Radio InSights

Media Buyer's (Secret) Growing Interest in Radio

Did you realize that interest in radio is growing among media buyers?

Did you realize that radio ties television in growing interest?

Probably not. It’s apparently a secret.

A new survey of media buyers found that 25% of agency buyers are more focused on radio than they were last year, a 31% increase.

Not only did interest in radio increase, it equaled the increase in spot TV!

Given the persistence of the “Radio is Dead” meme, you’d think it ought to be big news. But it’s not.

The news was buried in a single sentence in the last paragraph of a 1000 word press release that focused almost entirely on the battle between television and digital.

The study, ostensibly a comprehensive look at agency attitudes across media, barely touched on radio. Check out the press release and a MediaPost story that completely ignored radio.

Perhaps radio got buried because the study was done by Strata, a division of Comcast that sells software to buyers. Comcast has plenty of horses in the TV versus digital race, but nary a one in radio.

But perhaps radio got buried because the business is doing a lousy job selling the value of radio.

Let’s be honest.

Think about the last time you saw another mainstream media mention radio. Rush Limbaugh calls a college student a slut, and suddenly radio becomes front page news.

Perhaps not the best PR for the medium, but at least people noticed radio again.

And within a week, it was over.

People went back to talking about singing cats on YouTube, Facebook’s IPO, and porn on Pinterest.

If buyers are thinking more about radio today, it is despite radio’s PR efforts, not because of them.

This year is shaping up to be a lack-luster year for radio if the first quarter is any indication.

Is it any wonder?

Streaming Out to Crush Radio?

A recent Adweek cover with its smashed radio and bent antenna has all the earmarks of another hatchet job on radio.

The screaming title Is Streaming Music Out to Crush Radio Advertising? appears just one more example of the “radio is dead” meme that dogs broadcast radio.

So it is particularly ironic that the story by Erin Griffith is one of the more balanced looks at the battle between broadcast radio and its digital competitors. While most writers gush unfettered excitement over Internet radio’s future, Griffith captures the painful reality:

(Streaming services) pay a hefty rate each time a song is played. The services will never outgrow their costs, an unfortunate arrangement commentators have dubbed a "suicide pact."

Online radio's very survival depends on stealing ad dollars from its traditional counterpart, and it needs to do it fast.

Radio Insights made this point last August pointing out that the clock was ticking for the dozens of streaming services that want a piece of radio. In Is it Time for an Internet Radio Shake-Out? we noted:

Venture capitalists are still pouring money into music services and Internet radio providers. Pandora's successful IPO seems to have fueled even greater interest in the space.

VC money doesn't continue indefinitely, however. At some point, investors want to see a return on their investment, generally through an IPO. And there aren't any more Internet music IPOs in the pipeline.

That means these services are going to have to become profitable soon. That may be difficult.

We suggested that Internet radio was nearing a peak and that consolidation was inevitable, so it shouldn’t come as a surprise that cnet reports that MOG is being shopped.

Digital Music News notes:

MOG has always been a huge underachiever in the subscription market, though we've heard that the MOG Music Network (MMN) is actually quite lucrative. Either way, it looks like all or part of MOG is now being plumped for sale.

The website points out that the company has received $33 million in funding and has yet to make a profit.

After pumping hundreds of millions of dollars into streaming services, venture capitalists may finally realize that taking a piece of broadcast radio’s $17 billion (let alone becoming profitable) may be more difficult than they thought.

Robert De Niro, Deer Hunter, The Key to PPM Success.

George Orwell declared History is written by the winners. He might as well have been talking about radio.

When’s the last time somebody interviewed the program director of a station that just tanked in the ratings, asking about the keys to the station’s performance?

Radio isn’t interested in losers, only winners, so the stations that get all the press are the ones that are winning.

With over 2000 radio stations competing in PPM markets, each month hundreds of stations will have sizable gains and a handful will have spectacular gains.

And every month, the winners will get all the attention and speculation about why the stations did so well.

The problem is that nobody can really know why a station has a great month. Maybe it’s something the station did. Maybe it’s something the station didn’t do. Maybe it was something some other station did.

In reality, most of the gains from month to month are just by chance, but human nature and radio being what they are, the idea that most rating gains happen purely by chance is too unsettling.

Despite evidence that rating changes from month to month are purely random, radio pays close attention to the explanations of program directors, general managers and consultants in the belief that somebody must know the secret.

Let’s say a station does something like (say) commercial-free hours, has a good month and it makes the news. The following month other stations try commercial-free hours, and some of those stations also have a good month.

Seeing the number of stations doing commercial-free hours grow, the next month other stations try the same thing, and some of them have a good month.

Does that prove that commercial-free hours are the key to winning in PPM?

