Radio’s 5 Customers

“Radio is at the tipping point, and it doesn’t want to know much about the way its customers are changing.”

Joint Communications’ John Parikhal tells Tom Taylor of Radio-Info.com in yesterday’s daily newsletter he’s worried about radio tuning out its listeners:

“Internet companies are checking out the customer six ways to Sunday. But radio will tell you they don’t have the money to research their customer. I truly think we’re at the tipping point, because for any business, you have to know who your customers are. 

For radio, it’s 5 different customers:

#1 – Wall Street or another ‘lender’.

#2 – The advertiser. And radio should focus a lot more on the advertiser, because it has given them very short shrift. The more innovative companies are trying to become the digital and media marketing experts for the local guy, to help them move more product. Their competition is Craigslist and emerging online city directories.

#3 – The FCC, and I sense that radio will be hearing from them within a year.

#4 – The employees. With a few notable exceptions, they have been treated the way no customer should ever be treated. This whirlwind of firings and layoffs has nothing to do with performance, and the message it sends is very negative. People are now very, very wary about making radio a career.

#5 – The listener. But radio thinks ‘all we have to do is keep the listeners we’ve got.’ That’s a fool’s game. You have to grow the pie, and to do that, you need to know more about your listener than their favorite songs or that they like sports on the radio. The listener doesn’t care that radio is in a recession and won’t invest in understanding their changing needs.”

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Cover Story: John Parikhal on The Media Fix

John Parikhal

Never one to stand still and accept the status quo, John Parikhal has been a leading-edge thinker in the broad based media markets for over thirty years. As CEO of media strategy company Joint Communications, he has worked with a multitude of clients including TBS, MTV, VH1, XM Radio, Rolling Stone Magazine, Pepsi, Wendy’s, Molson, CBS, NBC, ABC, Time Warner and Radio One, as well as major record companies and radio stations in the United States, Canada and around the world.
In addition to operating Joint Communications, Parikhal has also formed a partnership with global media and entertainment expert Taran Swan who has worked with market leaders Disney, Nickelodeon and Cartoon Network over a twenty year media and entertainment career. Earlier this year the two multi-media doctors unveiled their latest venture, The Media Fix blog at http://www.gomediafix.com. It’s a must see site for all media and marketing executives who choose to be actionable in their approach to today’s solutions.

John Parikhal on imagination: If you take the commitment away from imagination, eventually you’ll even lose corporate focus.

e-QB presents excerpts from the NovemberFMQB magazine Cover Story with John Parikhal, CEO, Joint Communications

On the core concept of his new blog The Media Fix… The Media Fix became a way for us to start a dialog around the ongoing critical issues of the Internet, integrating ideas that parallel the broadcast and related fields. It’s not strictly about the digital space. We’re interested in all areas of media and technology focused on this changing world and its effects on the consumer. I’ve always been consumer focused. We want to stay on top of change to anticipate and help companies take effective competitive action while staying connected with the consumer.The Growth Curve is an important part of assessing where a company is and where it will go. Phase 1 in almost every business is the Discovery Phase during which you are figuring things out and investing a lot of time in the process which begins with losing more than gaining. You actually go down the Growth Curve before you go up. Once you discover what is really working you start duplicating the pattern of success. The Phase 2 is the Normative Phase where you duplicate what you have discovered and formatting becomes king. It’s also where you make the most money because of the repetition process. The Phase 3 is to rethink and modify what’s worked for you in Phase 2. It’s critical to the future of your business. You can get trapped in Phase 2 because of consistent success through repetition. However if you’re not thinking ahead and modifying your model, someone else will do it for you which can lead to disaster.

On the “Growth Curve” concept on the site which is an integral part of John’s strategic thinking…

On applying this concept to the radio industry…Radio is rethinking, modifying and innovating a lot these days. Some radio companies are doing really smart and creative things on the Internet. Radio is asking for innovation from their suppliers because they had to. You never really change unless you have to. As you move along the Growth Curve, whether you like it or not, after you make a lot of money duplicating the old pattern, it stops working and everybody always ends up at the rethink and modify stage or else they die.Radio is being innovative but there’s often confusion between innovation and top down initiatives. Top down initiatives are seldom innovative. They are usually the result of a committee meeting and jamming out something that’s sub-optimal but agreeable to all parties. Consolidation was developing managers burdened with too many responsibilities and radio lost its innovative edge.
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How to Fix Radio

Fix RadioThe radio business got into trouble because it was ‘consolidated’ -when Congress said there should be no limit to station ownership – radio owners believed that somehow ‘big’ would translate into ‘better’.

