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Radio’s Uncertain Future


We are experiencing a fundamental change in the radio industry.

  1. Radio revenues will continue their decline until 2013. At that point revenues will again begin to increase but we will be a smaller industry and a return to the 2003 billing levels is far into the future, if ever.
  2. Rate integrity is an outdated idea. We will have to make rate concessions to retain advertisers. A failure to do so will result in them going elsewhere (not radio) and they will not return.
  3. Advertisers will be slower to pay. The net 30 will become 60 and advertisers (like Budweiser) will want us to extend credit to 120+ days. We take the deal or we will be eliminated from their ad schedules.
  4. Advertisers will demand more and more accountability in our ability to provide a measurable return on investment. The value will become the strategy.
  5. Barter will again be a way of doing business. In tough times many people are willing to barter their services in return for advertising schedules. Where we can do so and cut cash expenditures, it might make sense. Remember the half cash/half trade deals from past recessions.
  6. Bad debt write-offs will increase. There is no way around it, if we extend credit past 60 days, some advertisers will not pay or worst yet will go out of business. We will simply write off more bad debt.

What can we do?

First, we must recognize that this fundamental change in the media business will present opportunities for those companies willing to embrace the change.

We must think of ourselves as being in the media business, NOT the radio business. We must begin to think web first, then radio. As a result, we need to:

  1. Make the web part of EVERY advertising schedule. The web gives radio the opportunity to have a visual component for the first time. This opens up new categories of advertisers like real estate, retail medical, and others.
  2. Use landing pages, jump pages, squeeze pages and microsites as a means of bringing a visual component to out advertising and giving more value and better accountability to our clients.
  3. We can no longer retreat to selling spots with the mistaken thinking that this is our core business and this will get us through the storm. That’s exactly what Kodak did. When the world was switching to digital photography, they stuck to their core business and invested in a better film. Now Kodak is playing catch-up in a crowded market they once dominated. They should have been the leader in the digital photography transformation, but the stuck to their guns and did what they always did.

“If you always do what you always did, you will always get what you always got.”

  1. We must embrace the Internet; we must spend most of our training time and training money on developing the Internet “brands” of each of our products.

“We must not expect success BEFORE we have made the investment! We must invest, then implement, before we can ever expect success.”

“R.O.I. no longer means the return on investment, it means Risk of Inaction!”

The natural tendency when things are bad is to retreat to what you know. That strategy worked at one time. It won’t work NOW! We can’t afford to put a toe in the water of new media; we must jump in headfirst. Remember:

“A timid trapeze artist……is a DEAD trapeze artist!”

  1. We must hire web-savvy employees in ALL departments. Disk jockeys are as obsolete as 45’s. We can no longer run our business hiring the same people to do the same jobs they once did. The business has changed and so have the job classifications. In the new media company that also does radio, the jobs we will be hiring for our web designers, IT specialists, code writers, database managers, and digital marketing specialists.

“Do you want to run your business or career as if; the past will last just a few more years? Or, that the future will come faster than you think?”

From what I can see there are two distinct models of how radio will be operated in the future that is emerging.

First; “the low cost, mostly generic, music-based, but higher margin station.” This is the model that the top broadcast companies seem to be embracing. Formats that are somewhat generic (programming from one central location, say San Antonio), with a choice of a nationally 05syndicated morning show, and voice tracked jocks, usually national and generic, or regional, doing several stations a day in the region. Their web sites will be national boilerplate with generic information linked together and sold as part of a larger ad network.

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