Not unless the number of commercial-free winners far out-number the commercial-free stations that were flat or went down.

It is called survivorship bias. We tend to only notice the winners. There may be just as many losers as there are winners doing the same thing, but we ignore the losers and pay attention to the winners.

Think about the Russian roulette scene in Deer Hunter. Robert De Niro’s character spins the gun cylinder, pulls the trigger, and lives. Does that mean De Niro has a special gift?

What if a hundred people decide to do the same thing?

One hundred people spin the cylinder, pull the trigger, and only ten people shoot themselves. That means 90 people are winners. They will be heralded and interviewed about the secret formula for winning.

The 90 survivors spin the cylinder again, 9 shoot themselves, but that still leaves 81 winners prepared to offer their key to staying alive.

You can see where this is going.

Most people win at Russian roulette, but who wins is determined purely by chance. There isn’t a secret formula for winning (except not playing).

Every month when the Arb numbers roll there will be plenty of winners. That means there will be plenty of stations that seem to have the winning formula, even if most won just by chance.

Last December even Arbitron got in on the act by presenting a piece called The Ratings Characteristics of PPM Top Performers (pdf).

The presentation was on pretty shaky methodological ground, but that didn’t dampen the excitement in learning PPM’s secrets.

One trade publication flatly declared:

Arbitron found hardly any difference in the length of listening durations among average stations and top performers, but top performers had significantly more daily listening occasions. It's all about the number of listening occasions.

This is how PPM myths are born.

Let’s look at what Arbitron did. They took the top 3 stations in 33 markets, averaged their share, cume, TSL, and occasions, and then compared them to the average station. You can read their conclusions above.

The table clearly shows that the top 3 stations had much higher cume audiences than the average station, slightly more TSL, but only one more occasion.

 

So the biggest difference between the top stations and the average station was cume. If you want to be a top three station you need nearly four times the audience as the average station.

Not an earth-shattering observation, but a useful reminder.

TSL differences were considerably smaller. Top three stations only have 22% more TSL. Not a huge difference, particularly when the cume difference is 247%!

Daily occasions differ by one single occasion. That’s it. One occasion.

On top of that, the top station in each market has no more occasions than the average of the top three. Despite Arbitron's conclusion, the evidence suggests a rather weak relationship between occasions and winning.

Yet we're told that it's all about occasions.

Arbitron released only 18-34 results for some reason. The presentation alluded to a 25-54 analysis, but those results were not shown.

In our next post we’ll continue discussing the issue of PPM winning secrets and show a Harker Research analysis that raises more questions about Arbitron’s Top Performer claims.

In the meantime, be very wary of people claiming to know the secrets of PPM....and stay away from guns.

Sun Rotates 'Round Earth! Pandora Devours Broadcast!

Anyone who has watched the sun rise in the east knows that the sun rotates around the earth. No need for scientific experiments or proof. What can be more conclusive than one’s own observation?

That was the prevailing thought when Galileo challenged the views of most 16th century intellectuals and asserted that the earth circled the sun. For questioning what everyone took for granted, Galileo was persecuted, tortured, and forced to recant his heretical ideas.

Judging the impact of Pandora on broadcast radio is another example where people don’t seem concerned about facts or evidential proof. They just know in their heart that Pandora will devour broadcast.

Radio’s Galileo is Mary Beth Garber, president of the Southern California Broadcasters Association (SCBA). While most broadcast leaders seem uncomfortable challenging the self-serving assertions of new-media pundits, Ms. Garber has been a lone voice defending broadcast radio, first against satellite radio, and now against Internet radio.

In 2005 at a time when The New York Times was gushing on about satellite radio’s threat to broadcast, Ms. Garber rose up to question all the happy-talk about satellite radio. The Times predicted satellite would hurt broadcast badly. Ms. Garber was brave enough to disagree publically.

The Times (along with most pundits) predicted up to 45 million subscribers by 2010. The actual number turned out to be less than half that.

At the time she took a lot of heat for questioning the threat of satellite (‘the fastest-growing technologies ever”!), but it turned out she was right and The New York Times was wrong.

Now the headlines are about Pandora. A Google news search finds nearly 600 stories on Pandora’s IPO.

Nearly all of them tell the same story about the near death of the company, the phoenix-like return, and how Pandora has severely hurt broadcast radio. Take the 2005 NYT satellite story, replace the word satellite with Pandora, and it could pass as a Pandora story.

That’s perhaps why Ms. Garber once again stood alone to defend radio when Radio Ink decided to weigh in on the Pandora story. Her reward was a dismissive ad hominem attack that completely ignored her points.

If anything, Ms Garber was too kind to Radio Ink. The author showed no evidence of uncertainty or ambivalence. He appeared to have drunk deeply from the Pandora punch bowl essentially declaring Pandora the victor over radio.

