You get what you ask for.
Last week Townsquare Media reported that about 30% of its revenue derived from non-spot sources in 2014 – 42% if you exclude recent acquisitions.
And Townsquare isn’t alone. Check out how CBS (the entire company, not just radio) is shedding its dependence on advertising:
CBS, which in addition to the CBS Television Network, owns Showtime, CBS Television Stations, CBS Radio, CBS Television Studios and Simon & Schuster, has the most exposure to advertising among the major media companies. But the media giant has reduced that exposure in recent years to 50% from 70%, partly by spinning off its ad-dependent CBS Outdoor division earlier this year.
Remember when having a front row seat before advertisers wasn’t framed with the risk-laden term “exposure”?!
So a greater fraction of CBS revenue comes from (among other things) retransmission fees – those fees the cable operators pay the network in exchange for their content. The same fees those cable operators collect from you and me in the form of monthly payments. Thus CBS, the ad-supported media company, is increasingly becoming CBS, the subscription-supported media company (this is a topic Tom Asacker and I took up on our podcast some weeks ago).
As the options for advertisers spread like wildfire and the sensitivity to radio clutter continues to grow, it’s essential for broadcasters not only to look to new sources of revenue but to set a high bar for expectations from those new sources and to put a proper investment against those expectations.
As I travel around the country I hear about many stations – especially music-oriented stations – that are almost entirely financed by ad dollars in the form of traditional spots. The pressure on these stations will only increase as listening splinters, advertisers scatter, and Nielsen becomes an ever-thinner measurement tool for an ever-thinner slice of the audio pie.
Townsquare, as Tom Taylor writes, is famous for its bold declaration “40 by ’14” (as in 40% of revenue by 2014). While it’s remarkable that they have hit this goal, it’s more remarkable that they set such a lofty goal in the first place.
Yet setting big, bold goals is the only way a brand achieves anything big or bold.
It’s the supersized goal that enables the big strategic moves (including risks and investments) that make achieving that goal possible in the first place.
The problem with too many broadcasters is not just that they don’t think big or bold, it’s that they don’t lead with ambitious goals that are in tune with the trends of the times. And they don’t power those big goals with equally big and bold strategies.
You get what you ask for.
But only if you ask.