A Local Radio Conversation

Last week I was talking to the sales manager of an Ottawa radio station about developing an online ad strategy and improving their online experience for listeners. It was an interesting discussion with someone I learned was the devils advocate.

First – and lets be frank – the stations current web site is horrible. Something the station (or at least the manager) freely admits. It’s not even at the level of the atrocious bunch that Mel Taylor links to in his post on bad radio sites.

I agree the stations demographic, 45+ isn’t the easiest target for web strategy, and Ottawa is a pretty conservative town. Still there are solutions that don’t cost a lot and can increase the stations connection with both advertisers and listeners.

First though you’ve got to have some targets for your stations web site – otherwise why even pay the hosting fee. Then you’re got to develop plans to reach those goals and choose metrics that reflect progress and monitor them – regularly.

For this station I suggested choosing one of the following for the ad side:

 increased revenue/client
 increased wins in competitive bids
 more requests for information from new advertisers

On the listener side you’ve got to build page views before you can hope for any dialogue or user generated content. Given the demographic of the audience and Ottawa as a tourist destination I’d focus on episodic events and festivals around which to build web presence and connection.

The advantage is that from a development perspective an episodic approach is easier to manage initially than the continuous release methodology used by seasoned web properties. The other reason is episodic events tie nicely to the site goals. They are major advertising events for merchants so the station benefits from this increased spending with a new property targeted to the event. On the listener side they tend to be time of high socialization providing numerous opportunities for information transfer, contest tie-ins and user comment. The key is to ensure that this web material becomes part of the on-air dialogue both to promote the site and to transfer the personal link between announcer and audience to the web.

The final advantage of this approach is that it builds evergreen material that can be used year after year – freeing the development team to concentrate on the inter-episodic period the following year – as the web property moves to a continues release model.

Of course the devils in the details. And to understand that stations need to become familiar with the trends and approaches that all media are using to integrate the web into their core property and the issues associated with them  – and that will be the subject of a upcoming posts.

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Online Advertising Consolidation

Jeff Jarvis notes that Google controls 40% of online advertising, and that their share of online advertising is growing faster than online advertising as a whole. In a world where online services are increasingly monetized by ad revenue – this concentrates incredible power in Google’s ad serving algorithms.

It’s not hard to understand why they are growing at such a clip – first the search market is tightly tied to the transactional ad spending – and that’s still growing rapidly as merchants discover the power of on-line ad to drive people to their site/store. Google is also one of the few companies that make buying ads or listing inventory easy – allowing both sides to scale in relation to each other. Finally contextual placement means assures the clicks that reinforce every party involved.

Some authors see the transactional ad market as a tiny sliver of the potential online ad market – noting that traditional media especially TV still collects the lion’s share of ad revenue and it is mostly brand (value / awareness) advertising. In fact it was only this summer that internet advertising surpassed radio – the media that came closest to transactional advertising for an age where in-store activity drove transactions. And radio in the smallest of the ad media – a third smaller than local TV and less than half the size of newspaper’s ad share.

ad-share-by-media-type.JPG

Magazines – another media form that offers advertisers content that can be relevant to their ads – is more than 2 times as large as internet advertising – while national TV is more than 4 times as large – and national + local TV is almost 6 times bigger. Taken together the entire internet has just 7.8% of all advertising spend – and Google ‘just’ 3.1% of the overall market.

ad share

 (Note both Tables from http://www.tns-mi.com/news/09112007.htm)

 Jarvis is right, “We need new networks that identify and create new marketplaces for new value — greater value than the coincidence of words on a page, which Google sells. “ This should be the domain of ad networks – but if my recent experience is an example they are not stepping up to the plate.

Ad Networks and traditional media have an opportunity to act as an interface between Agencies, who develop and place brand advertising for national customers, and small web or multi-platform publishers. This will be increasingly important as consumers shift their media attention from traditional media to web driven media. As Google learned the value is in the relationship between the advertiser and the content publisher – and that’s more difficult to automate for brand advertising because the content of the entire site becomes important.

The problem is that Ad Networks and traditional media have not automated enough of the qualification process for web publishers – so site traffic has to be substantial before they can afford to describe a sites market to advertisers or target ads specifically enough to that the revenue from them is better that is available from Google.

That has to change if Google’s online dominance is to be challanged.

Physical & OnLine Media Advantages

Jeff Jarvis, writing about Prince’s distribution of his new CD inside the London’s Sunday Mail says:

“it exploits the one last advantage of printing a paper on atoms and delivering them: distribution”

That’s not totally true. Each media type has several unique characteristics which can be used independently or in conjunction with online presence to extend the online into a physical experience.

