean "go dark", not go black. Any business wants to be in the black as opposed to being in the red. But nobody wants to be in the dark. There are now about 15,000 stations on the air in the U.S. That's a record high number.
ReplyDeleteApple has added FM radio to the latest I-Phone. Isn't it likely that Blackberry and all the others will follow? Arbitron's latest study confirmed again that more than 90 percent of all consumers aged 12 and older listen to the radio each week -- a higher penetration than television, magazines, newspapers or the Internet.
Though HD radio has yet to catch on in a meaningful way, it provides a near-CD quality signal with no monthly fee.
Though radio has made some HUGE mistakes, it is far from dead. I believe it will eventually remember that it's biggest strength is the ability to be local and human. And perhaps more stations will figure out the importance of writing commercials that are both entertaining and effective. If so, radio's future will be quite bright...but that's just my opinion. I could be wrong.
-Dave Dworkin, owner
Radiomall.com
Like most things, the future of broadcast will be...cyclical! How many times and for how many reasons since the '60's have people thought the decline of broadcast was happening? And one way or another it always bounces back (although not always to the level it was previously).
ReplyDeleteFragmentation and the increase of media outlets certainly is occurring right now. And i do expect to see more stations go dark soon, but fragmentation is also helpful for the small business owner. As you mentioned, in some cases it has reduced advertising costs. It has also created more targeted audiences, therefore removing some of the waste that is inevitable in advertising. In theory, small business owners may be spending less but reaching a more qualified audience in a turn away from mass marketing.