WE ALL LOVE TO BE THE FIRST to declare something cool, or buzz-worthy. It’s fun and exciting to be the first to find something neat-o and let people know about it. Conversely, though, we humans also sometimes revel in declaring that when things that aren’t cool, aren’t on the hot lists, and that they are in fact, dead.
For many new media true believers, radio is part of the old media world, harkening back to the days when people submitted to the hierarchy and let others decide for them what they will listen to, what music is new and nifty and what’s funny while driving to work.
We live in a new media age, where people can decide for themselves what they want to hear and when and where they want to hear it. Right? Just search Google for the phrase “radio is dead” and 42,100 results can be seen. (“Radio isn’t dead” turned up 825 hits.)
No one listens to radio any more. Right?
Wrong.
I mean, of course, Patrick Grierson, president of Canadian Broadcast Sales is going to say that. The company he runs is co-owned by big radio companies Corus Entertainment and Rogers Broadcasting. CBS offers airtime to advertisers who can reach 60% of the Canadian population on the two companies’ radio stations.
But the statistics back him up. All publicly traded radio station groups have reported nothing but growth as of late and the last CBS report said national radio sales climbed 9.5% in the first quarter of fiscal 2008, ended November 30th, and are on track to post strong annual growth of 8.7%.
So what’s going on? Why is the oldest form of electronic media continuing to grow, despite the spend pressures mounting in the advertising game and the growth of the Internet and specialty TV ad spend? Cartt.ca editor and publisher Greg O’Brien recently chatted with Grierson to try and find that out.
Greg O’Brien: You know when you speak to some media analysts or consumers or many others, many like to assume that radio is a dying medium. But they’re seemingly wrong. What does radio’s recent growth pattern tell you?
Patrick Grierson: There are a lot of factors. I would suggest one of the starting points might be the way people consume – they are no longer linear in their consumption of communications.
They hyper task… They check facts while they read online, they listen to digital radio, they browse magazines and all kinds of bloody stuff at the same time. And it’s very easy to dismiss, in this new digital age, traditional media.
But the truth is (radio) is still being consumed in massive, massive amounts. I mean television, which is frequently seen as archaic, continues to take a huge amount of media time. It’s still an incredibly powerful medium. The big difference there, however, is specialties are doing well and conventional’s doing badly.
I still have a slightly queasy feeling as we look forward into 2008, even 2009, because clearly, south of the border’s flirting with recession – arguably in recession. So far however, (Canadian) consumers continue to spend, largely unabated, in one of the longer periods of economic growth in modern history. So, how have things changed? The retail sector is very, very different right now.
GOB: In what ways?
PG: Well, it’s highly, highly competitive. And the money that’s often spent is below the line.
GOB: Can you explain that a little more?
PG: That’s money spent on in-store activity, on buying shelf facings in-store, for example. There was a time, for instance, when Loblaws dominated the (grocery) market in this country, and that’s been challenged clearly by the Americanization of the retail market. So, their clout and ability to demand the kind of fees for product listing, for shelf facing, for in-store activity has come down. And more and more marketers such as the big boys, the P&Gs of this world, the Levers, etc… have decided that in-store spend, the ‘below the line’ really was part of a total marketing budget. And they kind of did away with above and below the line philosophies.
GOB: So how then has that affected your members?
PG: It means that more money is moved at our estimation above the line, because I actually don’t see television doing that badly. I think conventional television is doing badly, but not specialty TV. And in no small part that’s driven by price.
Not that conventional television is less effective by any stretch, but clearly if you buy specialty television, it’s significantly cheaper than conventional television – about 40% less.
So if, arguably, you’re reaching the same audience or maybe even a more focused audience with specialty, why wouldn’t you move more funds from conventional to specialty? But then if specialty goes up too much in price than more money will move to the digital channels or be smaller numbers where (advertisers) cobble together lots of smaller digital stations to get the rating point delivery they want. So, how you get there (as an advertiser) doesn’t matter.
GOB: And there’s a lot more local advertising in radio than there are in conventional stations. I mean conventional TV advertising is switched to pretty much all national among the networks.
