Where Listeners have Power: Radio's Digital Horizon

March 18, 2017

 

Don't blink!

 

Commercial radio, as we know it today, may be about to change right before your very eyes.

 

It’s all going to happen around ancillary services – you know, the digital stuff.

 

How well you get these ancillary services to work with your traditional radio operations could mean the difference between networks generating healthy, enduring profits or suffering the indignity of dwindling revenues.

 

For many years now, traditional media has been descending into a “dog eat dog” feeding frenzy, falsely believing that’s the only way winning players can keep their heads above water.

 

We saw it firstly with newspapers; now it's radio and television's turn.

 

About a decade ago, television discovered that it couldn’t survive on its 50-year-old business model of handing out buckets of money to television producers to make non-primetime programs.

 

It was simply too great a financial risk!

 

So, out of necessity, free-to-air television re-invented itself with a new self-serving business model.

 

They called it ‘brand-funded programming’.

 

This was just their way of saying to independent producers ‘from now on, you’re going to pay us for the airtime, then, you can go out and get sponsors to pay your production costs’.

 

In one fell swoop, they cunningly passed the buck of who pays for producing content to an entirely different sector of the industry.

 

Commercial radio is not quite that powerful anywhere in the World, mainly because it hasn't worked with block programming for many decades, except in talk formats.

 

Realising this dilemma, the “smarter than the rest of us” guys in one of the big U.S. radio networks sat down with some digital geeks recently and looked for yet another way to ‘slice the apple’ in radio's favor, or more correctly, in their own favor.

 

At CBS, they recognised how efficiently the digital space operates and wanted to see how those attributes could be adapted to benefit their traditional broadcasting model.

 

To do this, they got into bed with a company called Wrapify.

 

Wrapify is one of the many digital technology companies out there producing very smart apps for the digital industry and outdoor advertising.

 

This broadcast app they’ve adapted for CBS Radio appears not dissimilar to the technology used for website programmatic advertising; in fact, it really seems to be just that – an adaptive form of programmatic placement.

 

With more and more people listening to their favorite radio station on the move with the help of their iPhone or Android device, and, increasingly, the ‘connected car’, Wrapify’s app may have hit the mark for CBS.

 

This clever little sucker tracks listeners’ movements through the cellular network that’s used to host the radio station's streaming.

 

With all this location data on hand, Wrapify and its radio station clients, know exactly where every one of their mobile listeners is at any particular time, if those listeners happen to be using the app.

 

Presumably, to get the app, those listeners will also have to hand over other demographic data, like age and gender.

 

Put all that information together and it makes it very easy to tailor specific localised advertising solutions to target individual listeners.

 

Of course, there’s absolutely nothing ‘Big Brother’ about all this, at all!

 

The Wrapify app works by inserting extremely local ads into the radio network’s streaming content, offering advertisers access to listeners, who may be literally just around the corner.

 

The listener simply has to download the Wrapify app to be able to listen to all this local advertising.

 

“Hey, whoa!” I can hear you saying “Why would anyone download an app so they can listen to advertising?”

 

Obviously, that was the big question facing CBS Radio and Wrapify - “how do you get the fish to take the bait?” - and that's where their marketing strategy appears to be really quite brilliant.

 

When listeners download the app, they are actually registering to be paid for listening to local ads.

 

For many traditional radio station owners and shareholders, this kind of thinking will be way too far ‘out of the box’.

 

However, when you think about it, do you know any listeners out there that would refuse free money?

 

With that in mind, the concept may not be as far-fetched as it initially seems, and, it could potentially revolutionise commercial radio’s future business model, just as ‘brand-funded programming’ did for television.

 

Remember, with this concept, we're only talking about paying listeners to ancillary services, such as streaming, where their participation can be electronically tracked and audited.

 

The very idea of revenue-sharing, especially with listeners, is a real ‘wash your mouth out with soap’ concept for most commercial operators, even though the idea has been tested in the past with the broadcasters themselves as the beneficiaries.

 

Twenty years ago, here in Australia, there was a weekly syndicated program called ‘The Outback Club’.

 

From a small-market regional radio station owner's perspective taking this program was a “no-brainer”; for the first time, a monthly fee was being paid to the station, instead of the other way around.

 

With radio station revenues under pressure during the 90s and costs always on the increase, information-based segments, long-form programming and radio serials, that stations had previously had to cough-up big bucks for, began disappearing from their schedules.

 

Program producers had discovered that they had to change the way they operated, if they wanted to get their programs aired, and, subsequently, a new radio business model evolved.

 

Now, fragmented audiences are becoming a fact of life, so another evolution in the radio business model may be just around the corner.

 

Perhaps, the ‘let's pay listeners to listen to commercials’ concept is where commercial radio’s new horizons may lie.

 

Clearly, it won’t be done if it’s not profitable.

 

While I’m sure, at first glance, this idea won’t sit well with current broadcasters or their accountants, we may well find that just like the recent onslaught of Uber in passenger transport, in the end, operators may have no choice but to rollover, if this concept gains momentum internationally.

 

Times are changing, and today, smart advertisers realise that ‘the listener’ is a valuable and finite commodity, whose listening time is in demand by all forms of competing media.

 

In fact, in commercial radio, listeners are the only commodity we trade in, and sometimes, getting to them is not the “cut and dried” process it used to be.

 

Unless you've been ‘Lost in Space’ for the past five years, you'll have noticed how focused advertising in the digital space has become.

 

This is primarily the result of programmatic placement, and, its execution is becoming more and more sophisticated as the months pass.

 

The CBS trial in Washington, DC is something the radio industry worldwide needs to keep a very close eye on.

 

If the outcomes prove to be as successful as the network hopes, I can see this development being quickly taken up around the Globe and embraced by many progressive and innovative broadcasters.

 

We are now, like it or not, living in a broadcasting era that is no longer solely traditional ‘over-the-air’ radio, where developments can move at a considered, if not snail-like, pace.

 

Programmatic technology, like Wrapify, is in the digital domain, where developments happen at warp speed and only the strongest survive.

 

Once proven successful, Wrapify must spread quickly or it will be usurped by other app developers, who will happily plunder the company’s research to produce “an even better mousetrap”.

 

Time is certainly no friend to technology.

 

Wrapify, of course, is only one of many ‘gee-whiz’ concepts, that are coming through and have the potential to revolutionise the way today's commercial and public broadcasters will work in the future.

 

When properly adapted, many of these evolving technological developments have the potential to give those who embrace new technology that commercial edge to stay out in front of the pack.

 

What is comes down to is this.

 

Will your station be bold enough to seize new opportunities, as they arise, or will you simply just press ‘Delete’.

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Brad Smart

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E: bsmart@smartradiogroup.com.au

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