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July 23, 2007

How The Radio Advertising Industry Creates Its Own Biggest Problem

Most often, we create our own problems. They don't come from competitors, fellow employees or from someone who cuts us off in traffic. They come from us.

Here's a classic example in the world of business and radio advertising.

The radio industry (owners of radio stations, radio networks, etc.) wants to be seen with credibility. It wants everyone to see how effective radio advertising is so it can grow revenues and profits. So what does it do?

Does the radio industry hire an independent research company to conduct independent research that demonstrates the effectiveness of radio advertising?

Great idea.

"Welcome to the Radio Ad Lab, an independent organization established in 2001. The Radio Ad Lab is funded by Radio industry companies to further the understanding of how Radio advertising works, to measure Radio's effectiveness and to increase advertiser and agency confidence in Radio."

"The Radio Ad Lab mandate is to improve industry understanding of how Radio advertising works and increase advertiser/agency confidence in Radio as an advertising medium."

Great idea, except that these people apparently overlooked the "independent" aspect of creating an independent research company. Instead of setting up an independent organization, the radio industry set up an organization and then funded and staffed it with interested parties.

Why is independence important? Picture the pharmaceutical companies allowing their own shareholders and management teams to conduct the scientific research on all new blockbuster drugs. All of them stand to receive huge material gains if the research shows the drug is effective. Is their research trustworthy? Would you take that drug and not worry about side effects? No, but you'd sure like to be a shareholder.

That's exactly what the Radio Advertising Bureau has done, as one look at the RAB's list of Board of Directors , funding companies and the Research Committee shows us. Even the "research" reports read like a sales brochure. Would you spend your money on radio advertising based on that kind of "research"?

To be sure, the radio industry is shooting for something that's worthwhile and appropriate. But as is so often the case, their aim is way off. They're going somewhere, but it's not where they think they're going.

And that's an example of how we create our own problems. TV isn't to blame for the radio industry's lackluster revenues. Neither is the iPod. Or satellite radio. Or internet radio. The truth is that radio advertising is incredibly effective. All the radio industry has to do is allow that truth to be seen. But instead of accomplishing that, they've built an organization (the RAB) that by it's very structure suggests to would-be radio advertisers that there isn't any real substance to the claims of radio advertising effectiveness - otherwise why would they need to create such a transparently biased "research" organization?

Posted by Brett Astor at 02:05 PM | Permalink