For newspapers there’s distribution, locality, political / social identification (which come into play when the paper is read in public), as well as the social engagement that occasionally arises when accident, interest or expertise make citizens actors in the news. For TV its diverse thematic connections, story telling that models life aspirations and privacy. For radio its locality, mobility and personal connection with the announcer and other listeners.

What makes these characteristics important is that they form the basis of what can be unique media experiences where the online and the physical can be used independently or in conjunction.

It’s the ability of every media platform to transcend the online and situate it with in real physical relationships that will be the basis of its new identity and value.

Federated Advertising Platforms

In a recent post I’d said “media will come to recognize that they are as much in the advertising assembly business as they are in the ad delivery and content businesses”

Seems Time Inc. already recognizes which led to an interesting post at Publishing 2.0 comparing Ad Platforms and Ad Networks. The core distinction is who controls the relationship with the advertiser. I’d go a bit further suggesting there three big areas of  difference:

– who controls the relationship to the advertiser
– how member sites are qualified
– how is site readership related to advertisers target demographics

Ad Networks, such as Google, develop vast relationships with both advertisers and sites matching ads to sites algorithmically. It’s efficient and highly lucrative for the network owner because the most of the value lies in securing the advertiser and linking ads to sites.

The down side is that sites and ads are interchangeable, at least to the extent the algorithm allows. While this is true to an extent for almost all ad mediums what’s different is how the matching occurs. Advertisers can buy placement only according to indicators the algorithm tracks. Sites are selected the same way. Differences in site selection have to show up in the algorithm or they can’t be used for placement.

A problem arises because matching traditional advertiser metrics to the algorithm depends on an inferred relationship.  Characteristics like traffic, links in & out, metadata, keywords, location etc. need to be aligned with typical brand metrics like ages, sex, income religion or more sophisticated  psychographic and aspiration indicators. The alignment is imprecise, which may count for the struggle advertisers have moving online – and the growth in services like Search Engine Optimization which need to continually refine the relationship between ad placement criteria to match target market behavior.

The alternative approach is the Ad Platform which does some of the same things Ad Networks do (algorithmically based ad placement) except they layer on an ability for a more direct relationship between the advertiser and the site – which opens the probability of site selection based on traditional advertiser metrics – because site owners need to understand this as it also drives content choices.

It is here that traditional media can build a new value. First the cost of building the relationship with the advertiser is expensive which opens opportunities to profit on the delta between advertiser’s costs and what sites receive per placement. An added value is that sales costs can be amortized across more sites increasing margins.

The skills required to build advertiser relationship are also very similar to those used to qualify sites for advertiser suitability. And this qualification increases the range of properties a platform can offer an advertiser – while still delivering site metrics that are of use to advertisers. 

By extending their Ad Platforms into sites outside their direct family traditional media grow revenue and reach – while maintaining two differentiators that are core to their current and long term value – their relationship to the advertiser and their ability to relate content to market characteristics advertisers understand.  

A Day of Silence

Internet Radio goes silent today to protest large retroactive increases in royalty fees.

Sounds like a sleeper of an issue made worse by a campaign that doesn’t make sense!  It shouldn’t be. This is an important issue that at its heart looks like a battle royal over the business models and revenue that will effect the options of what you can hear and where you can hear it. Think of it a Root kit for internet content distribution. And just like that record company ‘innovation’ this isn’t what it seems and may crash the system.

In my mind it’s a strategy put forward by the record industry and swallowed whole by the copyright board that reaffirms the record industry as the primary controller of audio content and distribution. Like a root kit it hides something ugly – its anti-competitive heart in the dreary language of copyright and the motherhood of payments to cheated artists.

The past 10 years has seen dramatic changes in the music industry. And it’s not just distribution and formats – its production and promotion as well. Artists no longer need the record industry to make records or connect with their audience – they can do it directly. While low cost studios make production cheaper its Internet radio that makes building an audience possible. Don’t believe me – read the pages and pages of testimonials for small artists who depend on Internet radio for their livelihood.

What does that raft of new artist do to the record industry? First they are outside its revenue reach. Not only do these artists not pay for services they also fragment the audience so that those artist that do use them make less money for the industry. It’s competition of the most brutal kind – thousands of small artists with one thing in common – Internet radio as the means of promotion.

And here’s where there’s a stroke of genius. By playing the industries favorite card – the cheated artist they can use regulation to play one group of artist (theirs) against another (the independents). If they can eliminate the promotion channel of the latter they create a stranglehold on all artists and channels.

What would it take to do that? Increase royalty rates 300 – 1200%, well above terrestrial and satellite radio and the whole internet radio industry is hobbled. Make those fees retroactive – so business planning is not possible – and you bankrupt 90 of the online stations the first day the regulations come into effect. (For more see here)  Suddenly having a record deal becomes more important for every artist – which is great if you’re a record company.

