“Radio is in a position to grow profoundly in years to come.”
NAB/RAB Radio show coverage by consultant Holland Cooke
By Holland Cooke
“Pillsbury’s Financing the Future of Radio”
That’s Pillsbury Winthrop Shaw Pittman LLP, the Washington law firm. But make no mistake, this session packed a well-catered ballroom with dough boys.
Wells Fargo Senior Analyst Davis Hebert:
- “The bad news: Investors are dealing with a lot of global uncertainty right now,” i.e., China, energy and commodities, and the eventuality that Fed will raise rates.
- “The good news: The USA hasn’t ‘caught the cold.’” He cited good Employment and Housing numbers, and small business optimism.
- “We expect a bit of a bounceback in 2016. 1-2% growth.”
Notable ad verticals he ticked-off:
- “Automotive, radio’s #1 ad category. We just had the best September in years.”
- Retailers: “They’re more concerned about E-commerce than consumer spending.”
- Telecom: There are now more wireless connections than people in the USA.
- Political: “As much as $4.5 billion in 2016. Radio should get about 5%.” More if TV sells out.
Magna Global data:
- Total USA 2016 ad spend forecast: $188 billion.
- Radio has stayed constant at 8% of ad dollars; look for 7% in 2016.
- Radio has “only slightly” under-performed vs. other media.
- “Digital – especially mobile – is taking ad share from everyone.”
Hebert thumbnailed big station group “leaders and laggards:”
- “iHeart is a clear leader.” Events play a big part.
- (I heard no audible snickering in the room when he said) “Cumulus hit a bit of a rough patch.”
- “Entercom has really found a nice groove, outpacing the industry.”
- CBS Radio performance is “tough to predict.”
- Townsquare “has done fairly well” in small markets. Like iHeart, they’re into events.
- Saga “has performed above the industry.”
- Radio One “has under-performed the industry.”
What investors worry about:
- “It’s not the radio industry, it’s specific [company] situations.”
- connected car,
- uncertainty about royalties,
- too much debt.
Highlights from a sound-bite-rich CEO panel:
Connoisseur’s Jeff Warshaw:
- “We’ve grown our company times 10” in recent years. “I’m a believer in the business.”
- “We don’t budget flat, we budget up.”
- “All the things that make local radio great” have been negatively impacted by too much debt.
- “Our stations bring in artists who sing 3 or 4 songs, take questions from & take selfies with listeners, something Pandora cannot do.”
More from Entercom’s David Field:
- “We’re living in a world which is essentially ‘flat-ish’ right now.” But “compared to other media, radio’s value proposition is powerful.”
- “Businesses I would NOT want to be in: TV, newspaper, direct mail, Yellow Pages.” He cited TV problems with DVR ad blocking. “The big loser now is recorded media” thanks to Pandora et al.
- “Digital, clearly, has a long runway to go, but over time we’re going to see great value created.”
- “Common thinking is never what makes investors money.”
- “We’re focused on local.” Scaled national tactics “can never come-at-the-expense-of local” focus.
- “We’re really good at talking to ourselves and to listeners. We’re really bad at talking to key influencers who set society’s perspective” on our industry’s health.
Beasley’s Caroline Beasley
- “Radio operators should be diversified in their revenue streams.” Advertisers are going-digital, “we need to provide [multi-media] solutions.”
- “Pandora’s having their own issues right now. Listenership has plateaued, and they’re dealing with Spotify;” while “radio continues to grow.”
- “We need to provide advertisers with data they’re looking for, data they’re getting from Pandora and Spotify.”
“The last thing I want is for people to take a side when they hear my question.”
Lara Logan’s objectivity was refreshing to hear, with so many cable news and Talk Radio interviewers now pushing an agenda. “What makes great broadcasters and great journalists,” she reckons, “is curiosity.” As Larry King preached to a generation of budding interviewers, LISTENING is key. Logan says “my strength is getting people to tell me things they had no intention of saying.”
The CBS News correspondent (pictured at right) held a Radio Luncheon audience spellbound with harrowing war zone tales, not the least of which was of her gang rape during Egypt’s Arab Spring uprising. Best known now for her work on “60 Minutes,” Logan began as a stringer for CBS Radio; and she loves our medium because “anywhere I was, I could pick up the phone and file.” She recalled the desk in New York telling her, on a scratchy satellite phone connection, “just tell us what you see.”
“One reason our ROI is so high is because our rates are so low.”
Pierre Bouvard, Chief Marketing Officer at Cumulus Media/Westwood One in the session “Radio and ROI: New Findings from Nielsen Spotlight the Value of Radio.”
Tracking advertising and eventual purchases makes a powerful case for AM/FM advertising:
- “Department stores experienced $17 of incremental sales for every $1 spent on radio.”
- “Exposure to radio campaigns drove a 10% increase in sales overall.”
- “Radio brought in more shoppers (3%) and they spent more (6%) each time they shopped.”
Telecom advertising (big category):
- “$14 of incremental sales for every $1 spent on radio.”
- Listeners exposed to this campaign ended up spending $8 more per month than those not exposed.
- Millennials exposed to the ads spent TWICE as much (+$16/month).
- Bottom line? Impact of radio exposure: $210 million, on a $15.3 million investment.
Citing Westwood One post-campaign analyses: Radio improved Return On Investment of all other media (i.e., viewers retained TV spot messages better, etc.). “We’re building up a huge body of evidence. The ROI is quantified and spectacular.”
Tips for station sellers:
- “The inside sale is as important as the outside sale.” Reps need confidence in what they’re selling.
- Bring “one piece of paper.” Avoid deck presentations.
“Media used to be a subset of advertising. Advertising is now a subset of media.”
Jennifer Hungerbuhler, who buys a LOT of advertising at Amplifi US agency, in the “Agencies Speak” session. Yes, new-tech competitors are The Shiny Object these days, but she’s wary of DVR, listeners bailing-out-of podcasts, etc. “I used to buy an ad in People magazine, and at least I knew it would be there, even if the reader chose to turn the page. Now with ad blocking, I don’t even know the message made it into the space.”
Hungerbuhler also had advice for monetizing podcasts at Tuesday’s RAIN Summit. If you missed it in yesterday’s issue, here are my notes: http://t.co/NoifDTK6Yr
Holland Cooke (www.HollandCooke.com) is a media consultant working at the intersection of Talk Radio and the Internet, and he covers industry conferences for TALKERS and RadioInfo.com. Follow his real-time Tweets from the NAB/RAB Radio Show in Atlanta @HollandCooke, and look for his notes here later this week.