Tough Love for Radio’s Online Revenue Strategy

A NAB Radio Show Preview from 2009. According to leading analysts and after many years of investment, Radio still only gets about 2% of local online revenue share. The industry certainly spends a boatload on digital platforms. So where’s the money? This is a question that a few savvy CEO’s are starting ask, and they’re finally taking a good hard look at this critical shortcoming.

Behind closed doors, some admit that Radio leaders typically follow other Radio execs for web ideas. Some say this could be the blind leading the blind. We think that’s a bit harsh, but still respectfully suggest that Radio peer outside the industry for some help. Step #1: Start with looking at local, online revenue leaders for proven ideas and tactics to borrow. Newspaper & online-only companies can provide a lot of clues.

To date, most of Radio’s web efforts have been focused on content, technology, brand extension and reach. Sales training and revenue development hasn’t received the same attention. Far too many in Radio (as well as TV and Newspaper) have subscribed to the mantra: ‘attract lots of users… and advertisers will get in line”. That used to work, but no more.

Radio’s current online revenue strategy either needs a little tough love, or a full blown Internet-sales crisis intervention. That’s the focus of the upcoming session I’m doing at the NAB Radio Show, Wednesday Sept. 23, in my hometown of Philly. Fair warning: you may not exactly like what I’ll be dishing out. Some of it will fly right in the face of what you’ve been taught, or have been diligently doing for the past few years. But I guarantee this: you will exit this session with simple instructions on how to quickly rev up your online revenue streams, using proven tactics from leading Newspaper and online-only websites. Here’s a look at some of the topics I will cover.

Profitability: more important than cool, high-traffic websites.  Any Radio GM worth his salt knows their primary responsibility is business profitability. Does this describe the person who runs your web operation? Does your digital division head or GSM have what it takes to build a realistic business and sales model, or are they primarily focused on building traffic, page views and streaming hours? Do your middle managers have a strong grasp of current web applications, and the competitive online environment? If not, how will they effectively manage and train for the effort?

Show me the real money. Banners and streaming spots were a nice start, but it won’t keep the lights on. Some of the fasting growing revenue ops are video, mobile, directories, & integrated promotions. These can and should be consistently leveraged by your sales force. Offering these platforms to your media buyers, will not only tap their emerging budgets, but it will allow you to grab a larger share of their overall marketing budget to boot. You may even want to consider putting on educational seminars for your clients, encouraging them to consider your fresh, new offerings. Once again, it’s as simple as Radio borrowing best practices from the online revenue leaders in their markets; Newspaper, TV, and online-only companies. Download our report: Newspaper Best Practices for Online Revenue.

Was Lowry right? Content is NOT king? The Internet continues to turn music & news into a commodity. Outside of a few exceptions, it seems that content is not always king. In a 2003 Fortune Magazine article, the head of Clear Channel bluntly stated: “We’re not in the business of providing news and information. We’re not in the business of providing well-researched music. We’re simply in the business of selling our customers products.”  

The Radio community soundly beat up Lowry Mays for this admission. That being said, Mr. Mays certainly understood what Radio’s core model was: the business of enabling commerce and providing platforms for clients to sell product. He knew deep down that content creation, music, DJs, and websites were just a means to an end. Little did Lowry know at the time, that he was also offering a warning to those that would eventually be pouring time, money and resources into building web products that still struggle to be monetized.

Who’s minding the store? There’s a good reason why a general manager (usually a sales-oriented exec) runs a local station operation. The GM position is designed to ensure station profitability and hitting margin goals. Everything else is secondary. He or she must produce a profit, no matter how cool the music is, how big the audience is, or how funny the morning team is. Imagine if your PD or marketing person ran the station. Think they would put a lot of time into thinking about spot yield, sales strategy and inventory management? Of course not. So why do stations still have the webmaster, PD or marketing director, run the website? This is a critical issue that needs to be addressed, and just one more reason why online revenue for Radio is still so elusive. 

What types of sites make money? A majority of Radio sites are still filled with content that’s not very unique, and continues to be commoditized. Examples: music & concert news, weather reports, station marketing, headlines from local & national news sources, games, DJ remote pictures, girlie galleries, morning show bits on video, etc. The financial returns on these types of efforts are typically weak, limited, or are in decline. To make matters worse, the interest and actual CPM’s from national and remnant ad networks are falling fast. This is not a good business to be in.

Where to start? Smart media properties are now picking out under-served online segments in their market, and building sites devoted to that community. They use the power of their traditional platform to drive awareness and other support for that effort. Example: We helped The Philadelphia Inquirer Newspaper and Philly.com develop a site devoted to local music called PHrequency.com. It’s a stand-alone online community that is supported by the massive traffic and sales force of the newspaper and the #1 website in town. Revenue comes from a mix of sponsorships, ecommerce and live events. PHrequency.com does not rely solely on CPM banner selling. Rock Radio in Philly should have jumped on this idea first.

It’s not too late, but the window is slowly closing. Radio is well positioned to do well in this new media environment, but every day that goes by, the competition gets fiercer. Why allow digital competitors like ReachLocal, Google Small Business, ESPN Local and the Newspaper take share from you? Radio can no longer think of the web as just a brand extension channel, but as a whole new tool to enable local commerce. That’s where the money is. For Radio to grow its online and overall revenue share, it needs to smartly leverage its unique portfolio of assets, with online playing a major role. Simply re-purposing your on-air content and hoping to have advertisers fall in line, is proving to be weak and limited profit center.


Just as you devote time, training and resources to your traditional business, the same emphasis must be devoted to your emerging digital business, especially in regards to sales. For starters, Radio would be best served from studying the online success and failures of Newspaper sites and other online-only companies. I look forward to sharing many examples of how this can be done when I see you at the NAB Radio Show in Philly. 

Mel Taylor is a Philadelphia-based consultant, specializing in online revenue strategy & web training for local media. He has 14 years of Radio experience, and has helped a variety of companies build their digital revenues: Tribune Newspapers, Clear Channel Interactive, Philly.com, Times-Shamrock, and Fox-TV.

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