Keep Your Eyes on the Road Ahead
March 18, 2014
Many times, broadcasters get so caught up in the next ratings monthly or the next quarter’s P&L that they forget to look a bit further out on the road ahead to see what the next challenges are going to look like and to prepare for them. Economics is the allocation of scarce resources; if we expend all our resources to make the month or the quarter, we will have little intellectual, brand or financial equity to put against the bigger challenges.
I just finished reading through Edison Research’s Infinite Dial 2014 report, which was underwritten by Triton Digital, and I must confess that I think this year is the tipping point for listener behavior and attitudes. The trends which we have been keeping tabs on for the past several years are now facts, right there in black and white for all to read. While the full report is extensive, I want to highlight a few of the key findings.
The first data point that leapt out at me is that online radio (radio station streams as well as internet only services) is now consumed by almost half (47%) of Americans each month. That is an amazing number. Only five years ago, it was 27%; ten years ago it was 16%. Even more significant is that among 12-24 year olds, that number rises to 75% who listen online. When you look at weekly consumption, the numbers hold up. In fact, time spent listening online has again increased and is now 13 hours per week. That’s double what it was just a few years ago in 2009. This is not just a passing fad; this is an established habit. Millennials in that 12-24 age group have figured out how to get what they want, when they want it, and Gen X and Baby Boomers are not far behind. The report shows 50% of these demographics are regularly listening online.
The driving force behind this dramatic shift in listening is, of course, the smart phone. In the past five years, use of smart phones has grown 500% to now be in the pockets of 61% of Americans. This growth is even more astounding when you look at younger consumers, 12-24, 78% of whom have a smart phone. Amazing! It proves the point that consumers of all ages will open their wallets for a compelling piece of technology. The smart phone is now a majority-owned, mainstream item and with it comes all of the technological freedom packed into the phones and their app stores. Tablet computing now clocks in at 39% of the population, another major leap toward mainstream. Televisions are connected to the internet half the time and social media (including through mobile apps) are now a regular part of life for two-thirds of the respondents.
Whew! But, as they say, there’s more.
In-car audio has joined the online revolution, with 26% of the study participants saying that they have hooked their cell phone to their car stereo. Among 12-24s, that number rises to 43%. And while broadcast radio still dominates in-car media both for usage and frequency, these new players and in-dash systems are not going away. In fact, they are becoming more and more important in the new car-buying decision. This evolution will have a different pace due to the long length of car design and replacement, but the respondents’ attitude is already reflecting the new demand for consumer control.
Not one of these trends should be news to any of us. The only surprise may be the actual numbers and the acceleration of the pace. The real question is, “What are we doing about it?” There are a number of broadcasters who are wishing they could wake up from this technological nightmare. Another segment of broadcasters is committed to bigger-is-better, combining their assets into networks for packaging. A final group is working to diversify by investing in new online businesses that have little or nothing to do with their broadcast holdings.
I believe that we have to focus on our existing brands and expand and recreate them to become multi-platform, consumer-friendly audio companions to our local communities. We have to keep pace with the changing platform choices of our listeners and focus on what we do best – create compelling content that informs, entertains or brightens their day. We have to carefully redefine our business model and recognize that we are well beyond the one-size-fits-all era of broadcasting. We cannot continue to stuff more and more commercials into giant stopsets each hour. We need to explore and try new things. We need to be more personal, more responsive and more innovative about our ability to serve younger listeners. We need to begin – right now – to create original content that lives online only in the digital world. Then we need to use our broadcast megaphone to make sure that our listeners know there’s much more to our brand than simply the tower’s signal.
Some of these attempts will fail; some will succeed. That’s OK. We need that information and experience to craft a long term digital strategy that works for both listeners and advertisers. We probably will never have the nationwide impact of a Pandora or iTunes Radio, but we do not aspire to that. What we need to focus our energy on is our local impact that we can bring to bear for advertisers and listeners alike. We need to be the local media company that everyone trusts and relies on.
Look at the road ahead, not the rearview mirror. Wandering aimlessly down the digital highway will get us nowhere. Every station should have a transformation plan that extends over the next 24 months and is shared with, understood and agreed to by the entire staff. Only then can the creativity be unleashed with enough focus to reach our destination.