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The Reason Commercial Radio Hasn’t Died.

And It Isn’t What You Think!

I admit it.  I really love Spotify.  Where else can you get “stations” like ‘Weekend Hangouts’, “The Happy Hipster’ or “Smart is the New Sexy?”  Curated music that is designed for whatever mood I may be in at the moment.  I can now hear exactly the specific type music I want to hear at any given time.  It has completely taken over the vast majority of my listening experience in the car.  OK, except NPR.

Which made me wonder about how commercial radio is shouldering what I thought was its impending painful decline and ultimate path to oblivion.

The answer – “Just fine, thank you!”

How is that possible?????

The Radio Advertising Bureau just reported that 2014 revenues were relatively flat with 2013 revenues.  The revenue areas that I expected to decline actually did decline.  Spot radio advertising was off 3% and network advertising was off 4%.

Now, here is where it gets interesting.

Those declines were offset by a 9% gain in digital advertising and a whopping 16% in event-driven off-air revenue generation.  Surprisingly, non-traditional revenue from live events off the air now account for nearly two billion dollars, more than one out of every ten dollars radio receives overall.

Rather than fight the current music listening trends of the public – on-line/digital listening and brand-driven music events – radio has embraced them and monetized them.  The result is significant revenue that has offset the decline in their traditional on-air advertising business model.

It is often said that macro-economic trends are the most difficult to fight.  And that remains true.

But, the unspoken corollary is that macro-economic trends can be the easiest to embrace.  And, actually the most lucrative to embrace.

Of course, that is provided you have a few necessary prerequisites:

  • A brand that can make the transition.
  • The insight and execution necessary to make the transition legitimate.
  • A strategy that remains true to the brand.
  • And, a value proposition that is consistent with the macro-economic trend.

So far, radio has figured out how to make the necessary pivot to remain vibrant and relevant to their customer base in a time of macro-economic transition.  How would your company fare if faced with a similar quandary?

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