Borrell Presentation at Virginia Association of Broadcasters

I attended a presentation made by Gordon Borrell of Borrell Associates (http://www.borrellassociates.com/) at the Virginia Association of Broadcasters convention this weekend. The foundation for Borrell's research is "following the money;" they determine how much local advertisers actually spend in local interactive media.





According to Borrell, the local interactive market is $12.7 billion and showing explosive growth. The market is shared as follows:



Pureplay - 47.6%


Newspapers - 26.4%


TV - 8.6%


Radio - 2.2%



Display ads are not fairing particularly well, peaking last year at $6.5 billion. The growth categories include email, search (directories), and video.



Borrell stated his premise that the Internet is "more a commerce medium than a news medium." He also is of the opinion that "Yellow Pages and direct mail are in free-fall."



Legacy media companies are growing at 19.2%, while the pureplays are growing at only 1.9%. Examples of 2008 online revenue growth rates for local media companies include:



Nexstar Broadcasting - 100.0%


LIN TV - 61.0%


Gray Television - 24.8%


Belo Corp. (TV) - 23.0%


Gannett (TV) - 13.0%


Media General Interactive - 7.7%



Radio broadcasters generated 2.4% of their 2008 gross revenue from local interactive (though Emmis Broadcasting did 5.1%, clearly ahead of the curve). TV broadcasters did 3.4% of their revenue from interactive.



In markets 1 - 20, TV did an average of $1,365,505, while markets 101 - 210 averaged $266,663.



Using Hampton Roads as a sample market, internet usage in the past month broke out as follows:

• Sent/received email - 60.5%


• Got weather reports/information - 32.7%


• Got news - 28.4%


• Paid bills - 27.5%


• Downloaded music/listened to audio clips - 17.7%


• Made travel reservations - 17.1%


• Got Financial information/services - 16.6%


• Looked up movie listings - 16.5%


• Used Internet yellow pages - 16.2%


• Used Instant Messageing - 15.9%

Borrell stated that the average interactive sales rep bills $250,000; more sales reps = more revenue.

It was an interesting presentation, providing a good glimpse into the bright future for local interactive sales if the broadcasters will jump on the bandwagon. Thanks to Gordon Borrell for providing the information, and the Virginia Association of Broadcasters for the forum.

George

"If it was up to me, I would . . ."

My blog post, "Less is NOT More . . . It is SIMPLE," drew some comments on LinkedIn's Radio Ink group. Michael Walters at Radio Ink asked me to respond to, "If it was up to me, I would..."

That may have been a very polite way of asking, "OK, if you're so smart, how would you really put your ideas to work in the trenches of broadcasting?" Fair question. Here is how I answered:

If it was up to me, I would WIN THE LOTTO!

But more to the point . . .

• Hire and train more salespeople.
• Hire salespeople to just sell the "digital products" (websites, streams, email, search, etc.) .
• Spend more money on researching what our consumers really want to hear (and see!).
• Be "live & local" 24/7.
• Pay for real talent.
• Promote, promote, and promote some more.
• Use every social marketing technique out there (and a few not yet out there).
• Pay my people well and offer benefits comparable to Google's (including tuition reimbursement).
• Reward risk-taking.
• Throw away the Policies and Procedures manual.
• Have fun at the office (and encourage use of Facebook, Twitter, etc. on company time).
• Have non-station branded web products.
• Have the best local news, public affairs, and community involvement in town.
• Have a radio chip in the iPhone (we can dream, can't we?); Actually, I think that there is a strong homeland security argument for it. How did your cell phone work in the last hurricane? How did the Internet work when MJ died? What if some kook had detonated a nuclear bomb? We need radio on mobile devices.
• Get the kids involved in the business again.

Utopian? Yes (but you did ask). We need to start thinking and doing. Soon.

George

www.MediaServicesGroup.com

www.linkedin.com/in/georgerreed

Less is NOT More . . . It is SIMPLE

It is time for broadcasters to re-think the “norms” under which we have been operating. Our business is being trampled by herds of sacred cows. What we have been doing is no longer working (and not likely to work in the future).

Let’s start with this: “Less is NOT More!” The solution is SIMPLE.

Salespeople. “Cost Accounting 101” teaches that you keep adding salespeople (technically, sales costs) until the marginal revenue (the amount of additional sales coming in) equals the marginal expense (the expense going out). In other words, you do not arbitrarily fire one third of your local sales departments and expect your local sales to increase. Won’t happen. Didn’t happen. Less is NOT More. The old saying about the ideal number of salespeople for your radio station is true: “One more than I have!”

