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Radio’s Future in the Media Mix – an interview with Tom Asacker

My friend Tom Asacker is one of the smartest marketing thinkers I know. Tom is noted speaker, strategist, and author of A Clear Eye for Branding

.  He blogs at

What follows is a transcript of highlights from our conversation about radio's future in the media mix.  For the full chat, I encourage you to click below – or subscribe to all hear2.0 podcasts at iTunes.

Tom, as a keen observer of what’s going on with radio, how do you see things right now, and are they different from where they were a year or two ago? 

Broadcasters still talk about “the radio business.” There really is no such thing. There is only the marketing/advertising/media business, and that particular business exists to serve marketers, consumers, and audiences. 

You see, it’s all interconnected and dependent on the value creation and exchange and consumption of each participant. And I think that’s what people are having a hard time grasping because they’re thinking of their business – of their brands, of their industry – as some distinct thing that can create value and attract dollars based on this exclusive creation of value. 

So broadcasters, newspaper publishers, etc., have a tendency to view themselves as channels of distribution where the border between inside and outside is fairly well defined. As a result, a lot of broadcasters are viewing digital elements as add-ons or non-traditional bonuses to the core proposition. And what you’re saying is those very dividing lines are vanishing before our eyes.

I don’t really think that they were ever there; I just don’t think that they were as tightly interrelated as they are today. The successes of every partner in this relationship are really tightly interrelated now. 

A wise Rabbi once said, “If I am I because you are you and you are you because I am I, then I am not I and you are not you.” In other words, we’re not separate; we define each other. That’s what radio needs to understand. 

Radio doesn’t exist separately. Radio exists in this relationship with marketers, advertising, and consumers. I mean this stuff is all linked, and when you start taking your eyes off the fact that it’s linked, then you wake up one day and you say, what happened? Where are all the advertising dollars? 

Radio is not just a place where you put dollars to send out messages. The advertisers, the marketers, the agencies – everybody that participates in this relationship – have things they’re trying to get out of the relationship. There is value that they’re looking for, and this is where I think radio (and a lot of other media companies) are missing the game that’s changing before their eyes: The nature of value that people are trying to receive has changed dramatically. The Internet has had a lot to do with their elevated expectations. 

What you’re saying is radio, television, newspaper – it’s all part of the media circus, and the relationships are so tight between them now, there is really no difference between them any more. 

Marketing, advertising and media – look at it as one big marketplace, one economy. We’re at a watershed moment right now. 

The Internet, yes, it’s a major contributing factor. It has changed the way people consume media. And marketers are investing a greater percentage of their shrinking budgets to connect with prospective customers through things like search marketing, display advertising, email marketing, social media, mobile marketing… but you see, that’s not the big structural change that’s taking place. 

What’s really taking place is that this thing they call the “ad market” is transforming. I don’t think there is a thing anymore called the “ad market,” as we’ve known it, with buyers at the mercy of suppliers. 

I think what we have now is an idea market. 

Marketers are out there saying “Look, we are confused. We don’t know the best way any more to connect the value of our products and services to the customers who will benefit from this value.” And they’re looking to everyone and anyone – agencies, media properties, creative firms, brand strategists, consultants – and they’re saying “whoever has the best idea is the one we want to work with.” Because it’s the idea that’s going to generate the results they’re looking for. 

If we’re now competing not to provide our air-time at the lowest cost-per-point, but to provide the best ideas which generate the greatest value, what’s the strategy to provide those ideas? Because right now the average radio station goes to the average agency buyer and that buyer pulls out the Arbitron rankings and says “your cost-per-point is too high.” What’s got to change in the equation?

I’m not saying that you can’t continue to compete as a commodity; all I’m saying is that your margins will drop. 

It’s Economics 101 – scarcity is what drives higher pricing and higher margins. 

Radio has to provide something that is scarce. What is that? How about ideas that help marketers connect with an audience that radio has a tight relationship with and understands better than anyone else does? 

That’s what radio needs to bring marketers – all kinds of ideas. Using your platform, using digital, using over the air, using events, using whatever you need to use to show marketers this is the best way to connect with your audience because this is what we do, this is what our unique skill set is. 

So you’re talking not just about better sales ideas; you’re talking about packaging ideas, content ideas, you’re talking about shapes of ads, you’re talking about alternatives to ads that could be monetizable, you’re talking about every aspect of the relationship between an advertiser, marketer, and media company and adding innovation to each step. Right? 

That’s right. Listen, advertising agencies are facing similar circumstances right now. Radio needs to understand marketing. They need to be in the marketing business as well as content business because that’s all part of that ecosystem we talked about. 

What do great marketers do? Great marketers differentiate the value of their offering primarily so that they can reduce the cost of sales. Unfortunately, radio is increasing the cost of sales because they’re not differentiated

You want marketers to say “We want to work with that radio station because it’s an idea-generating machine… stuff that really connects with people and drives sales and margins for our business.” Otherwise it’s a commodity game, and cost of sales will do nothing but rise while margins will continue to fall. 

What do you say when broadcasters say that’s great when you’re dealing direct with the client but not so great when you’re dealing with the middle man at an agency who, more often than not, is the commodity broker, the person who evaluates the Arbitron rankings? 

I would say that they don’t know what’s going on in the agency business right now. The agency business is suffering like crazy because the big advertisers are going to niche players. They’re looking for best of breed, whether it’s in digital, print – it doesn’t matter where it is. So these big agencies are also looking for ideas that they can bring to clients. 

Where’s the disconnect then, Tom? The agencies are looking for ideas but when someone from a radio station comes in, they talk cost-per-point. What am I missing?

They’re talking cost-per-point because they think that that’s what the broadcaster wants to hear. 

Here are some questions I got through the grapevine from a major unnamed agency asking about different ways to use radio. Here were their questions: “What can we do with the programming? How can we use on air personalities? Are there scripted or non-scripted shows we can produce or get produced for our clients? Are there vintage radio shows, commercials or ideas we’d like to bring back? Are there new ways to tie into sports, music, opinion, talk, etc.? Are there ways to make the media more interactive? Are there new ways to combine technology to our media to create something fresh? Are there different shapes for commercials?” This is all what you’re saying, right? 

Somebody should thank that person. But I can tell you what this person is not going to do – they’re not going to spend their day trying to figure it out for radio. What they’re saying to radio is “Here’s a gift. I went and brainstormed a little bit for you. Now, go package this stuff together in a compelling way so that I can walk into a client and give them something that wows them that they’ve never seen before that meets their criteria for how they want to connect to their audience.” 

Everybody is waiting for somebody else to do the work so that they all can benefit from it. It’s just not happening. Somebody has got to be the person that takes the high road. 

What is radio going to be if not the people who have the best local connection, the best insights into how to pull all these local resources together to create something of greater value than the components? That’s where I think the future lies. 

Do today’s ad agencies want to be in the commodity business or do they want to be in the value creation business? 

If people believed that the commodity business is a viable business, I think they’d rather be in it because I think they sense it’s easier. Until they get hit with something… 

Here’s an example. Walmart went to P&G and said “we want a third of your ad budgets for your product to go to us” – to Wal-Mart’s own ad program. Now, for P&G that’s like a billion dollars. Why? Because Wal-Mart has the power. That means that Proctor & Gamble’s ad agencies are going to lose one-third of their billings from P&G because it just shifted over to Wal-Mart. P&G knows they have to bring ideas to Wal-Mart for Wal-Mart to move P&G product. 

Everybody is in the idea business, especially in an economy like this. 

That is where the future lies, and when I say “the future,” I mean “high margins.” 

Radio needs to create ideas.

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