What truly matters as the business of selling content moves forward to better serve its customers during and after the current recession (whatever it is that comes next) ? As I've suggested in two previous posts, Better Metrics are essential first steps even if the changes that follow these will be more substantial to the media business model.
Interestingly, this loud discussion about how to measure consumer engagement with old media has made the headlines often (lately) as radio businesses attempt to shift to electronic measurement and away from diary based recall methods. The process has been turned into a political football game borrowing from the social acrimony so ever-present these days. And since most statistical methodology is esoteric (at best) the negative nabobs opposed to change are winning the shouting contest by saying 'it's not fair'. The result of their efforts is that the industry has been distracted from what truly matters at a crucial time.
Just recently, I read where two competitive industry views considered the results delivered by radio's new electronic measurement system (PPM). They came to opposite conclusions about electronic measurement while looking at the same data.
It's hard to know what honesty is in this discussion with all the selective whining going on. Let's explore a little because it really matters to all media enterprises - and not only to radio businesses:
If I asked you what you did yesterday, and to be as precise as possible, how well do you think you'd do? How about three days ago? Everyone has a few benchmarks that are easy. The 5:30am alarm clock. The 6:55am drive or train. The 8am meeting. The 12:30pm lunch. The 6:40pm ride home. Even with this kind of structure built into your routine could you clearly remember when you heard a a few songs on the radio in the crowded breakfast shop? How about that radio on at your job?
I'd guess that most adults have structured lives but even using that, people have trouble remembering small things outside and inside of their routine and that the process of filling out recalled radio diaries, possibly well after the fact, is problematic at best. And when you think about the practical challenges of this method, you can immediately appreciate why diaries have always captured loyal listening and little of the incidental listening now clearly shown by the PPM's electronic direct method. (This is very cursory and worth looking at PPM results closer because what it tells the industry generally makes a lot of sense.)
Q: This does not matter that much, does it? How could it, really?!
If you own and run a web based business you are capable of measuring customer engagement. Period. The standard for successful reach and frequency has evolved because of this competitive environment change. Radio does not have the luxury of being so different in a world where broadcast licenses are no longer as significant a barrier to entry in markets.
What really surprises me in this discussion is the silence from the other Customer base.
Q: Who are these other customers?
A: The sponsors and the advertising industry representatives who purchase media time on behalf of advertisers. Without these sponsors the medium of radio would never have existed beyond a cool toy for soldiers. Sponsors of programming allow consumers of radio what they want and, in return, they get exposure to groups of people who are ideally suited to be exposed to the commercial message of the sponsor.
Q: So why haven't we heard from the sponsors to insist radio update their method of reporting interaction to the sponsor base that finances the entire industry of radio?
A: They are distracted right now and have been for a long while figuring out how to engage customers in the digital environment and take advantage of the social momentum and new expanding opportunities using social tools that create meaningful feedback. Radio station web sites are cool in some cases but, the bigger picture is that the entire discipline of marketing is being transformed in a brief period.
Q:Are sponsors leaving because radio has been bad? Is this somehow punitive?
A: No, the "click" that emerged through Yahoo and Google search engines a decade ago changed everything. Interaction and engagement was born. The conversation was no longer one way and this is why radio's revenues have been slowly eroded. Also, ROI is the currency of recessions and engagement metrics are more attuned to these concerns. This compounding reality has sped up the changes that ensure market circumstances will never be the same after this recession ends.
Many marketers within the radio industry insist the demand for the medium is still strong the same way Brett Favre's agent keeps selling "one more Championship season". They love to use numbers to justify this sunny position about listening. They are missing the point.
So, let's begin to sum up this post because the discussion may be only beginning but, the answer is already obvious.
Acceptance of the digital environment has become ubiquitous in much less than a generation and in only 13 short years we went from initial consolidation of ownership in old media enterprises to outright decline because the metrics old media relies upon are old fashioned and cannot pretend to keep up with the new reality in marketing to a world with a digital universe. Marketing is now a two-way conversation. It will always be a two-way conversation from now on. The mature owners and managers of old media companies want to grasp this social dynamic as if it is a new "potential" revenue platform but it is more socially nuanced than comments on a blog or visits to a web site. It requires complete organizational adaptation.
