Radio InSights

Winter 2008 Arbitron Winners: AC and Talk. Losers: Rock, NAC, and Sports

Each quarter Harker Research tabulates the Arbitron 12+ performances of all stations in the top 50 markets and produces a format report card. Unlike other format analyzes where larger market stations have a disproportionate impact on the results, we examine the performance of each station determining whether the station gained or lost share. We then tally the station count to determine whether more stations within a format gained or lost share. Using this method, we can more clearly assess the health of formats.

We categorize each station into one of 32 different formats and then analyze both individual formats as well as broader formats. For example, we track Hot AC separately from Mainstream and Soft AC in addition to the broader category of all AC stations. We also track both year to year performances in addition to book to book performances. While more commonly reported, book to book changes are not particularly useful in assessing the health of a format. Book to book wobbles tend to cancel each other out revealing no inherent trend. In contrast, year to year comparisons are more likely to indicate whether a format is growing or in decline.

This Winter, one of the biggest success stories was Hot AC. Comparing Winter 2008 to Winter 2007, nearly twice as many Hot AC stations gained share as lost share (60% to 33%). In contrast, Mainstream AC was essentially flat, with 47% gaining while 45% lost share. The challenge of making sense of book to book changes can best be illustrated by the two formats' performances in the Winter book compared to Fall 2007. Two thirds (68%) of Mainstream AC stations declined in the Winter book compared to the Fall book, while 84% of Hot AC stations gained.

One might suspect something ominous is going on with Mainstream AC until one realizes that a high proportion of Mainstream AC stations program Christmas music during the Fall book, and therefore have a Fall spike. All the gains of the Fall book are given back in the Winter, so a high proportion of Mainstream ACs drop in the Winter. A smaller proportion of Hot ACs program Christmas music, so the format tends to contract in the Fall and regain its losses in the Winter.

Most Rock formats struggled to make gains. By a two to one margin, more Active Rock stations lost than gained share (64% to 33%) while Classic Rock fared only slightly better as 50% lost while 37% gained. Country continued to erode. Only 39% of Country stations gained over their Winter 2007 numbers while 54% lost share. A number of high profile stations have dropped Smooth Jazz over the past few months and the Winter book results should heighten concerns over the health of the format. Stations that remain in the format did not fare well. Losers this book out-numbered winners by a two to one margin (57% to 29%).

It was a good book for spoken word. The contentious Presidential primary season may have fueled the gains with 55% of News stations and 50% of News-Talk stations gaining over their Winter 2007 numbers. In the talk category, Sports was a notable exception where only 30% of stations gained share while twice as many (59%) lost share.

Here's how the broad format categories stack up ranked by the percentage of stations that gained share over their Winter 2007 numbers:

Rhythmic 57%

Spanish    56%

Urban   53%

AC   51%

CHR    50%

Rock   41%

Country   39%

Radio's Death Greatly Exaggerated

The manner in which Inside Radio characterized the results of a new study regarding radio continued a tradition of greeting good news regarding radio with skepticism while gravely reporting any bad news. Monday, sonoro audio, a German audio equipment company released the results of a study of US consumers. Beneath a headline declaring, Radio Still Number One Media Source over MP3 Players, CDs, the company’s press release announced that according to the study, 57% of listening (audio entertainment as the survey puts it) is spent with radio of some sort, two-thirds of which goes to FM. That compares to 23% for MP3 players and 18% to CDs. Sonoro audio CEO Marcell Faller noted, "Even with the advent of MP3 players, consumers are still largely turning to radio for their music needs as it is easily accessible and free." You can read the press release here.

The story complete with upbeat headline was repeated by Yahoo Business, CNET, and other outlets. Yet Inside Radio’s headline was Survey claims radio holds the lead in a head-to-head iPod comparison. The story then begins, "Popularity of MP3 players and digital records hasn’t pushed listeners completely away from radio...."

So Inside Radio takes a positive story about radio and twists it in such a way that the study findings are reduced to claims, and radio’s overwhelming advantage over MP3 players is dismissed as some sort of hollow victory. Why is Inside Radio so skeptical of upbeat news?

Perhaps Inside Radio has been sipping from the new media punch bowl. Nearly a decade ago the new media told us that terrestrial radio was dead. Soon, they said, everyone would be listening to internet radio, obsoleting over-the-air radio. Then they told us that the iPod would kill radio. Even some Chicken Littles within our business declared that the absence of a tuner in the iPod would be our death.

Mark Twain’s comment that, "reports of my death are greatly exaggerated" comes to mind. Radio has been pummeled so long and so hard regarding the medium’s imminent demise at the hands of new media that many within radio accept it as a fact. Consequently, when contrary evidence surfaces, we greet it with skepticism.

