The AT&T Deal – A Long View

July 31, 2015

 

Peter Smyth

This week saw headlines in all of the trade press about AT&T’s decision to add the FM tuner to its spec list for future smart phones on its network.  This is great news and a big win for Jeff Smulyan and the NextRadio staff who have worked so hard for so long to build a consensus and gain backing from the NAB and the RAB. Jeff is a very effective advocate and has led this initiative from the very outset.

But after reading all the congratulatory press, it is reasonable to ask, “Why is this such a big deal?”

AT&T’s decision to activate the tuner chip in their phones in 2016 is important because it builds on the success that NextRadio had with the Sprint deal of 2013. This means significantly more users will be able to use their Android smart phones as portable receivers without depleting either their data plan or their battery life, both of which are important variables in consumers’ phone usage, especially for younger users.   For our local stations to maintain their vitality, we need to be available to younger listeners however they want to consume our product.

This leads us to a more essential challenge that may not be apparent to those targeting older listeners. You may (and I certainly) remember the popularity of transistor radios during the zenith of radio’s “portable era” in the 60s and 70s, and the success of the Walkman in the 80s. But there are now two full generations whose radio experience has largely been confined to in-car listening. For them, portable listening has been iPods and iTunes, and now Pandora, Spotify or other services like them. These audio consumers often don’t know that there is a tuner in their smartphone, or that their favorite station has a mobile app for easy, portable listening. You may think that I exaggerate the situation, but it became clear in the research that the NAB commissioned for the NextRadio app.

In addition to that challenge, radio needs to address the two-way functionality of our medium.  Younger listeners expect to be involved with their media choices and NextRadio is a first step in this direction.  It gives listeners a channel to feed back to both the station and our advertisers and interact with program content and sponsored ads. It is a richer, two-way interactivity that will take us some time to grow to scale, but holds the promise of increased engagement and time spent listening. This functionality will be especially valuable in the digital dashboard as our in-car landscape opens up to other online providers.

Certainly none of these features will be compelling enough on their own; they have to be used innovatively by a creative, locally-based, community-aware and personality staffed radio station.  If the product is not competitive with other non-broadcast services, or if it is not innovating and responding to its listeners on a consistent basis and on all platforms, broadcast, digital, social and personal, stations will find success very hard to achieve.

Let me be clear: The FM tuner in AT&T phones is another step forward and a significant one. But it is not the goal line in this game. Our industry still needs to convince the remaining wireless providers to get on the bandwagon, and the Apple folks in Cupertino that they were on the right track back when they activated the tuner in the iPod. They need to hear from their customers loud and clear that they do not want to have to worry about their data plans in order to listen to the radio. We also need to communicate with a unified voice to the auto technologists in Detroit that broadcast radio not only has a significant emergency utility, but has also been their customers’ best friend while driving. Radio does not deserve to be lumped into a secondary menu option in the digital dashboard.

There may also be innovations and improvements that have not yet come to market, and I will always be open to new technology to extend our brands.  But we cannot afford to be either timid or divided as we make our case to others in the listening ecosystem. I do not believe that streaming will overtake the reach of the FM broadcast, nor will it ever be as reliable and effective in emergency or crisis situations. But personal, portable audio is here to stay. It is up to us individually and collectively to make it an effective part of our business.  This is a big deal.

Standing on the 50

July 7, 2015

 

Peter SmythAs we enjoy the mid-summer break for the 4th of July holiday, it is only natural to take stock of how our industry has fared thus far in 2015. The first six months have been filled with the unexpected; from epic snowfall here in Boston to floods in Texas and drought in California, the weather has played an outsized role in economic performance this year. While no one weather incident was to blame, together they created uncertainty  for marketers as they planned and revised their strategies for their clients.

This uncertainty created a series of disappointing economic numbers in the first quarter and created further delay and caution in marketing plans during the second quarter. It looked like many advertisers waited until the last minute to act, creating a choppy ad environment for radio.

This certainly made the sales department’s job significantly more difficult as they struggled to provide forward guidance and forecasting. Many of the months in the first half of 2015 were not decided until the final week of the month.

But in recent weeks, we have started to see more clearly how the American economy is performing and there has been significant progress on a number of fronts, including job growth which has pushed the unemployment rate down to 5.3 percent. Housing prices are finally starting to increase, and consumer spending is picking up. It appears that we can carry this momentum into third quarter as economists expect both government and business spending to increase as a positive reaction to the improving economy.

Although Greece and the European financial ministers continue to play high stakes games with that country’s future, the betting is that after all the posturing and rhetoric has played out, there will be a resolution to this long-running soap opera. Whether it will be a band-aid or a longer term solution, no one can know.

However, with a favorable domestic economic climate, we expect that advertisers can more confidently lay their plans for the back half of the year. That means that our sellers can do a better job of advising, planning and executing for our clients and focus on outcomes and performance. With all the digital solutions that have burst onto the market, we have to be prepared to discuss much more than our stations’ ratings performance with clients. Our sales staffs must take the extra time to explain in detail how the broadcast and digital assets we can provide will work together strategically to create an effective and affordable marketing solution for their business, one that works for the client and is good for the listener.

Selling “time,” as it used to be called, has always been a matter of trust and creativity as much as it has been metrics and ratings.  Now, with even more tools in the arsenal, salespeople have to be on their toes as never before. They have to ask questions that probe beyond the surface, find out who their real competitor is – it probably isn’t the station down the block—and find out how the client will measure the success of his campaign. Too many times, salespeople do not take the time to collaborate with the advertiser to review and adjust creative for maximum impact on the station’s audience. It’s another one of those small items that can kill an otherwise well-crafted marketing campaign. The next six months can allow us to look back in December at a successful and profitable 2015, but it will take cooperation and creativity, along with excellent execution for each of our clients, to get us there.

Let’s make every opportunity count.

 

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