Cutting and pasting 400 words from the Pandora S-1 (no sense writing anything original when it’s all there in the document), the writer laid out a withering attack on broadcast radio.

Many of the 600 IPO stories saw through the fluff and puffery of the S-1, and recognized the battle is just beginning. Not so Radio Ink. No other source led the Pandora cheerleading like Radio Ink did.

In the end, the story simply exposed the extent of Radio Ink’s naivete. It reads like a Justin Bieber fan club letter, showing no critical thinking, or for that matter much thinking at all.

For every consolidation horror story, there’s a broadcaster doing good radio. For every complaint about commercial radio’s vacuousness, there’s a radio station fan who wakes up every day to radio.

Sure there’s bad radio out there. There always has been. But there’s also a lot of good radio being done.

Maybe Radio Ink could spend a little less time leading cheers for the other team and more time better understanding and highlighting the good radio that keeps broadcasting on top.

The Pandora Circle Jerk

by R. Harker

The buzz surrounding Pandora will someday become a case study on how venture capitalists make millions of dollars by recruiting self-serving pundits and exploiting the naivete of deluded digital true-believers.

The scam begins with a founder that seems to have no other motive than to make a better world. In that regard, Tim Westergren seems out of central casting. Secure a number of interviews where the earnest founder can calmly explain why Pandora is the future of radio. See some examples here. Then nurture the Pandora is the future of radio meme in a steady stream of upbeat announcements.

That’s where it starts, but success depends on today’s brain-dead viral digital reporting.

Original critical reporting about anything digital is essentially dead. Most who write about new-media can’t tell the difference between fantasy and fact, reality and dreams. They accept press release spin without question.

That’s bad enough, but there is often self-serving ulterior motives behind the upbeat reporting about digital media. Consultants and digital vendors have a vested interest in helping maintain a high level of buzz. So they help spread the news.

The way this works is that a blog or web site rewrites an upbeat press release into a story. Then other blogs and web sites link to the original story. The story virally spreads while the self-serving press release transmogrifies into something resembling a real news story.

The latest example of this is an insignificant story about Pandora signing a deal with AdReady to sell space for them. As we write this, Google lists over 3,000 links to the story.

The story appeared in eWEEK.com, a Ziff Davis website that appears devoted to (poorly) rewriting press releases for the sole reason of selling display ads. The article inarticularly gushed:

Hoping to build on its strategy of capitalizing on revenue growth opportunities by expanding into new markets, Pandora, the personalized Internet radio service, announced a new initiative aimed at small and midsize businesses offering them the advertising tools larger corporations currently have access to.

Kurt Hanson’s Radio and Internet Newsletter then picked up the story in not one, but two stories. (Note that Pandora is one of RAIN’s platinum sponsors, although that certainly wouldn’t influence the newsletter’s story selection.)

The newsletter writes:

Yesterday came news that the invaders may now be scaling the castle walls. Internet radio's biggest pureplay, Pandora, announced its partnership with AdReady to target small- and medium-sized local businesses - that is, traditional radio's local customers, its bread and butter. (It's display ads only for now, but the technology for geo-targeted local audio ads is there, no doubt.)

Gerson Lehrman Group advisor Alan Albarran fears that radio has lost of (sic) a generation of listeners, many of whom migrated to more "forward" media like personalizable online radio. And with them, radio's lost selling opportunities. "The demographic. 20-24. no longer uses radio. But they use Pandora, and they use it a lot," he writes. "Once these businesses realize the awareness of Pandora and where the younger market is, they should jump on this opportunity."

So the newsletter adds weight to the story by quoting one Dr. Alan Albarran (with link). Who is Dr. Albarran? A PhD trolling for consulting work. He’s sign on with the Gerson Lehrman Group as a consultant, perhaps to supplement his university pay.

A professor in the Department of Radio, Television, and Film at the University of North Texas (gasp), he writes:

I'm a college professor in the media area.  I'm teaching a management course this term, and recently I asked my class how many had heard of HD radio.  One student raised their hand out of 24.  When I asked how many had heard of Pandora, all but two students raised their hand.  The demographic is roughly 20-24.  This group no longer uses radio unless they are in a car with no alternatives.  But they use Pandora, and they use it a lot.

If this is the level of intellectual discourse in college media departments, we now know why so many college graduates are stupid. They are being taught by clueless professors.

Drawing conclusions about the health of radio and the future of Pandora based on a show of hands of 24 media students allows Albarran to appear a media expert to be cited by RAIN to reinforce the notion that Pandora is scaling radio’s castle walls.

Pandora may be the future of radio. It may just be a curious footnote in the future of radio, but either way you have to give them credit. While medieval alchemists might not have turned lead into gold, Pandora has found a way to turn BS into gold.