No other audio medium comes close to terrestrial radio’s reach and impact. Not the iPod, not streaming, not internet radio, not satellite radio. That is true today and it will remain true in the future. So to radio’s Chicken Littles who continually shout that radio’s sky is falling: Get Over It!

Don't Shed a Tear for Wall Street

Inside Radio today lamented radio’s loss of Bear Stearns radio analyst Victor Miller. Inside Radio notes:

Miller’s departure comes as Wall Street firms have been shedding analysts assigned to covering radio. As Inside Radio reported in January, 24 analysts were assigned to radio a year ago compared to about half as many today as stock prices have plummeted and some of radio’s biggest companies are going private.

Radio & Records went even further writing:

Miller’s observations were respected and revered and played a pivotal role in the way institutional buyers looked at a broadcast property when making an investment. He also thanked broadcast executives and industry leaders who shared their knowledge and findings with him, let him grill them about their business and took his tough questions during seemingly endless quarterly teleconference calls that companies host for investors and analysts.

These stories bring to mind an old (and admittedly tasteless) joke that goes, "What do you call 10 dead lawyers at the bottom of the ocean? A good start." Yes, it is in poor taste, but the joke’s survival (and the web sites that perpetuate them) speaks to a universal mistrust of lawyers. And in some respects, what Wall Street analysts have done to radio is not unlike what some lawyers have done to the justice system.

While both Inside Radio and R&R lament the passing of radio's moment in Wall Street's limelight, The fact that Wall Street is abandoning radio says as much about Wall Street as it does radio. Wall Street introduced the notion of "shareholder value" into our lexicon. Suddenly listeners and advertisers didn’t matter as much. Shareholder value is a code word for the price of the company’s stock. To Wall Street what mattered most was that the stock price remained high, and since more than two dozen analysts wrote about radio groups every few months, the business became fixated on quarterly results.

If a group spent money in an effort to increase share and that led to a decline in quarterly profits (which it generally does over the short term), the analysts would write critical reports accusing the company of not showing enough concern about shareholder value.

Ultimately, radio became a hostage of Wall Street thinking. Radio abandoned any thought of investing in the product. The focus was on reducing costs, pricing for share,...and keeping the stock price up. Wall Street rewarded all this by then criticizing the business for not investing in the product. The very people who forced us to plan in three month increments accused the business of thinking too short term.

Noting that small market radio revenues were holding up better than revenues in larger markets, Jim Boyle, one of the few analysts that actually worked in radio, observed:

What we believe this strongly implies is that the unwieldy 'giant platforms' and near-sighted public groups that dominate the big markets are generally not a positive for the management-intensive, locally-centric industry.

Yet it was Wall Street that rewarded the mega-deals. Smaller groups like Cox were criticized and larger groups like Clear Channel and (then) Viacom were praised for their vision.

So pardon us if we don’t shed a tear for Wall Street’s abandonment of radio. Record low stock prices might be painful for the executives and shareholders of public radio groups, but perhaps radio needs a little invisibility on Wall Street so we can start paying attention to our listeners again.

PPM Ratings: What Can We Believe?

One of Arbitron's pitches regarding PPM was that switching to long term panels of PPM wearers would stabilize the numbers. We wouldn't see the dramatic swings from month to month. PPM would also enable us to look at more "granular" ratings. Monthlies would be more reliable, we could look at hour-by-hours with confidence, and we could even look at minute by minute ratings and make programming decisions based on what we found.

The graph below is the PPM share for 28 consecutive weeks of a single drive-time hour for the top rated station in its target demographic. The first week the station had about a 22 share, and by the end of the 28 weeks the station's share was down to a 9 share. More significantly, the station in week three achieved a 25 share only to plunge to a 7.5 share two weeks later. Imagine a station trying to make programming decisions on such swings.

Our look at stations in all three PPM markets shows a similar pattern.  PPM numbers are no more stable than diary based numbers when we start looking at the "granular" numbers that Arbitron says PPM can deliver. Yes, PPM is an improvement over the diary method as long as we look at long time periods and large demographic cells. But don't expect PPM to give us the kind of "granularity" we have been promised.

Another Radio 2020 Critic

We recently criticized the new Radio 2020 campaign calling it ill-conceived and doomed to fail. John Gorman in a RBR guest blog that appears here expresses similar concerns. The broadside is a little unfocused, but it expands on a couple of points that we mentioned only in passing.

Quoting Gorman:

I got a chuckle out of brand strategist Kelly O’Keefe telling the Clear Channel-owned Inside Radio that his group “…tested more than 30 logos and had a very strong positive response to (the one they are using).” He claimed that 74 percent of respondents in his focus group found the logo “energetic.” Energetic? When was the last time you hear someone under fifty use that word?

