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September 20, 2006

Great News For Direct Response Radio Advertisers

Media Daily News reports that a recent survey shows that Americans are listening to more terrestrial radio, not less. This is news because the radio industry seems to think it's under siege from satellite radio, ipods, and webcasts - in fact it has blamed flat revenues on these issues.

The radio industry is investing heavily in HD radio because they see it as bringing them to parity with the quality of satellite radio. The problem with this is manifold. First, listeners don't listen to satellite for the quality. In fact, in our experience there are frequent pockets of "no signal" with satellite radio that meaningfully detract from the experience. Imaging listening to a comedy show and having the reception cut out at the punchline. Pretty frustrating. This isn't a problem with terrestrial radio.

The radio industry has also made moves to cut back on the amount of commercial airtime, presumably to compete better with satellite radio. Here again, in our experience satellite radio has at least as many commercials as terrestrial radio. At times it's one long spew of advertising.

So if these perceived "threats" aren't to blame for the sideways revenue trend of the radio industry, what is? Could it be that radio advertisers are holding their advertising more accountable for results? And, if that is the case, have the moves to compete with these perceived threats served to enhance the effectiveness of advertising on radio or not?

Either way, this is all great news for direct response radio advertisers. The survey quoted by Media Daily News states that listenership is up while revenues are flat. This is a great combination for direct response radio advertisers because it means we'll get more inventory exposing our clients to more listeners at lower prices - which is exactly what we're seeing. But then, we ARE holding every dollar accountable for results.

Posted by Jeff Small & Brett Astor at 01:25 PM | Permalink