July 14, 2006
New Report Shows Folly of Radio Industry Focus
Their report is an update on the status of the "adult hits" format that we've previously written about. Their claim is that the adult hits format is successful because "A Switch To Adult Hits Still Means Bigger Audiences For Most Stations In Radio's Newest Format".
So all that matters, according to Arbitron and Edison, is audience size. Is that true?
The answer is an unqualified no. What matters is the quality of the audience a radio station delivers to its advertisers. As we've said before, while adult hits may bring bigger audiences, they are less homogenous, and therefore less efficient to advertise to. Advertisers are paying to reach more people, but a lower percentage of them are going to be responsive to the ads.
What does this mean for the stations switching to adult hits? It means that while their audience size may grow, their advertising rates will have to decline to reflect the lower quality of the larger audience. Whether the switch to adult hits is profitable for radio stations will be determined by whether the decline in rates will offset the gain in audience size.
Why isn't the radio industry focused on it's unique ability to aggregate homogenous audiences and serve them up to advertisers? Maybe for the same reason that golfers care more about hitting long drives when it is common knowledge that improving putting is what will actually improve their score. We're quite sure that when the radio industry stops trying to "me too" iPods and starts focusing on what they can do better than any other medium, they'll reap the rewards.
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