Investment. Less investment in your product(s) does not yield a higher return. “Let’s cut out Research, Sales Training, Live and Local Talent, and Employee Benefits . . . and by the way, let’s run our local news station with no local newspeople.” Lower costs? Yes. Lower revenue? Yes. Less is NOT More.

Marketing and Promotion. When is the last time you saw major ad spend for a radio station on TV? Billboards? We have quit promoting and wonder why we’re losing relevancy. What about good, old-fashioned “on the street” promotions? Do you see many station vans around town? Do you see your own? Or have you caved in to high gas prices? And what about your investment in digital offerings and social marketing products and people? Can we really expect to compete in a digital world if we’re not investing for the future? Less is NOT More.

Pride. Does everyone in your shop feel good about your station(s) and your company? Are you proud of your on-air product and your stream?

Leadership. Are you leading or are you managing? Will your troops storm the beach with you? How much coaching is going on? Or has the HR department’s Policies and Procedures manual become the book of choice? Randy Michaels got this right years ago when rumor has it that his manual simply stated something to the effect of, “Work hard, compete ruthlessly, play hard, and stay legal.”

Enthusiasm. This is a natural offshoot of Leadership. You won’t have one without the other. We’re in the RADIO business. It should be (and once was) a hotbed of creativity and talent. Is it any wonder why the kids don’t want to work for us anymore? The “buzz” is missing. You know it when you spend more of your time making forecasts than sales calls.

Less is NOT More. Should we really be that surprised that revenue has been flat to down for going on nine years? This is not about “How we did it back in the day.” It is about “How will we be relevant five, ten years from now?” Less is NOT More.

Those are my thoughts. What are yours?

George

Mark Ramsey: Learn to be like Google with these three rules

http://www.hear2.com/2009/06/learn-to-be-like-google-with-these-three-rules.html

10 Things All Businesses Should Do to Market More Effectively on Facebook

Every broadcaster should read this: http://ow.ly/fCSn

New Tools on the Media Services Group Website

We recently added some useful features to the Media Services Group website. On the Links page (http://www.mediaservicesgroup.com/index.cfm?pg=links), you will now find links to a comprehensive group of broadcasting companies.

But perhaps even more helpful information can be found on the News & Info page (http://www.mediaservicesgroup.com/index.cfm?pg=newsinfo). We have assembled there a cross-section of RSS feeds from industry trade publications and informative blogs. You might find it useful for a quick industry briefing first thing each morning.

If you have any other ideas for improvements, please let me know: George@MediaServicesGroup.com or by your comments on this blog.

George

http://www.mediaservicesgroup.com/

Eric Rhoads: Is the RAB The Next To Fall

Eric's thoughtful analysis of the RAB's role in the industry:

http://ericrhoads.blogs.com/ink_tank/

Clear Channel lenders threaten refinancing plan ("Financial Times")

http://www.ft.com/cms/s/0/af2439c4-5076-11de-9530-00144feabdc0.html?dlbk&nclick_check=1

What makes local radio work: An interview with former Q-94 GM Phil Goldman (RBR.com)

http://www.rbr.com/features/interviews/13517.html

Jerry Del Colliano: If I Ran Clear Channel

http://insidemusicmedia.blogspot.com/2009/05/if-i-ran-clear-channel.html

Why Larry Wilson Matters

http://ericrhoads.blogs.com/ink_tank/

Can Media Companies Survive the Stress Test?

http://seekingalpha.com/article/137061-can-media-companies-survive-the-stress-test?source=kizur

Larry Wilson is back!

http://www.oregonlive.com/business/index.ssf/2009/05/paul_allen_sells_his_two_portl.html

Radio Tunes Out Google in Rare Miss for Web Titan

http://online.wsj.com/article/SB124172645603997429.html

The Newspaper & Radio Bailout.

http://ericrhoads.blogs.com/ink_tank/2009/05/the-newspaper-radio-bailout.html#comments

BIA Finds Broadcasters Showing Progress in Transition to Internet Revenue Development

http://www.bia.com/pr090508-onlinerevenues.asp

Signs of Thaw in Small-Business Credit?

http://blog.kelseygroup.com/index.php/2009/05/05/signs-of-thaw-in-small-business-credit/

Headlines from this morning's "Radio Ink" email; do we see a pattern here?