At the same time, the radio industry's internal politics have spilled over to the public and are creating a cacophony of political BS for the mature gang to chew over. In the meantime the digital enterprises of the world will eat more of radio's revenues while it rationalizes bringing the past forward into the future. This is not an esoteric conclusion. Radio's business model is failing because they cannot see forward while looking backwards. When a business model fails it is because it has stopped serving a specific need or the need has changed somehow. The answer (this time) is not to just add more units per hour or let a few people go and do with less intellectual capital (though capital allocation is a very important subject for owners). Ironically, the best use of the PPM tool may be for programming radio formats but very few see any of that potential right now while many argue and prolong the inevitable. That's really too bad.
Better metrics that describe engagement more clearly are not an option anymore. Metrics that get closer to describing the two way interaction must develop and keep developing. PPM is only a first step. Radio format marketers must engage in a dance with content consumers and record it and study it over time. Those that do, will survive. Those that do not will get eaten or rot quietly.
The ethnicity issues surrounding radio's new PPM system are an embarrassment to the industry and not a political issue. That it has arrived at Congress's doorstep (at this time especially) should be humiliating to anyone higher up in the industry or to Congressional representatives themselves.
Now to make matters even worse; Add a Johnny Come Lately competitive presence in the ratings industry serving its own financial ends by suggesting that paper diaries can surprisingly be used to combine radio and TV ratings; and you have a metaphorical recipe for the La Brea Tar Pit of medium market radio companies. As TV is just as close to total convergence as radio is, any suggestion for segregating the two old mediums from the data describing the digital media universe is nonsense and worse. The groundswell is already fully formed and proceeding fine with those who are willing. (Buy both books in that link!)
It's pretty natural that one day, the old leaders of any herd stop leading and the new leaders are those who see something that matters while not everyone else sees it. After decades of refining sales discussions regarding price, it'd be pretty ironic if the mis-direction of the industry is caused by cost concerns while ignoring PPM's greater potential to grow interaction with content consumers.
In the meantime, I am sure the NY Daily News will sell some papers because of ridiculous headlines as if the real issue in choosing a ratings method is continuity fairness to minority communities or something along those lines. This is the classic stuff of what is best described as a social correction, and this is a big one. (I will be posting more on this topic later)
Better Metrics are not a luxury or even a choice for old media enterprises....they are a matter of survival for radio as a medium. Audio content will continue to see ongoing gargantuan demand every week whether the present industry leaders get their profitability together or not. Segregating radio and TV ratings together at a time when two-way conversation in the converging media universe has built unstoppable momentum is beyond foolish. Looking deeper at PPM's programming capabilities will justify the greater costs as radio owners struggle desperately to survive the marketing challenges of the digital universe. PPM promises some of what the last 13 years of MBA talent never delivered in terms of business or programming leadership. PPM measurement has yet to be fully developed but it has more potential than anything else out there now. Finally, social tools are not an answer but an important means to a new business reality. These are the things that really matter.
ps...all that incidental listening captured by PPM is not worth much on traditional R&F calculations? Think about all those banner ads we all see each week and how much of radio's revenue now goes to them...It's a heck of a lot easier to redirect my eyes than to forget hearing a damn good seasonal jingle...even if I don't know what station that was playing it. You can be sure that anyone dismissing incidental listening is selling something. Brand marketers won't as they tally their posts.
reminder: This blog is WIP of a book on the larger discussion of the evolving media business model. Each of the two previous posts in this series have offered ideas about how to see the confluence of short, medium, and long term trending processes shaping the business right now. When you really think about it, however, the measurment of changing behavior is much more significant than a technical problem in one industry. Likewise, the solution should attempt to be as dynamic as the impulses shown by the changing use trends in our markets.
Comments