As the calendar turned and we got back to work during the first week of January, a blog post by Fred Jacobs [The Sales Department] caught our eye. In typical Jacobs Media fashion, it’s a well thought out piece about how to address and improve the age old issue of the relationship between sales and programming. FMQB has spent many pages in its history with the brothers Jacobs covering programming and marketing topics, so it’s only fitting that we turn our eye to sales as the radio industry is in the midst of a pivotal time in its history.
By Michael Parrish
Fred & Paul Jacobs
As the calendar turned and we got back to work during the first week of January, a blog post by Fred Jacobs [The Sales Department] caught our eye. In typical Jacobs Media fashion, it’s a well thought out piece about how to address and improve the age old issue of the relationship between sales and programming. FMQB has spent many pages in its history with the brothers Jacobs covering programming and marketing topics, so it’s only fitting that we turn our eye to sales as the radio industry is in the midst of a pivotal time in its history.
With increased competition for ad dollars reaching an all-time high due to the advent of Pandora, Slacker, Groupon, Living Social and the like, the focus of all facets of radio stations needs to be about the bottom line. Over the course of its existence, Jacobs Media has worked with radio to maximize ratings by building revenue. And while their message is primarily targeted at Rock radio stations, it’s a message that is universal no matter the format one works in.
FMQB caught up with both Fred and Paul Jacobs for a conversation regarding sales and a little more.
I was reading a blog post on your website where you wrote radio is in need of a better sales story. Can you expand on that as to what radio should be doing better?
Fred: The good news is I have [Clear Channel CEO] Bob Pittman on my side. I’m essentially echoing the same thing he’s been talking about since the Radio Show back in September, which is radio needs to do a better job of telling its story. He’s talking globally, but you could essentially make the same case locally right down to the brand level. But you know what, I’m the programming guy and Paul’s the sales guy. We were probably a couple of light years apart from each other back in 1981 when I was programming WRIF and he was selling time there. We really didn’t have a whole lot in common with each other in terms of what we did inside the building. Today, we’re on the same page.
Inside a radio station, programming and sales really need to get closer to one another, so that sales can better communicate the really great stories behind the brand. Invariably, there’s a disconnect between the programming side of the station and what’s happening with sales. That’s why I encourage programmers to get in front of the sales people, get invited to their meetings, and make sales calls. Nobody tells the station story with more passion than programmers do. It’s their baby. It’s their product. They are the designers, and can communicate a story better to the jocks, to management, and ultimately to advertisers, better than anybody. This used to be such an easy business. You would get the ratings and sales would seamlessly follow. Today it’s not like that at all. You really have to work hard for the money and you have to make your case. Yet there’s a real breakdown in a lot of brands because programming has a strategic plan and in many cases executes it, but oftentimes, sales does not.
Paul: Radio is losing the war by allowing itself to be defined by its metrics, which reverts back to what I’ve seen on the sales side with that growing inability to tell stories. It’s not that radio needs a better story. It’s that we need better storytellers. We need sales people who are engaged and excited with the product, but not because it’s #1.
We created the “Marketing to Men” research study a year ago, because radio stations were having trouble with media buyers who are shifting dollars to women, based on the mistaken conclusion that men are worthless slugs that don’t have the power of the purse. We would sit in sales meetings with great Rock radio stations and hear: “Oh I wish we had more women,” which told me that we were losing the battle. So we created this research project which told the story of the value of men. On the sales side, there’s lack of strategy, a gap in really truly valuing the brand and its connection to listeners, and an inability to connect those dots to advertisers.
It seems like this conversation that sales and programming staffs need to get more in sync with each other never goes away. Why hasn’t radio figured this out by now?
Fred: It is a universal problem and it’s been going on for as long as many of us have been in the business. The difference though, is that in the old days of the low hanging fruit, radio was a simple business, because radio was a hot commodity. There was always newspapers, the yellow pages, television and outdoor, but when you think of the options that the buying community has now, radio really needs to do a better job and finally take on a more strategic approach to sales marketing. It’s crowded out there.