PG: Absolutely. And you know advertising agencies are still challenged with a whole bunch of problems. First of all, they’re brain-achingly busy because they have had to carve back, they’ve had to manage lower commission rates or revenue from their clients while demands have increased. And frankly, they’re still very, very much trying to evolve and to tackle (the digital world) and embrace all other new media. To that I believe there is a strong sense that they need to have traditional media partners while they manage their evolution of media.
So, radio’s very, very well-placed with its local reach, its huge reach. If you consider we have about a 96% weekly reach… That’s extraordinary… And I look at our projections into the future and look at the past two quarters… we’re barreling ahead again this year.
And we like to believe our view of the world is pretty complete in the sense that (CBS has) about a 65% share of all the national radio ads in the country, when we have every conceivable format, we have every conceivable market. And we’ve seen spending from all categories continue to grow… the finance sector, automobile companies… The retail advertisers book on perception but renew entirely on results. And if the results weren’t there, they wouldn’t keep renewing – and they do.
So, it’s very difficult for an advertising agency or multi-national clients to identify precisely, as many before me have said, which segment to their advertising works when they’re inevitably using the multi-media mix. They don’t know the extent to which radio or any other part of the media is working, but clearly the local advertisers do. And that says to me that’s how they keep coming back because there isn’t a better, more effective local medium than radio.
GOB: Well, I live and work Hamilton, and the local news here is basically the newspaper and the radio stations, and to a lesser extent CH and the cable community channel. So, as much as people talk about how much stuff there is available on the web, I mean there is very little of the local stuff compared to what you can find about Brittney Spears and whatnot.
When it comes to finding out of they’re changing the zoning a block over from my house or something, there are very few places to find that out.
PG: Precisely. What fascinates me and what I love about all the (new platforms) is the speed at which it all moves… Start with the big media story of 2007, I guess: social networking.
You have to start with Facebook. Not because it invented anything new because it certainly wasn’t the first social network. But because for the first time the chattering classes and the media pundits paid attention and saw the point. Facebook’s contribution in 2007, I believe, was to get a massive number of people into social networking.
But enthusiasm for Facebook is waning very rapidly as you’ve probably heard.
GOB: Well, that’s true. I’ve got a Facebook page, but that goes back to my point. If you look at the top stories posted in the Hamilton network, often very few of them have anything to do with Hamilton news.
It’s often all the same celebrity BS you can find anywhere. But, I can still turn on CHML and hear local stuff.
PG: Exactly. And mostly, Facebook isn’t really about anything, it’s just about itself. The strongest social network sites… appear to be about something other than just socializing. If you had a look at, for instance FFFFOUND, have you ever been to that?
GOB: No.
PG: It’s fascinating, it’s about visual images and you can find all kinds of wonderful visual images, and use them for what you’re working on. It really is fascinating. Or LastFM or the Dopplr Network, for frequent travelers? Those sort of sites are now starting to gain.
Will there always be growth in that sector? Absolutely. Will radio continue to deliver solid audiences? There’s no question it’ll change in how it’s consumed and, as we look right now, we’re going through the process of putting in a new measurement system (portable people meters, or PPMs).
GOB: How do you think PPMs are going to change things – and how deep is the problem with the younger demographic and their level of listenership?
PG: First of all will PPM change things? Absolutely, because what we do know is that a diary, as good as it is and as consistent as it is, is in fact, impacted by the visibility of the station in the small part and the memorability of the station… because what you do with a diary is filling in what you think you listen to, or remembered you listen to.
So, we see people get in the car or assume they got in the car in the morning and they draw a line down through 680News until they get out of the car. The reality is what PPMs and the tests have proven clearly is when you get in the car, you may be listening to 680News for a period, then you may decide to make a phone call and cut the sound on 680News and then… so, the time spent with the medium decreases but the reach goes up dramatically. So, the way it’s sold will change. To become an even greater reach medium, you’ll perhaps buy more spots to get the kind of frequency level you need. We’ve also discovered that evenings and weekends grow ever so slightly and breakfast and drive home audiences decrease.
But, there’s no tail off. There’s a factor called diary fatigue which means that people claim they listen to the radio less on Friday, Saturday, Sunday than they do the rest of the week, progressively less from Wednesday on. The reality is that isn’t the case.
