Top 10 Online Revenue Challenges of Radio

Can Radio Win with Local Online News?

To help Broadcasters, we’ve compiled a list of issues to help conference attendees make the most of sessions devoted to interactive. This list is not focused on the usual topics of brand extension, FM on cell phones, HD, streaming, mobile apps and social. Rather, it’s a fact-based list of online revenue challenges still confronting Radio today.

Hard to believe, but Radio is still operating its digital business like it did in 1999: build content, get traffic, then sell ad units around that traffic by leveraging advertiser relationships. (ex: up-sell) Maybe that’s why Radio still only gets less than 2% of local online revenue shares. Compare this sad number to online-only companies like Reach Local, and Google that get over 50% (and growing) of local web budgets. Anybody in Radio think that’s a problem that finally needs a little fixing?

All is not lost. Even though local competition grows stronger, Radio can still get back in game, and significantly grow its web and overall revenue share. The solution is simple and indisputable. Radio must address and remedy these most common, web sales errors. The list below identifies what our team refers to as the 800 lb. gorilla in the room.

1. Top management & owners need specialized web training. How can you manage what you don’t fully understand? Expensive research and consultants are not enough. Delegating sales strategy to a content & tech focused VP of Interactive or Internet manager is risky without knowledgeable oversight.

2. Dangerous thinking: “selling web cannibalizes Radio sales.” It’s crazy to think that these words are still being uttered. If those in charge would prefer to focus on their core product, that’s fine. If these managers believe that “web revenue is small, so let’s ignore it”….that’s fine too. But at the end of the day, if you’re not going to run your web assets like a profit-first business…then why even have a digital initiative in the first place? Advertisers are moving more ad dollars to online. They can buy web from their Radio rep, or someone else. While web revenue is still relatively small, it is the fastest growing revenue stream. At the very least, Radio should focus on growing its overall revenue share, by smartly leveraging its digital assets.

3. Limited web training of sales reps. How can they sell new products without seasoned direction & regular training? Is your staff taught by qualified web-sales trainers, or by a Radio ‘web-geek’? Is your staff forced to endure theory & classroom lecture, or are they getting real world training by being taught in the field? Radio needs to look outside of the industry for fresh and seasoned perspective on Web sales. Be wary of training from those who do not have recent local/direct, web sales experience.

4. Management structure conflicts. Conflict #1: Web managers report to Broadcast managers whose compensation package favors spot or total sales. This may be one of the most critical choke-points of growing online revenue. Where do you think Broadcast managers will place most of their efforts? Conflict #2: Programming departments are primary operators of most websites, including where and how advertising is placed. If you would never allow the PD to determine your on-air spot load, why do you allow them to determine online units and placements on the website? Just like your Radio station, the website must be ultimately run by those with ‘web profit & revenue first’ goals.

5. Poor attention to fast changing, online environment. Radio execs typically follow other Radio execs for determining digital plans. Some harshly suggest it’s the blind leading the blind. If Radio barely gets 2% of local online revenue, it might be best to also look outside the industry for best practices in web sales. New competitors like Patch, Reach local and Groupon are ramping up their local staffs, and are going after the budgets in your own backyard. Is your team familiar with these new players and their sales plan? How do you keep up? Do you have a plan to thwart these new competitors? One way to win is to provide Web 101 workshops to local advertisers. By taking an educational approach with clients, they’re more likely to rely on you for all of their marketing needs, and not some outsider.

6. Setting web budgets too low. This little sleight of hand allows your sales staff to quickly hit web goals. Once hit, they can push down web sales to a lower priority. In this situation, money is left on the table and gives corporate management the false impression of successful, local web selling. Making matters worse, this encourages the remaining local web budgets to be redirected to online-only companies. The only thing worse than this is the foolish trick of reps converting spot costs to web, thereby teaching clients that web should always be viewed as a value-add.

7. Ineffective inventory & yield management. Nothing says poor web-sales management than seeing a lame Google AD Sense or network ad on your home page. Geez, you can’t sell your most valuable, most powerful ad unit to a local sponsor? That’s like always placing per inquiry or PSA’s in your 7:20 stop set on a Monday morning. If more than 20% of your available web inventory is sold to 3rd party ad networks…your local sales strategy needs to undergo a crisis intervention…now.

8. Confusing media kits, sales packages & pricing. Local business owners prefer simple offers, delivered using Radio-friendly vocabulary. They’re usually not sure of the value of 1 or even 10 million page-views. Excel spreadsheets with ad units, CPM’s and other confusing data only frustrates the advertiser. It also freaks out the sales rep who’s trying to clearly explain the features & benefits of a cross-platform marketing program. Simplicity is always best.

9. Director of Interactive; tech & content background only? Too few Interactive VP’s or web managers are qualified to implement a realistic revenue strategy. While building slick sites and driving eyeballs are quite important, these skills do not equal revenue & profit. Suggestion: hire a corporate VP of Interactive Revenue that reports directly to the CEO. Bonus all applicable staff based on web profit, not web traffic.

10. Over-reliance on vendors & research for sales strategy. Just because I built you a beautiful kitchen & gave you the best cookbooks, doesn’t mean that you’re now on the way to becoming a master chef!

— Mel Taylor, President of Mel Taylor Media; a Philadelphia based consultancy that specializes in online revenue strategy for hyper-local media.

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