Well, big didn’t mean better.

Instead, ‘big’ translated into ‘dumb’ as most (but not all) of the consolidators proceeded to pile on commercials, fire program directors and managers, bully the record companies and cut marketing and research so they knew less about their listeners than ever before.

Not surprisingly, their audience got smaller, advertisers got turned off and their share of revenue declined.

And, radio blamed everyone except themselves.

It’s the internet’s fault. Not really. Radio came very late to the party. Many aren’t there yet. I saw a radio website recently that still had a Christmas promotion on its home page! And, this was a major company.

It’s the advertiser’s fault. Not really. They are shying away from radio because the internet appears to be a more efficient way to measure and reach customers. Does anyone remember Lowry Mays’ famous comment that he wanted to pay Arbitron 20% less – when the service was already substandard in sample, especially among 18-34?

It’s the listener’s fault. Tragic. Blaming them because radio became even more predictable and less innovative.

It’s Wall Street’s fault for demanding huge returns. Ridiculous. Wall Street is a pimp and everyone knew it going in.

So, what’s radio to do?

First, stop acting like a victim. Second, come up with better ideas. Third, suck it up and accept that you have to invest to make products better – the shell game of cost-cutting doesn’t impress anyone anymore.

Let’s start with low-hanging fruit – cheap and easy ways for radio to make more money.

  1. Dump bad initiatives and start good ones. HD is DOA. Spend your time and energy tapping everyone except the most senior executives – who seem to spend too much time with each other and not enough in the trenches. Stop surrounding yourselves with ‘suck ups’ who agree with bad ideas because they are afraid for their jobs or need your business.
  2. Push hard for a 30-59 demo buy. For decades, radio has been driven by advertiser’s demands for 25-54. It’s so out of date. Get modern. Already, 16 million Baby Boomers are 55-59. They spend billions –and radio ignores them. In the next 4 years, another 16 million will be 55-59. Meanwhile, 25-29 year olds are less interested in radio than ever before. Get real. And, if I hear ‘we can’t tell advertisers what to do’, I repeat – stop acting like a victim.
  3. Encode song ID. This is a simple, not-too-expensive fix. Make sure that when you play a song, the title shows up on in-car radios. iPod does it. Satellite does it. But some stations won’t spend the money! Even though 50% of radio listeners want to know the name of the songs each time they are played.  Then, get serious about some longer term changes…
  4. Tap your employees. Get serious about innovation. It’s usually ‘bottom up’. Radio has proven you can’t do it top down. The best ideas come from those closest to the customer. Put a process in place to listen to your employees who actually interact with your listeners and advertisers.
  5. Advertise. Stop acting like poverty stricken corner stores – who cut their ad budgets when sales are down. Act like serious players – HBO, even Eggland’s Best Eggs – let people know what you’re doing, what’s new and why you matter. And stop acting like a victim and saying you can’t spend the money. You have to! Build it into the budget and don’t cut it if times get a bit tough.
  6. Learn about your customers. Do you know that fewer than 4% of your listeners ever text a radio station? Do you know that almost 25% of those who go to a radio station website are also listening to at least one other internet-only station too? You learn this by researching your customers. Full disclosure – I do a lot of market research for clients ranging from radio to bankers – so this might look like self interest. Except that the reason for the market research is because I learned 40 years ago that if you take your eye off the customer, they take their eye (and ear) off you.
  7. Get serious about your website. Update often – at least every day. I saw a radio website recently that still had a Christmas promotion on its home page! Optimize search. Make it easy to find the ‘listen’ button. Include a phone number in your ‘contact us’ information. Update constantly. Post lots of photos. Give your staff cameras and show them how to take a good photo. Do usability testing.
  8. Adapt to the new world. Drop the clichéd slogans and connect with the real world. Accept that 30+ listeners are the future for at least another 5-10 years and figure out how to make them REALLY HAPPY with you.