Paul: Especially since PPM, where there’s been a lot of ratings compression. I’ll sit with sales staffs and there will be six radio stations essentially tied for fourth place. And the sellers are saying, “Oh, if we can just break out of the pack.” And I keep saying to them, “You can break out of the pack, because it has nothing to do with ratings. It’s about telling your story, creating differences, and building value based on your product.” But these are concepts that really have become challenging for a lot of sellers to grasp. Now, in their defense, the advertising world doesn’t value great brands the way it used to, especially in radio. So, even if you have that great morning show or an iconic brand or a thirty year track record of success, the media buyer knows that they can get their cost-per-point goals using anybody. So, it’s a chicken/egg thing, but it is radio’s problem, and therefore it is incumbent upon the industry to create the solutions.
Does radio need to get more creative with its advertising by implementing more digital avenues?
Fred: It is part of the larger challenge that all radio companies are facing because the media world has gotten much more complex. It isn’t just a matter of “Here are our ratings; here are our rates; here’s your 60-second commercial, run it 18 times and everything will be okay.” It’s not that simple anymore. Radio has to think about ROI. Radio has to think about packaging all of its assets from its over-the-air sound to its digital offerings. Radio has to step it up on the production side. The way that [WBEB/Philadelphia owner]Jerry Lee has viewed that world is so important, because we can no longer simply mail in the creative, and have that “good enough is good enough” mentality.
We really need to get more focused on solving the problem of the advertiser. That’s an area where it’s always been about the station. Here are our ratings and here’s what it costs, so buy time now and you can go to Jamaica with us in February. Too often, radio isn’t focused on how it can solve a retailer’s problems and to a great degree, that’s why Groupon has been successful. For all of its flaws and all of its problems, and there are many, Groupon takes on that issue of store traffic and results. While it has many downsides, it does address a need for many retailers that radio keeps dancing around. The world has changed and yet radio sales and radio sales pieces are still similar to the way they looked back in the ’80s.
Paul: Radio has this historical infrastructure of radio sellers where the product is valued on ratings and that’s the metric, and it is sold to media buyers who are select people who have allocated money for radio. That equals about six percent of the advertising pie, and it’s not growing. Growth is in areas outside of radio’s infrastructure. It is with coupons, mobile, and social media. Some radio companies have made nice efforts in this area, but we’re still hampered by having radio sales people and managers that have been traditionally trained to talk to certain decision makers while Groupon, Living Social, and Pandora are out there talking to other people with growing budgets. So that’s really the nexus of the problem. The reason why we’re talking about a problem that’s existed for fifteen years is that, for the most part, radio stations are structured very similarly to the way they were structured fifteen years ago.
How much are Groupon and Living Social a problem on a competitive level for radio sales?
Paul: Well, they’re talking to thousands of local retailers, where the average radio station probably has eighty clients in an average week.
Fred: They’ve clearly expanded the pie by realizing there’s no reason to be in this small circle of advertisers like most radio stations are. Everybody needs store traffic and they position themselves as a solutions provider for all kinds of businesses; big, small and otherwise. Paul’s right that when you add up the number of different accounts on your typical major market radio station it’s a small number of advertisers, and yet when you look up and down the street in your hometown or the mall, there’s a lot of local businesses there that need store traffic, better branding, and all the things that radio can provide. But we limit ourselves by continuing to call on the same accounts with the same stories with the same basic products.
Paul: And that’s it, the same basic product. We sell :60s and :30s primarily, and the market has shifted. There are efforts out there, but let’s not forget the secret sauce, and that is the cume. As radio realigns itself to take advantage of where the money is, we will always have that cume – the ability to reach a local audience. .
Fred: We’ll have the cume as long as we have a compelling enough hometown product to make a difference, so of course that means the personality. Yet, as we know, radio is going through another one of these cyclic conversations about “What is the role of the personality?” And for economic and efficiency reasons, the question is whether radio can consolidate that role and use out-of-town voices or, frankly, no voices at all to be able to represent its brands.
All of this is going to come to a head for radio in the next few years as companies grapple with this issue. Clear Channel certainly has its philosophy with Premium Choice in many of their markets, and CBS is firing back with an approach that local content is the way to go. We’re really living in a very interesting time where the different models are going to be tested. We’re going to find out what kind of product radio needs to put on-the-air and how radio needs to market it in order to turn the corner and come out the other side as a viable advertising medium and a content provider worthy of the consumer’s time.
One of the things you wrote in the blog post that I mentioned at the start of this conversation was about it’s not enough for programmers to just help sales reps tell the station’s story. What else should programmers do to help sales along in the process of selling the station?
