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I Want a Bigger Piece of Pie

January 31, 2013

According to Universal McCann, in 1935 the size of the U.S. advertising pie was 1.7 billion dollars. Radio, dominated by network radio, took 113 million dollars or 6.6%. That was before broadcast TV, cable, internet, or social media.

Fast forward to 2012. MagnaGlobal estimates U.S. advertising to exceed 176 billion dollars. Radio’s slice of the pie was just under 15 billion dollars or just under 8.5% share. For every tenth of a share point that radio can garnish, it adds almost 180 million dollars in new revenue. Instead of just fighting for the dollars already allocated to radio, we, as an industry, need to grow our slice of the advertising pie.

While this sounds simple, it is getting harder and harder. Radio is perceived as a traditional media with a traditional measurement matrix. Newer advertising outlets with newer measurement matrices make the task of growing our slice of the pie more difficult. However, measurement is only a small piece of the pie.

A key word in this new age of advertising is accountability.

Yes, our digital brethren can tell you exactly how many ads appeared on people’s devices. They can often segment who these messages are delivered to in an impressive fashion. To them, that is accountability. However, like many advertisers, what they cannot tell you is how these ads impacted sales.

Conversely, broadcast television has done an exceptional job of maintaining (and even growing) its revenue even as viewership has eroded. It is common knowledge that over the past two decades, the four big networks have been losing eyeballs to cable. More recently, on-demand video (DVRs and Netflix) have increased viewers’ options.

So how has television maintained revenue while losing viewership? Television gives the advertiser what they want, results. They understand the goal of the advertiser and document their success. Recently, this has become a more exact science. However, sometimes this difficult task can be done fairly easily. An advertiser is looking for higher sales. Track sales before and after the campaign. Quantify the difference. While there can be numerous other factors, one can presume a cause and effect.

Documenting radio’s effectiveness is only part of the story. Where several other advertising outlets have excelled is in telling their story to the right people. Once it gets to the buyer, it is too late. We need to document our effectiveness to the planner and directly to the advertiser. First, listen to hear how they determine their marketing mix. Understand what they are looking for. Finally, speak their language and show them why radio deserves a bigger share.

Remember, if radio can grab just a 0.1% bigger slice of the advertising pie, then there is $180,000,000 for our industry. It is time for us to grab a bigger piece by documenting our success and telling the story to the right people.

-Charlie Sislen, Partner