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By Stacey Sedbrook
NetNewsCheck, November 6, 2014 5:51 AM EST
Despite some great examples of innovation, the radio industry is lagging other media in digital adoption. Radio has invested less in developing digital products and services, devoted less leadership attention to digital transformation and done less to retrain its sales force into digital sellers. As a result, it has less digital revenue than most other media.
The good news for radio is it still has an opportunity to avoid the fate of newspapers, Yellow Pages and other media that waited too long to transform and are now scrambling to return to growth.
I have spent my career building digital sales teams in local media — in newspaper, pureplays and radio. I’ve been able to see up close how challenging it can be to get sales organizations to commit the resources and the time to building a digital division.
One reason radio lags in digital adoption is that the pain it is feeling on the top line may be insufficient to drive a sense of urgency. The radio business is soft and getting softer, but it isn’t falling off a cliff. Core product disruption has a way of focusing a medium on finding and committing to new revenue streams.
As Tom Bender, SVP and GM of Greater Media Interactive, explains, “The urgency of the digital challenge is in direct proportion to the revenue compression.”
According to BIA/Kelsey’s U.S. Local Media Forecast, radio will generate just 6.5% of total revenue from digital in 2014, climbing to 11.6% in 2019. Overall, radio is expected to grow over the forecast period, albeit at a tepid 1.7% compound annual growth rate.
Newspapers will generate 16.2% of revenue from digital in 2014, a figure that will reach 22.5% in 2019. Newspaper revenues will decline, however, at a 3.7% CAGR during the forecast period.
Like any traditional medium, radio faces various existing or potential disruptors. The one that comes immediately to mind of course is streaming, or the Pandoras of the marketplace.
“Another slow-motion disruptor that is affecting broadcast radio is the evolution of the digital dashboard and the connected car,” Bender says. “With almost half of our current listening taking place in the car, we face significant challenges to make sure that infotainment systems don’t shortchange radio in their effort to provide other entertainment options.”
But some of the radio industry thought leaders I’ve checked in with believe radio’s biggest worry isn’t external.
“Radio’s biggest disruptor is the industry itself,” says Martin Kristiseter, VP of mobile solutions at Marketron. In other words, radio’s tentative embrace of digital may be the biggest threat it faces.
Some radio groups are clearly digital innovators. Clear Channel, Townsquare Media, Radio One, Entercom and others are moving forward aggressively with innovative digital products, sales methodologies and go-to-market strategies.
Clear Channel is the widely acknowledged leader in digital product innovation with iHeartRadio, but others are doing the less visible things that make a big difference in successfully moving the business forward.
One example is Townsquare Media, which has brought in a large team of senior digital leaders from AOL and gone all in on a portal approach that generates a significant amount of traffic. Or Radio One, which has made the investment necessary to put true digital experts into local markets, a key indicator of local sales success.
Still, too many radio groups are in toe-dipping mode when it comes to digital. They may have digital products, but they have not changed how they sell. And leadership is often ambivalent, which is the kiss of death for any organization trying to transform itself.
So what should radio do? Radio’s thought leaders posit that it all comes down to leadership, focus and accountability.
Kimberli Sonneborn, VP of Digital Product Development, Beasley Broadcasting Group, believes the key lies in training and incentives.
“Radio needs to focus on digital training for their sales teams and have digital specialists on staff in each market to assist sellers and create integrated packages,” Sonneborn says. “Compensation needs to be changed for program directors, personalities and sellers to reward them for reaching or exceeding digital specific sales or numbers.”
Martin Kristiseter, VP of mobile solutions for Marketron, says success is elusive without having digital expertise at the point of sale.
“Having digital staffing in place locally is a key success factor,” he says. “Without staffing and proper resourcing, radio groups won’t see larger than a 2% share.”
Greater Media Interactive’s Bender believes the stick is at least as important as the carrot when driving digital sales results.
“If a sales director is not mandating true digital upsells or new digital first business, they will not make their goals,” he says.
Finally, Rockie Thomas, VP of business development at AdsWizz believes leadership has to show commitment by bringing in top people with digital expertise. It’s not a matter of telling someone to take on digital on top of an already taxing day job.
“There are too many hybrid roles, and digital inevitably takes a back seat when that happens,” she says.
Radio still has a chance to get ahead of the curve and avoid falling into the same trap as other traditional media that waited for disruption, then scrambled to remake themselves as digital innovators. That model hasn’t worked. The radio industry needs to follow a different path.
As Vice President of Strategic Sales Consulting at BIA/Kelsey, Stacey Sedbrook heads up BIA/Kelsey’s strategic sales consulting practice, which helps traditional and digital media companies identify and implement effective digital sales strategies within their specific markets. A Colorado native, Stacey earned her BA from the University of Colorado and MS from the University of Denver.