Radio remains a vital part of consumers’ lives and now is growing its influence across new platforms and devices. But the medium still only attracts 6% of advertiser budgets and its greatest challenge is attracting new dollars to the medium. That was a top takeaway from the Radio Show in Dallas as the heads of radio’s three largest groups took the stage to tackle “2020 and Beyond: Insights from the Top.”
“With the consumer we’re doing great. I mean great,” iHeartMedia Chairman and CEO Bob Pittman said. “I can’t imagine any industry that wouldn’t love where we are and what we have. The problem with this industry is we’ve not monetized that audience well and that’s the focus.”
With radio delivering to advertisers a considerably larger ROI than television, Pittman made the case that radio is underpriced. The industry needs to develop stronger relationships at the client level with big brand advertisers to get on a longer sales cycle that they use to plan their media campaigns, Pittman said. “I am actually optimistic that we’ve got the right people in place and we’re getting there. But it would be nice if it could come a little sooner.”
Coming to radio from the publishing industry, Cumulus Media CEO Mary Berner said she was surprised by the big disconnect between the perception and reality of radio. “I was really excited about the facts since I came from print where the doom and gloom were reality,” she said. While continuing to nurture its core AM/FM base, radio companies are “leveraging content creation and sales skills” to play in the overall audio ecosystem, which Berner said is crucial for the future: “As an industry we need to really lean into the shift from radio to audio because it allows us to develop new revenue streams and business opportunities.” Berner also cited a datapoint from Activate Media’s annual forecast that predicted time spent with audio will grow as fast as time spent with gaming by 2022.
While radio remains the top reach medium, it continues to show modest year-over-year listening declines. But Entercom Chairman, President and CEO David Field said the industry sometimes gets too “myopic” about that, losing sight of the fact that virtually everything in modern day life is being disrupted by digital. In that context, radio is holding up remarkably well, but it doesn’t often take stock of its value relative to other media, Field noted. “We see TSL declining by a relatively small amount and we get upset about that,” he said—as television ratings are declining by almost 20% per year. Radio remains resilient and its expansion onto new platforms is increasing listenership, and “we’re starting to crack the code in our ability to monetize that,” Field offered. The Entercom CEO said radio is “vastly under-charging” and that as more media shift to impressions-based measurement, allowing for better apples to apples comparisons, he’s optimistic that “radio will be revalued to a more intrinsic level to what we’re deserving of.”
But while the group heads spoke about radio’s top reach and expansion to new platforms, moderator Stephanie Ruhle said, “We’ve heard all of this before.” The MSNBC and NBC News Anchor and Correspondent asked why advertisers haven’t jumped on board. Berner noted that it takes time to change perceptions and she put some of the blame on ad agencies where radio and other media buyers are siloed, resulting in radio’s value not always being clear to the advertiser. Pittman said there are signs that’s changing, thanks to efforts by iHeartMedia and Cumulus/Westwood One to engage higher up the agency food chain. Agencies are trying to break down their silos and ultimately want to have one way to plan across all media, Pittman said. “They’re heading there; the question is how fast.”
A common theme of the luncheon session—which drew such an overflow crowd that some attendees were actually turned away when there were no seats left—was that radio companies fighting for share of radio dollars is the wrong strategy. “What we really need to do is bring money into the sector,” Pittman said. Podcasting could be “a gateway” for advertisers, who are excited about the “sexiness of audio,” Field said, and use it as their audio entry point only later to expand into broadcast radio in search of greater reach.
While radio and streaming music services are often lumped into the same bucket, Pittman contended that the two are completely different industries. On-demand services like Spotify and Apple Music are music collections, the digital era equivalent to yesterday’s vinyl records, cassettes and CDs. Consumers use their music collection to “escape the world,” while radio is used to “find out what’s going on in the world, to be part of the world, and feel like you’re getting all the information and you’re caught up.” This is a familiar theme from Pittman, who said he starts most presentations on the topic because “it’s the biggest misunderstanding about radio.” – Paul Heine