09/11

What if Digital for Radio is a Profit-Enabler, not a Profit-Center?

I came across an interesting opinion recently in a Fast Company piece called “Why VCs Still Love Social Media” in spite of legendary roadblocks to monetization:

If monetization is such a problem, why do VCs keep investing in social media? At [VC firm] Greycroft, we’re looking for consumer sites that have massive consumer adoption tied with strong engagement. [Greycroft has invested in the video-sharing network Viddy.] These networks, like Instagram, can be fantastic add-ons to companies for acquiring and retaining users. As part of a larger ecosystem, the business can make money from those users elsewhere.

Ponder that for a moment.

“Massive consumer adoption tied with strong engagement.”

“…fantastic add-ons to companies for acquiring and retaining users.”

“As part of a larger ecosystem, the business can make money from those users elsewhere.”

This echoes precisely what I heard from podcast giants like Kevin Smith and Adam Carolla.  It echoes precisely what I heard from digital guru and entrepreneur Gary Vaynerchuk.  It’s what Gary described to me as making money “on the second level.”

What VCs view as investment-worthy, in the opinion of this particular VC, is that which is popular and engaging such that it can help a company’s larger ecosystem acquire and retain users for stronger monetization.  In other words, any given investment would be viewed not as a profit-center on its own but a profit-enabler for a larger ecosystem.

How many broadcasters see their digital platforms this way?

Does every initiative need to be monetized out of the box?  Or do we look at each initiative as part of the larger revenue ecosystem and create expectations accordingly?

Are we wrong to count digital dollars per se?  And should we instead consider how to maximize total dollars even if the digital portion of the portfolio does more to enable than to monetize?

Broadcasters need to better differentiate between profit-centers and profit-enablers.

* = required field
  • Warren Lada

    Digital is integral to our stations overall revenue and audience strategy and a very important asset to our stations. No question it is a profit enabler and it also can stand on its own, depending on which digital asset you are talking about. Quantifying digital revenue as a discreet profit center is analogous to taking a radio station’s specific daypart, say midday, and analyzing the revenue and expense only for that particlar daypart. In that scenario, you would not get a true depiction of how “midday” ties into the rest of the operation. Digital is a part of what we do, and while we can quantify it, no doubt it brings opportunity to everyhting in the station. Yes, we need to more strongly consider how digital maximizes TOTAL dollars and how it complements our core revenue component, on air commercials.

  • Thanks for the comment, Warren!

  • dave presher

    There are some new fundamentals in advertising that broadcasters have been slow to pick up on, i.e. digital sales opportunities. The traffic they have gives them an unsurmountable lead if they are smart enough to channel it to other opportunities outside their brand extensions. We have created a formula that generates lots of revenue with little effort for Broadcasters. The hardest part is convincing them it’s ok to take the money.

  • dave presher

    There are some new fundamentals in advertising that broadcasters have been slow to pick up on, i.e. digital sales opportunities. The traffic they have gives them an unsurmountable lead if they are smart enough to channel it to other opportunities outside their brand extensions. We have created a formula that generates lots of revenue with little effort for Broadcasters. The hardest part is convincing them it’s ok to take the money.

  • Well I’d like to hear more about that, Dave!

  • Well I’d like to hear more about that, Dave!

Dive Into The Blog