Digital revenues were a bright spot in 2020 for pandemic blighted radio ad revenues. Borrell Associates has been watching digital trends for nearly 20 years. The 9th Annual Benchmarking Report for the RAB shows digital revenue is expected to grow 18 percent.
When Gordon Borrell presents report findings there is no shortage of charts, graphs, numbers and percentages. Defying the Gravity of 2020, presented as a special report for the RAB this week, was no exception. Borrell’s interpretation of the numbers and trends are what puts him at the top of his game.
“2020 was a great year to have had a solid digital strategy and I think 2021 is going to be even better. Our surveys show that everybody is holding back now; but if you have great strategies in place and you’re having conversations now, get ready. 73 percent of our respondents said they have much more flexible budgets in place. So now is the time to be in there, influencing people.”
It’s not about selling radio vs digital anymore; it’s all about an integrated marketing plan that produces results.
“Your real product is results. It ain’t just radio. Radio is great, it gets results, but advertisers want more. If they get lured away from radio because you’re not offering the things that they want and they’re buying it from somebody else and getting results; you’re not even going to get the conversation. You gotta listen to your customer. If he doesn’t like radio, sell him digital, develop the trust and then bring him back into radio.”
Borrell indicates their survey shows management is starting to see the value of training in being a marketer with a working knowledge of all aspects of getting the message out. That’s good, because the buyers expect that.
“We have heard from advertisers and they want someone that knows the products. I’m paraphrasing here but some survey comments are like this…’I’m tired of you sending out these dumb punk sales reps. I know more about marketing then they do. Please train them better.’”
So what are the top digital products that are needed?
“Audience Extension, Search Engine Optimization and Geofencing. Those are the ones that are most appealing to an advertiser. Geofencing is fascinating, and we found that there are a remarkably small number of advertisers, only 18%, using it. It’s a sexy product, especially given the fact that 80% of adults have a smart phone. That is a hot product but there is not enough education in the market yet. So if you had some sort of an educational campaign and pushed it hard; that would grow very, very quickly.”
Social Media is a stalwart of an integrated digital campaign. Borrell says that component needs to be handled in a special way.
“90 plus percent of radio buyers are buying social media and the vast majority is buying it direct. Businesses are two to three more times likely to handle social media in house. What we have begun to track is do advertisers have internal social media managers and how much money do they spend on it?”
“We found that roughly a third of them are using a third party, like an ad agency to manage social media. So to sell it, it’s a bit more complicated than just saying we have this great package to manage your social media. It’s a lot more than promising so many posts a month.
“What we found what is more effective for radio is convincing businesses that radio can generate more ‘likes’ just by showing the numbers for the station and comparing them to the social media reach of the businesses efforts.”
Some owner/operators are still hesitant to put money into what it takes to generate a good digital revenue stream. Borrell believes if it’s done right, the return will be pretty good.
“We have anecdotal evidence that the margins that we are seeing in companies that are very, very organized, the ‘best practices companies’, are seeing about a 38 to 40 percent profit margin; after all the payouts are made. The problem is this, most radio stations see digital as a product extension or they see digital products as something that is going to help them sell radio. So they are far more forgiving of digital and still want to throw it in for free. Where is the profit in that?”
For Borrell the adage, ‘You need to spend money, to make money’ is a greater truth now, in our digital age; than ever before.
“You have to hire people. This is not something your radio sellers can do on their own. There is money here, and there will continue to be money here. It’s going to continue to grow and if you continue to short change it and say ‘well we’ll train some of the radio sellers to sell some of this’, then you will only get a little bit. Invest! Roll the dice, it’s a pretty safe bet it’s going to be here a long time and there is a lot of money in it.”