O’Keefe continues, “The next highest reaction words were “alive,” “bold” and “fresh.”

Who was he interviewing? Music of Your Life listeners? I’m over fifty. Well over fifty – and those words don’t speak to me. You got some 17 year old to say radio is “bold?” I’m supposed believe you, right?

It wasn’t a total loss. O’Keefe did have one direct hit in his research.

“When we pushed it too edgy, we lost the young audiences. They said that’s not what radio is.”
But before you think he was starting to get it, he added, “We need to take it one rung of the ladder at a time. You can’t just jump to the top or you lose consumers.”

Lose consumers? Kelly, my boy, you’re supposed to be trying to find them.

Gorman takes the opportunity to take a swipe at research, writing:

Think about it. If you’ve been in this business long enough, you’ve probably worked with a research company that asked you, “What are you hoping the research will tell you?” and wouldn’t you know it? That company's told you exactly what you wanted to hear.

I’ve dealt with the best and worst in research companies. There are those that tell you what you want to hear and those that tell you what you really need to know. I respect the latter, I abhor the former. You should, too.

We too suspect that whatever research was done to create this campaign was more to justify the decision than to reach it. Repositioning a product like radio requires sophisticated research that goes beyond holding up logos and asking for a show of hands. We suspect that O'Keefe's characterization of what people said is unfortunately pretty accurate. That's why this campaign can do more harm than good. It reinforces the negative impressions listeners have about radio. That's the last thing we should do.

Radio-the Interaction Leader

A recent article in Advertising Age talks about the new future of branding being in the hands of "interaction designers". It's a good article by David Armano that describes a new experience - an "ecosystem of experience" built on "microinteractions".

"Micro-interactions are the everyday exchanges that we have with a product, brand and service. Each one, in and of itself, seems insignificant. But combined they define how we feel about a product, brand or service at a gut emotional level."

But wait a minute - isn't this what good radio is all about??? So here we go again - the on-line guys are co-opting and repackaging the essence of what radio is all about - a sense of belonging, emotion, and friendship. The on-line guys want people to believe that they invented the concept, but they have applied some sexy terminology and taken it for their own.

Armano continues...

"microinteractions…combined they define how we feel about a product, brand or service at a gut emotional level. In the case of Google, each time it helps us find what we are looking for, view a map, send an e-mail or connect with a friend, it deposits a positive impression in our memory banks. Kevin Roberts expresses a similar sentiment in his book "Lovemarks":

"Lovemarks transcend brands. They deliver beyond your expectations of great performance. Like great brands, they sit on top of high levels of respect -- but there the similarities end.

Lovemarks reach your heart as well as your mind, creating an intimate, emotional connection that you just can't live without. Ever."

Great radio stations do just that - create a connection. So resist the urge to compete with iPods. Understand that it is the integration of music, personalities and information that create an emotional connection.If we do not lose sight of that - Radio will be the leader and teacher in brand 2.0 in an interactive world!

Radio 2020: Ill-conceived and doomed to fail

The National Association of Broadcasters rolled out Radio 2020 at the Las Vegas NAB Convention. While the first reaction might be to rally around any effort to reignite radio, this campaign is so misguided and ill-conceived that it might actually do more harm than good. What radio does not need during these tough times is a national effort to reinforce the negative stereotypes of radio that put us in this hole in the first place. So it is in radio’s best interest to fully vet the campaign to make sure it puts radio in the most positive light possible while not creating any unintended negative messages.

In the following paragraphs we will quote from the NAB website where it explains the campaign (shown in bold) and explain the potential problems.

Radio 2020: Reinvigorating the Great Medium of Radio

In the fall of 2007, the National Association of Broadcasters, Radio Advertising Bureau and HD Digital Radio Alliance embarked on an unprecedented initiative that we call Radio 2020 – a nod to radio's centennial year and our clear vision for the future. This set the wheels in motion to remind radio insiders, the media industry and consumers of radio's value.

So the name is “a nod” to 1920. Radio will be 100 years old in 2020. It is hard to imagine that many people see its 100 year history as a positive attribute. Does longevity breed loyalty? Walkman versus iPod, VHS versus DVD, incandescent versus compact fluorescent, broadband versus dial-up. Would you rather be the old or new product? Do we really want to point out that radio is 100 years old? And if the 1920 connection is lost, what is so significant about 2020? Do listeners need to wait until then before we get our act together? We’re not off to a strong start when the name of the campaign is so obtuse.

