<em>Marketing Playbook</em> interviews Ramsey about the Future of Radio – Part 1

Recently I was interviewed by John Zagula over at Marketing Playbook. The Playbook is a terrific blog, by the way (and I’m not saying that because he interviewed me). Also look for Marketing Playbook, the book, this October online or at a store near you.

John had lots of questions about the future of Radio. Here is part one of his interview with me, originally published at Marketing Playbook. I’ll share part two with you after John publishes it.

Radio – Personalization vs. Simplicity/Cost?

With the growth of satelite radio and mp3, there have been a lot of entries lately on the web, in print and in the blogsphere about the decline and fall of radio as a medium. Personally, I love radio and I always liked it as an ad medium both for its rich and the type of creative it could force you to. But, hey, I’m getting old so rather than trust my opinion I thought we ought to talk to someone who really knows what they are talking about.

Mark Ramsey of the Radio Marketing Nexus was nice enough to give us his take of both the current playing field for the Radio industry and what he sees as the right play or plays for the media owners/stations as well as the media buying universe. Here’s a summary of our discussion in two installments:

Marketing Playbook: So what is all this about the decline of radio?

Mark Ramsey: The reports of Radio’s death have been greatly exaggerated. Despite some of the dire predictions from recent publications like Barrons and Fortune, here are the facts, courtesy of Arbitron Ratings: Radio reaches about 94% of all persons age 12 and over, and that percentage is down only about 2% overall in the past five years. What IS true is that people are spending less time with Radio than they used to. In any given quarter-hour listenership is down an average of 17% – rocketing to 30% among 18-24’s.

The reasons for this are many – from the rise of Hispanics and Spanish-Language tastes which broadcasters have yet to catch up with to the splintering of tastes in general. It should not surprise us that as media options of all kinds increase the share of attention received by any given one (whether radio, TV, newspaper, or whatever) should decrease. Radio is not at all unique in this regard. In fact, it would be remarkable if Radio didn’t follow the same trends as other media. Nonetheless, none of the new options are gaining the kind of massive audience traction that Radio continues to enjoy. The markets have a fixed number of competitors and a comparatively robust advertising market. What’s more, Radio is an ideal vehicle especially for the local business who is promotionally active and for whom a mobile, active audience is the primary target. All this adds up to an enviable business.

So what’s wrong?

Radio has dramatically consolidated recently. A few companies own vast numbers of stations (although, I should add, vast numbers of stations are also owned by many small companies, too). With size and consolidation comes the temptation to make big promises to Wall Street – promises which may at some point become unsustainable. Such aggressive promises to Wall Street can make any performance look mediocre.

Strike one.

The easiest way to increase revenue is to bulk up on spots. That is, until you reach the point where both clients and listeners start screaming – as they are doing now.

Strike two.

The biggest criticism of Radio is perceived “sameness” across the dial and across the country. While true to some extent, I’m seeing a lot more risk-taking now than I saw in the years before consolidation, because in the old days one radio station was the entire portfolio – today it’s only a very small corner of a portfolio, so risk can be spread much more thinly. Now is the time ripe for innovation. Nevertheless, the popular bias says: Big + Consolidated = Little Variety.

Strike three.

Fortunately, Radio is by no means “out.”

Marketing Playbook: What do you see as the overall ABCs (current situation, desired future, gap that needs to be bridged between the two) of the radio industry?

Mark Ramsey: A. Today: Radio is current with audiences everywhere: in their cars, on their hips, in their homes, and we’re aiming for a future where we will always be their number one source for convenient information, music, connection, and entertainment.

B. The gap in my mind is the degree to which we can continue to innovate and grow talent in our industry at a time when many other industries are much more attractive to talent at all levels.

C. The challenge is: How do you make Radio cool again?

Marketing Playbook: Let’s go further with this assessment on a few other dimensions. First, what is the effect of bigger market or technology factors on the use and economics of radio?

Mark Ramsey: Technology personalizes audio – but at the cost of complexity.

That is, you can design your own radio station (which is what an iPod is) with some degree of effort. But it will always be the station you design and nothing more. Nothing on it will ever surprise or delight you. And doing the designing will always take a non-trivial fraction of your time – more of a problem for folks past their student years who are time-poor.

Radio, conversely, has to navigate in a music world where folks can always hear a music mix they like better than what the radio’s playing out of their own home-grown station. Well, Radio’s passive and easy – but also not quite your favorite mix. So it’s a trade-off.

What Radio will always have that your home mix won’t have is distinctive personalities. Growing our talent base is, I suspect, one of our most formidable challenges – particularly at a time when a very vocal minority spend their abundant free time plotting to rid the airwaves of some of our most compelling entertainers.

As for economics, that remains to be seen. As you know, lots of these technologies are not advertiser based, they’re consumer-based. That is, you pay for them or subscribe to them. Perhaps the greatest competitive advantage of all for Radio is this: Radio is FREE.

More soon…