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What is Radio’s “Fair Share” of Revenue?


“Radio does not get its fair share [of ad revenue],” says Radio Ink.

That’s based on a new eMarketer report indicating that consumers aged 18+ spend 12% of their media time with radio, while radio receives only 9.3% of the ad spend.

Radio Ink’s premise is flawed in two ways: First, there’s no such a thing as a “fair” share of ad dollars; Second, ad dollars should not necessarily match time spent.

“Fair” is a value judgment in a world where life generally isn’t.

From the advertiser’s perspective, a “fair” share is one that reflects the full power of a platform to deliver results, however defined. To advertisers, what’s “fair” is what you say “yes” to.

Print, for example, occupies only 3.5% of the consumer’s media time but receives 19% of the ad dollar. Is it the power of the print brands? The niche nature of those brands? The value of a paper coupon delivered to your door in the presence of compelling editorial content? Slow changing buying behaviors? The reluctance of print sellers to say “yes” to a lower price? All of the above, most likely.

eMarketer reports:

While 6.0% of US adults’ digital media time is spent on Facebook, nearly 10% of US digital ad spending flows to the site, which is in direct contrast to all other digital media we track.

Is that discrepancy a function of the amazingly broad reach of Facebook? The interactivity of the platform? The targeting efficiencies? The ROI? The engagement opportunities? All of the above, most likely.

So the “fair” share is the one that equals the full value provided by the advertising platform – not simply reach, and certainly not time spent using. But larger questions like: What can I do with this platform to help me tell my story? How can I target more effectively? How can I demonstrate results? How interactive and engaging is this platform? How does it fit into my larger advertising and marketing agenda across platforms? Etc.

If you think you are owed ad dollar share simply because of time spent, then you are thinking wrong. Worse, your wrong thinking is bad for the radio business.

Why? Because Borrell Associates estimates that time spent with radio will plunge by nearly 24 percent by 2018 – a total decline of more than 40% from 2008 to 2018.

In other words, if ad share = time spent, then a much lower share of ad revenue will be more “fair.”

Forget about what’s “fair.” Your disgruntlement will only encourage you to “tell a better story” or “change buyers’ minds” or “get the credit we deserve” or “make radio cool again” or other such nonsense conclusions which substitute for action or results.

Focus on what’s valuable to your clients and create more in its image.

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