GOB: Personally, I think I listen to more radio on the weekend than I do during the week. That’s different now that I don’t regularly commute into Toronto. When I commuted, I listened to the radio in the mornings, especially, all the time. So now that I do a lot of my radio listening on the weekends it kind of distresses me to see – because I live near one of the station groups here – the parking lot is totally empty and there’s nobody actually there and a computer is probably running the things.
PG: Well, I don’t know which station that is but there’s less and less of that. It’s fascinating because that’s very, very much the case in the States. And that’s why when people draw parallels between Canadian radio and American radio they really are not fair in the sense that Canadian radio has far greater texture and depth than American radio, which tends, by virtue of over-licensing, to become a juke box, because you still want these margins out of it, so they start cutting all the costs and they start moving over to voice tracking, etc. And add to that, they’re hurting rather badly (in the U.S.) whereas radio continues to grow here.
Outside of outdoor, which probably is pretty close to radio in terms of being close to point-of-sale…
GOB: Well, then a lot of the outdoor stuff is getting closer and closer to broadcasting.
PG: Indeed.
GOB: However, I’m getting pretty sick of being barked at, at every Esso gas station I stop at with their loud ads and news headlines that are three days old. But if you look at some of the other in-store display technologies that are coming out in say Tim Horton’s or other retailers, you know they’re reaching people, reaching in even closer than radio can because they’re right there in the store.
PG: Absolutely. However, to your point, I don’t know how much people enjoy that. Radio’s something you opt into… whereas the in-store stuff is in your face and sure it has an affect, all advertising has an affect, there’s no question about it, but, I could give you a whole bazillions of reasons why people believe radio does and will continue to be successful. The other thing it has in its favor is it’s new. It’s new music, there’s new news, there’s new weather. Frankly in Toronto and southern Ontario, with the weather we’ve been having, it’s difficult not to consult radio all the time to get some sense of where you’re going, how you’re going to get there, what the hell you should wear. So, those factors only support increased tuning as far as we’re concerned. So, it’s an easy partner to other media.
GOB: Who are the demographic leaders in terms of radio listenership and just going back to the young demographic for a minute, where does that stand right now, because that’s been dropping off for a while?
PG: Interestingly enough, where there is an offering that appeals to the younger demographic – which is in most places – radio tuning levels according to the PPMs are effectively as good as they ever were.
GOB: And that’s from the testing done in Montreal and other places?
PG: Montreal, Houston and Philadelphia are the two markets that have been done in the States as well and they have clearly established that the youth is not, not listening, they’re just not filling out diaries – and you can imagine why. They live in a digital world… and for them to fill out a diary is ridiculous, it’s archaic.
And frankly the other group that reflects lower tuning are the professional males. Women seem to be more responsible than we are about lots of things. So, those males haven’t been filling out diaries either to the extent we wanted them too.
So, tuning levels seem lower than they are. So in fact there’s not the huge loss of young male audience for instance. It’s just as I said, they aren’t filling out diaries. So, PPMs, once you get them to accept that they will carry this meter, will reflect how audiences – and it’s not without its challenges, because you dock it at nighttime, people wonder what happens when you go into the bathroom and shave and shower and all the things you do in there. You sure aren’t carrying your meter in there.
So, there’ll be some extent to which it’s under-measured, but it will be a far more transparent audience measurement. And advertising agencies and clients will take comfort in that.
GOB: You have to get that technology into their cell phones and pay them their $2 for carrying around the technology inside their cell phone somehow.
PG: Yeah, maybe.
GOB: Then they wouldn’t have to carry a separate meter and we’ve all got cell phones anyway.
PG: Yeah, and maybe in fact just contribute the money to their cell phone bill.
GOB: There you go.
PG: Clearly the technology will evolve. Right now, this people meter is the most effective one in the minds of Arbiton and Neilsen and BBM in this country. But we’re very hopeful about it because we believe we’ll have great tools in which to sell the medium and we’ve seen, as I’ve said, extraordinary growth. We continue – this year we’re pacing in the first two quarters about 10% ahead of last year – and last year was an extraordinary year.
So, anybody who suggested a demise of local commercial radio is wrong.