Instead of a day of silence we need to use the  medium – while it still exists – to show the power of media to connect broadcast to internet based discussion and community building. From there we need to develop and coordinate a strategy that looks beyond the reversal of this regulation to a level playing field for businesses large and small. We need to lay the ground work for a new type of public policy discussion.

Want to get involved? The Save Internet Radio site is a great place to start – Click here to begin your action.  Don’t be silent – speak up.

The Future of Newspapers (and Radio & TV)

Jeff Jarvis asked what newspapers will look like in 2020. It’s an interesting question because 13 years is a huge timeframe – when you consider what the past 13 years have wrought. But here’s a stab.

First the underlying processes technologies that are in evidence now, or in accelerated adoption cycles, will be the same processes and technologies that papers and media will be wrestling with in 2020.

That seems like a relatively bold prediction. The reason is that the buildout for the telecommunications infrastructure to support high speed data has occurred and for business reasons it will not be supplanted in 13 years. Sure there will be tweaks and faster speeds but the underlying issues remain the same. Mobility will increase but again that doesn’t fundamentally alter anything it just makes what’s already happening on the web more available. Same goes for what ever nomenclature you want for user contributed content – it will increase in prevalence and types adding to the competition for attention that has affected media so much recently.

Short term all media will blur looking more like each other – but longer term this will not prove competitive (because it pits media against each other and not the real competition) – and each media will revert to its area of strength (intimacy & community for radio, information & analysis for newspapers, and entertainment for TV).

Regardless of medium, media will solicit and incorporate more user content – not just because it makes sense to interact with your audience when your competition is. They’ll also do this because it reduces costs, increases connection with the medium and provides new value for advertisers. The latter will occur because advertisers will recognize that only few people will contribute to multiple communities – and few products are sticky enough to be among those few. The centralization and advertiser friendliness media provides will be seen as welcome for initiating & hosting these discussions.

Demographic changes will also affect media. Internet use will rise to about 90% of the population – as older people decrease in number and usage patterns established by today’s teens become common in older demographics. This will make competition for attention more intense. The rate of user generated content will not grow at the same rate – in part because it is a function of education and that will not change dramatically – but also because it depends on audience attention and that will not grow dramatically either (more popular sites will get a lot of the new traffic). 

None of this actually answers Jeff question however – so here goes.

Thirteen years from now newspapers will still be published – much as they are today – though they will be thinner and likely free. Their purpose will be to provide to entertainment during commutes and provide a non-browser interface to promote the papers web site(s) and content expertise. There is a possibility that weekend feature issues like the NY Times magazine will make resurgence – as they provide an avenue for in-depth reporting and higher cost advertising (because of the staying power of the issues).

The biggest changes will be in business models and how content is delivered. First media will come to recognize that they are as much in the advertising assembly business as they are in the ad delivery and content businesses. What they’ll recognize is that there is a large margin delta between what advertisers pay for Google and what Google pays most sites. Most of this delta can be attributed to the value of owning the relationship with the advertiser. Media will live in this delta providing more value to partner sites and better targeting to advertisers wanting regional and niche sites.

The relationship media will develop with a multitude of regional or topical sites around advertising also speaks to a new model for content distribution and creation. Site owners and authors already understand audience, traffic, readerships etc, and have tools to measure them. Media will use its’ ability to link to sites across mediums (web and internet) as the first tool in its reemergence. Media can build smaller sites traffic – and in doing so establish beachheads against attention overload – buy providing more sites where their advertising and content appears.

The other area where business models will change is around content distribution – with media acting as clearing houses, filters and store for a federated network sites that share content community and overlapping audiences.

Of course I could be all wrong as well.

CBS buys Last.fm – Inspired

Mark Ramsey reports that CBS has bought Last.fm.

Mark speculates that in two years well see Last.Fm integrated into all of CBS’s radio web sites delivering the personalized online radio that Last.fm is famous for.

While that my be true (except for the two year part) because if they plan to take that long they’d develop a similar offering for a lot less than the 280M they paid.

My guess is that it’s not just their sites they are interested in – I’d bet we see the first radio station on FaceBook far sooner that anyone expects.

It isn’t just that Quincy Smith – the Head of CBS interactive has repeatedly said “We can’t expect consumers to come to us. It’s arrogant for any media company to assume that.” (thanks to Jeff Jarvis for this)

It’s that it makes so much sense – the recently opened Facebook platform that allows developers to monetize their applications, the great brand that Last.fm has build – much of it to the Facebook generation – and the association of those brands with CBS interactive.

It’s inspired – especially for a radio station.

Update:  From  Richard Jones portion of the Last.fm blog   ” We’ll be back in an hour to finish off our facebook app :)”