A Timely Dose of Reality

Hats off to Inside Radio. After a couple of years of muddled mis-directed press release journalism, it seems to have rediscovered its mojo. Lately it has been producing some insightful pieces on issues that really impact radio.

Tuesday’s entire front page was devoted to the findings of an observational study funded by Nielsen and conducted by Ball State University’s Center for Research Excellence. It demonstrated the continuing relevance and importance of traditional radio to music listeners.

We first reported on the study back in June here, and since have mentioned a few implications from time to time, but the audio aspects of the study hadn’t been fully crunched yet. You can now read a summary of the audio report here. We’ll have more to say about the radio findings soon.

The study is a valuable dose of reality that disproves a lot of the new-media propaganda. The other trades covered the story, but not with the thoroughness of Inside Radio. Well done.

The study should be required reading for pontificating new-media pundits and radio’s doubters.

Professional Pundits & Radio's Paralyzing Stupor

Want some easy ink? Declare Radio Dead. No matter how lame and misinformed one’s thoughts are on the subject, they will show up in print. And radio people will read and believe them.

Here’s what professional pundit Mitch (I have a new book) Joel recently said about radio:

I think a lot of people are trying to figure out how to save radio, but I’m not so sure how savable radio is, to be perfectly honest. I do see many opportunities for people within radio to start thinking about transitioning to the more digital-based channels because I think there are many opportunities there.

He added:

I just don’t see young people getting into the traditional form of radio. They are very, very ear-buds-in-ears, highly mobile, pause, forward, rewind, save it for later. “Radio” as a format just does not click, I think, with this next generation, and it’s going to have to reinvigorate itself because there are only so many 60+ year olds who don’t mind making time to listen to some radio.

To put this gibberish in context, we have to first figure out who Mitch (I have a new book) Joel is. A Google search reveals that he is a Quebecer, president of Twist Image, a Digital Marketing agency, and president and founding partner of Distort Entertainment, a Canadian heavy-metal label. He’s a journalist and a publicist. He tells us he is revered in Canada as a speaker on new media. Did I mention he has a new book?

So he’s a new-media hustler. What we call a professional pundit. No experience required.

It isn’t clear what qualifications he has to pass judgment on radio, let alone declare it un-savable. He does admit to listening to some radio, albeit public radio, praising the Canadian Broadcasting Corporation and National Public Radio.

So to summarize, he’s a head-banging CBC listening new-media shill. What is the chance he is going to be upbeat about commercial radio or its future? Maybe zero.

The fact that an uninformed out of touch narcissistic hustler would have such a low regard for radio is understandable. The fact that the views of a person like this could possibly be taken seriously is what concerns us.

If reaction to similar tripe is any indication, radio people will earnestly read Mr. Joel’s pithy comments. They will look beyond his assertion that no one under the age of 60 listens to radio and that modern people aren’t into the “traditional form” of radio. They will search to find the wisdom he must obviously have. He wrote a book, didn’t he?

This business has got to get beyond this consuming sense of inferiority to new media. Radio isn’t going to be helped by new-media professional pundits. They don’t get commercial radio. They never have.They can’t believe that people listen to Sean Hannity or the same 200 songs over and over. They can’t believe that 90% of Americans still listen to radio. They can’t believe that Americans spend any time with advertising supported commercial radio, let alone 22 hours a week .

Professional pundits live in an imaginary world where everyone owns an iPhone, watches Hulu, would never listen to commercial radio, and instead listens to podcasts and Pandora. The only pundits that have any chance of helping radio are the ones that understand that the new-media world is a fantasy. The real world listens to commercial radio, and likes it. When we find a pundit that understands this, he or she will be worth listening to.

Mr. Joel’s comments appeared in a forum for radio people not once, but twice. His insights first appeared in Mark Ramsey’s blog, a frequent safe-house for professional pundits. Not only can you read a summary of Mr. Joel’s thoughts there, you can listen to them for full effect. Then Al Peterson’s NTS MediaOneline picked up the story.

Both sources offered the rambling self-serving drivel without critique or criticism. We suspect that our post will be the only negative critique it will elicit. We may even be taken to task for our narrow-mindedness criticizing Mr. Joel’s sweeping indictment. That’s where radio is right now.

Down deep, a great many people within radio believe Mr. Joel. They’ve lost faith in radio and expect it to just sputter out at some point. In the meantime they collect a paycheck.

Until radio shows the will to defend itself against these attacks, until radio sees through the transparent carpetbagging pundits, and until radio gets out of this stupor of a paralyzing sense of inadequacy, we can expect a parade of book peddling pundits to keep telling us we suck, and radio people thanking them for the advice.