Bridge Ratings: Is Terrestrial Radio Ready for a Digital Future?

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Bridge Ratings: Is Terrestrial Radio Ready for a Digital Future?

Jul 1, 2010 3:44 PM

Plano, TX - June 30, 2010 - A study from Bridge Ratings echoes a sentiment felt across all forms of media: Adapt to the consumers' preference for online and mobile platforms or be forgotten. Bridge Ratings says terrestrial radio has been exposed to the potential of increasing audience and advertising revenue through digital platform transition, but it is unprepared for what's ahead.

Bridge Ratings focused on the effect that social media marketing can have on any business. Terrestrial radio was included in this study. The results of a specific four-week marketing process called "The Social Marketing Hierarchy" showed that over time, and with repeated and proper messaging, terrestrial radio's tune-in occasions increased, from an average of listening 16 times per week before the study, to an average of listening 28 times per week by the fourth week.

Yet, whether the tool is social network marketing, loyalty clubs or increasing online listening, terrestrial radio executives seem to have their hands tied. Bridge Ratings spoke with 242 general managers and/or market managers in the top 150 radio markets to better understand what's preventing them from being more proactive when it comes to transitioning their businesses.

The study was conducted during the months of May and June 2010, and while there are some market size variances, the general complexion of the study can be ascertained by looking at the average among all the executives who were interviewed. When asked "What is preventing your station(s) from having all the digital resources they need to build audience and increasing billing?", the responses break out as shown in Figure 1.

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Figure 1. Digital Future Preparedness

While these key obstacles rate highly for all stations, the two of greatest concerns are budget (92 percent of GMs responding) and know-how (91 percent) or having the properly trained and managed personnel dedicated to their digital efforts. That costs and personnel assets to direct and operate digital strategies are the number one and two issues makes sense because they are inextricably tied together; station management can't have one without the other.

And while staffing a digital department ranks as the third obstacle to moving forward quickly and effectively, it is clear by these interviews that traditional radio executives find themselves between a rock and a hard place; the desire to move faster is there, but the resources are not.

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Figure 2. Media Use Consolidated. Click to enlarge.

However strong weekly tune-in to traditional radio stations (AM/FM), time-spent-listening is the continuing concern for the immediate future as more consumers of radio find alternate entertainment sources.

What is the potential effect on terrestrial radio? When asked, "Have you read communication from a radio station via any social network?", 78 percent of respondents said no, 9 percent said yes, and 13 percent didn't know. Less 10 ten percent had recently come in contact with a social network communication sourced from a radio station. This data tied to Figures 2 highlights the importance of radio's use of these tools and that the light at the end of the tunnel is the social networking train coming on fast.

Of those who had communicated with a terrestrial station through a social network, the power to move them to action resulted in 44 percent being motivated to visit the station's website, and 38 percent indicating they listened to the station in question by virtue of some social network contact through Twitter, Facebook or other social network entities. All indications suggest that social media marketing is playing and will play a major role in the future business success of traditional radio where it is feasible for radio's analog universe to interface with powerful digital tools.

The mobile future presents yet another opportunity for traditional radio as part of being prepared. In America, 285 million people (91 percent) own cell phones. For most users, activity on cell phones is no longer limited to a simple phone call. The cell phone has become a hand-held computer, and consumption projections provide insight into which activities are growing and which offer the best opportunity to marketers. In this latest Bridge Ratings study, 2,311 panelists were asked about their current and potential use of cell phone activities. Figure 3 expresses these interests as the percentage of panelists who expect to use the activities more in the next six months based on their current usage.

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Figure 3. Consumer use projections. Click to enlarge.

Social networking (29 percent), text messaging (25 percent) and using Twitter (22 percent) are mentioned most often; Internet radio streaming was a close fourth position. All provide outstanding business growth opportunities for terrestrial-based radio businesses.

Bridge Ratings Summary

Over the last two years, the digital landscape has rolled out much faster than expected. While the Internet has been pervasive for years, its power on a personal basis has been exposed through social networks and the speed with which communication travels.

Knowledge is the most combinable thing humans have, but taking advantage of it requires special conditions: the size of the community, the cost of sharing that knowledge, the clarity of what gets shared and the cultural norms of the recipients. No other environment exemplifies this more than the Internet and its communication capabilities.

Terrestrial radio management in general seems to be getting the message that leveraging the Internet's tools to further its business is a critical component of future growth and success. Intellectually it is clear. The ability to empower the radio business as a whole is stifled by recent economic developments and corporate rationale concerning reinvesting a greater portion of profit margins.

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