Last week I wrote that Pandora is, without any doubt, a radio substitute in the ears of the audience who might consume both.
In one sense a “substitute” or suitable alternative to radio is what the audience says it is, not what the broadcasters say it is. But in another even more critical sense a radio “substitute” is what your advertisers say it is.
Let me explain.
Let’s say the advertiser has a dollar to spend. She wants to spend that dollar to connect her product or service with more potential customers. She doesn’t really care how she spends that dollar – she cares only that it produces a suitable outcome that makes the investment worthwhile.
The value of radio to this advertiser is that it reaches lots of people and can mediate lots of connections. This is the same value the advertiser places in other media (indeed, this is pretty much what the word “media” means to advertisers) such as outdoor and television and print and now digital.
Historically, this is why radio broadcasters were often under the same ownership roof as outdoor and television and print. Because the corporate owners recognized that ad dollars are not about vertical media channels, they are about marketing outcomes mediated across those channels. If you own more channels, you own more of the ad pie.
So where should the advertiser spend her dollar today? She will spend it wherever it can mediate the most efficient connections. Indeed, this accounts for the rise of the digital marketplace as the key growth category in advertising.
So what is a “substitute” for radio? The answer is any destination for ad dollars which can achieve the same or better results for that dollar spent.
So any ad medium is a substitute for any other. That’s why there is no such thing as “radio” per se, there is only “media.” You are all of it – unless you choose to narrow your expansive horizons deliberately and foolishly.
So from an advertiser’s perspective, is Pandora a radio substitute? You bet it is. But that’s only scratching the surface of the competitive field.
It would be smart for all broadcasters to quit arguing over who is and isn’t the competition and do something altogether more strategic:
Follow the money.