CBS Radio Revenues Drop Double Digits in Q1 (-29%) http://www.radioink.com/Article.asp?id=1311682&spid=30800

Entercom Revenues Fall Sharply in Q1 (-21%) http://www.radioink.com/Article.asp?id=1311283&spid=30800

Salem Broadcast Revenues Down in Q1 (-12.3%) http://www.radioink.com/Article.asp?id=1311789&spid=30800#Scene_1

Saga Reports Q1 Revenue Results (-17.2%) http://www.radioink.com/Article.asp?id=1311568&spid=30800#Scene_1

Here Lies NAB's David Rehr: RIP (Radio in Peril)

http://ericrhoads.blogs.com/ink_tank/

U.S. Retailers See Signs of Easing in Sales Slowdown

http://www.nytimes.com/2009/05/08/business/economy/08shop.html?_r=1&src=twt&twt=nytimes

FCC: Still Deciding on Newspaper/Broadcaster Crossownership Rules

http://www.broadcastingcable.com/article/231602-FCC_Still_Deciding_On_Newspaper_Broadcast_Crossownership_Rules.php?nid=2228&source=title&rid=5335256

How the Next Kindle Could Save the Newspaper Business

http://www.wired.com/epicenter/2009/05/how-the-next-kindle-actually-could-save-the-newspaper-business/

Radio: The Original Social Medium (and wireless before wireless was cool)

There was a time, not long ago, when radio was “cool.” It was creative and fun, and run by people who valued those traits above all. Even better, it was a great, high margin business.

I’m not talking about the 1940’s; I’m talking about the 60’s, 70’s and 80’s. This isn’t another “yearning for the good old days” piece. Instead, this is about radio’s future. But let’s look (or listen) backward first.

Radio was Facebook and Twitter before there was an Internet. It connected. It was one-on-one between the DJ and his/her listener. It set the tone for a community’s entertainment and informed it of the day’s news. It introduced new music. It was Facebook. It was fun and exciting. The DJ was “my DJ.”

But radio lost its focus:

“Just play the hits . . . do what’s safe.”

“No one wants local news anymore; besides, it is too expensive.”

“Let’s voice track the shift and save a few bucks; no one will notice.”

“Flying the morning show to the movie premier (or awards show, or NASCAR race, or fill-in-the-blank) is too expensive.”

And if that weren’t enough, we ran too many spots. Way too many spots.

Little by little, we chipped away at the cherished, intimate connection with our listener. And then it was gone. We became jukeboxes. Satellite radio won a PR war that radio didn’t even know it was fighting, repositioning the entire radio medium as “old” and “over.”

My own teenage daughters prefer their iPods; I bet that yours do too. Radio is boring.

So if my premise that we truly are (or were) the ultimate social medium is correct, how do we regain our footing? I’ll leave the specifics to the industry’s creative types, but here are a few starting thoughts:

• Bring back the stars. Find and hire talent; nurture them.
• Take some chances. Try something. If it doesn’t work, try something else.
• Break some rules. If a listener just wants more hits, she’ll get an iPod.
• Use the social networks to inform the tribe that you have something new.
• Get radio on all appliances. Have you seen the selection of radios at Target lately? Compare to the iPhone.
• Get the kids involved again. Listeners and staffers. Are the “kids” on your air staff all in their 30’s? Newsflash: they’re not kids!

Twenty years ago, every radio station broker knew ten GM’s working to own their own station. Today, those same GM’s simply want to make it to retirement (if they haven’t already been fired). There is no “bench,” no farm team. We are living a brain drain, or more accurately, a leadership and creativity drain. It is time to reconnect with our listener, with our tribe.

“What’s hard now is breaking the rules. What’s hard is finding the faith to become a heretic, to seek out an innovation and then, in the face of huge amounts of resistance, to lead a team and to push the innovation out the door into the world.”

Tribes, Seth Godin, 2008. http://www.amazon.com/Tribes-We-Need-You-Lead/dp/1591842336/ref=sr_1_1?ie=UTF8&s=books&qid=1241701570&sr=8-1

Those are my thoughts. What are yours?

George

Media Services Group

Clear Channel and Arbitron make deal; some markets dropped

http://www.radioink.com/Article.asp?id=1305652&spid=24698#Scene_1

WWGD ("What Would Google Do?") with newspapers?

http://www.buzzmachine.com/