Based on extensive consumer research conducted last year, we know that radio has a great story to tell. It connects, informs and inspires an estimated 235 million listeners each week.

Our research shows that 92 percent of Americans believe radio is important in their daily lives. But while it is valued, radio is also taken for granted. Because it is so pervasive, radio is sometimes overlooked, just like water or electricity.

Yes, we may inform and inspire 235 million people each week, and yes 92% of Americans may believe that radio is important in their daily lives, but listeners are very selfish. As far as they are concerned, we succeed if we inform and inspire a single listener–them. The pervasiveness of radio is totally irrelevant to a listener.

Over the past three decades, Harker Research has talked with tens of thousands of listeners, and we’ve never heard listeners liken radio to water or electricity. The pervasiveness and availability of radio creates the real positive attribute of radio-choice. They can listen to station A or B or C. The attempt to compare radio to water or electricity reveals more about the creators of the campaign than listeners. The research behind the campaign was poorly designed, focusing on radio’s breadth and reach when it should have focused on radio’s intimacy and connectedness. To compund the problem, the research results were then misread and misinterpreted.

This is a fatal problem for the campaign. “Radio” is not some monolithic product that people love. That passion is spread across over 13,000 diverse products. That’s why people say, “my radio  station.”

Based on what we heard from our consumers, radio's intrinsic value lies in the fact that it's accessible. It's a medium where everyone can freely and easily connect to a diverse world of entertainment and information, anywhere, anytime and everywhere.

Again, this is a misreading of the strength of radio. There might be a few people who fell in love with radio, but the majority do not love radio in a generic sort of way. People value what their radio stations’ offer, in some cases passionately, but people don’t value radio outside their chosen few stations.

To provide "one voice for radio" we launched a comprehensive, multiplatform campaign with a wide spectrum of promotional and educational initiatives designed to engage virtually the entire ecosystem that radio touches.

This campaign, called Radio Heard Here, will include everything from radio spots to Web banners to outdoor advertising and promotional merchandise to reach every single person in America with the message that radio is heard everywhere.

We've unveiled a new Web site – www.radioheardhere.com – that we will populate with resources for you. It has an online newsroom, radio facts and viral videos that provide a "behind the scenes look" at the work going on at your stations daily.

We're going to repeat these messages over and over again - until we're sure every man, woman and child in this great country knows the value of radio.

If there is any doubt that the campaign is misguided, a look at the web site will erase it. The Radio Heard Here logo has a dated “retro” look. Retro can communicate something is cool and contemporary if the look invokes the past without looking like it came from the past. The logo fails on this measure. It just looks old. And the accompanying pictures just reinforce the dated feeling of the campaign. A boom box with dual cassette players is not retro–its old.

There is a strong self-consciousness to the campaign. It is reminiscent of the uncool kid in school that worked so hard to look cool that he looked even more uncool. To be honest, this is exactly where radio is today. We so desperately want to be cool that our self-conscious efforts to look cool just come off as trying to be something we are not.

Kelly O’Keefe, the creator of the campaign has been quoted saying that the retro look tested well in the research. This should be a major alarm bell for the campaign. We know we have an image problem among young demos (the future of radio according to O’Keefe), but we let them pick the imagery that invokes radio to them. Of course they pick imagery from the 1980s and before because they think we are from the 1980s.

A successful repositioning campaign takes a perceived positive attribute and builds on it. A repositioning campaign that takes a negative attribute and tries to turn it into a positive is misguided and doomed to fail. The whole campaign should be scrapped. It will do more harm than good.

   

UK Chooses On-Line Diary over PPM

Aside from a small page 2 mention in R&R Today, there's been little notice of RAJAR's abandonment of PPM. RAJAR, Radio Joint Audience Research, is the UK's radio ratings system. You may recall that the very first test of PPM was in Great Britain, and British broadcasters have done more systematic testing of electronic measurement than any other organization. In addition to PPM they've tested the Eurisko Media Monitor, the IPSOS audiometer, and others.

Explaining their decision, RAJAR writes:

The pilot has delivered a wealth of data but it has continued to high-light serious concerns with respondent compliance, particularly at breakfast time. In addition, the pilot has thrown up a range of concerns involving sample sizes, panel composition and the practicalities of operating a panel for the entire UK radio market.

Instead of electronic measurement, RAJAR has decided to pursue an on-line diary methodology. The entire RAJAR press release is interesting reading. Coverage of PPM in the US has been essentially press release journalism. Neither the trade publications nor organizations that ostensibly represent radio stations like NAB or RAB have taken any interest in an objective assessment of PPM. The RAJAR press release is a dispassionate and objective review of where radio measurement stands today. The Press Release can be found here.