Fred: Part of it is just basically informing the sales staff about what’s actually going on. If you offered a weekly quiz to everybody inside the radio station who interfaces with the communities radio serves – the audience, advertisers, or the community itself – you would probably find that there truly is a disconnect between what the PD is programming, and what everybody perceives the radio station is actually doing. So, simple internal newsletters are important, because even though radio stations are populated by fewer employees these days, it is presumptuous to think that everyone knows what’s going on. More and more staffers are multitasking and working harder than they ever have before, so maybe they don’t have time to listen to the station and actually hear what’s on the air. It is the programmer’s duty to be the internal town crier for the radio station, and let everybody know from sales right down to the person answering the phone what’s going on.
The other side of this is selling up, because when you look at the pressure on corporate staffs these days, to assume they know what’s happening at the station level is a major error in judgment. Too often, a corporate opinion is formed at a point in time about a particular brand, disc jockey, or program director that may not be accurate with what’s really happening on the ground. It is the duty of the programmer to manage-up, manage-down, and to inform everybody in the pipeline about what the radio station is doing. Many people in radio stations will tell you they don’t understand what’s going on around their station. It shouldn’t be that way in a small operation. There’s no excuse for those communication breakdowns.
Alright, let’s leave sales behind for a moment and switch topics. What’s wrong with Rock radio?
Fred: It really comes down to that eroding symbiotic relationship between radio and records. Even though it’s always been a couple of parts adversarial and a couple of parts cooperative, the two sides, by and large, worked very well together historically in order to accomplish each other’s goals. I look back to when maybe things started breaking down and the product for new Rock started to go a little south in the mid-to-late ’90s. My perception is that Rock radio really tried hard with the material that it had, yet much of the music did not connect with consumers. So is it the changing nature of the overall audience? Maybe. There may be some sociological things happening in there as well. Why do people continue to be fixated by Classic Rock? Can you believe I’m asking that question? It’s a very interesting one.
That’s was my follow-up question. Are you surprised at how well Classic Rock still does?
Fred: No, I’m not surprised at how well it still does because I have come to believe that this stuff is going to be around for 100 years. It is every bit as long lasting and viable as Classical Music. What I’m surprised about is that it hasn’t really been replaced by whatever is happening now.
Part of it is the way that new music is discovered has been dispersed. You go back to Philadelphia in 1975 and there were really only a handful of sources available to learn about new music. You could read Rolling Stone and you could listen to your local Rock radio stations, WMMR, WYSP, and WIOQ. Today we’re all discovering new music in a very customized, personalized kind of way, whether it’s on Pandora, surfing around on YouTube, or checking out songs on Spotify. But “hits” are no longer these big mass appeal things that sell massive numbers of CDs or singles. It really is the long tail effect and it’s impacting music radio. It’s not just Rock; it’s across the board. But Rock has clearly been impacted by it.
The other part of it is the crazy fragmentation that happened in Rock throughout the ’80s and’90s is part of the story too. Because as Classic Rock came into popularity, it fragmented, and eventually, so did Alternative and Active Rock. You still have a lot of markets where there are too many Rock stations and they can’t all make a living. So when you start seeing some of them drop out and move to other formats, the typical reaction has been that there’s a problem on the Rock side. But, as we documented when this first started getting crazy last summer, a number of the spoken word stations came out of Rock, but also were born out of other formats. Rock is on the leading edge of some of the problems that have impacted that relationship between radio and music. It just happens to be closer to the tsunami of change that the music industry and radio are enduring.
Give me a quick rundown of jacAPPS. You received some really good recognition towards the end of last year about your growth. Are you surprised the apps business has taken off the way it has?
Paul: We were surprised in the first six months but not anymore. We started jacAPPS three-and-a-half years ago, based on research, intuition, and the theory that individual radio stations should be in mobile. The challenge for us is to continue to not only enhance the existing product, but keep up with mobile and make informed choices about where the puck is heading. We believe it’s in-car connectivity, shopping, and social. But the reason why jacAPPS is successful is because we’re not software developers. We hired them. We are marketing and strategy guys; and Fred’s a Program Director at his core, so we’re in touch with consumers. As long as we continue to have that, this thing’s going to be very successful, not only in radio but lately we’ve expanded well out of radio.
Fred: This whole opportunity came out of the research that we do. Our Techsurveys which we’ve trended for seven years now have not just been helpful for all the stations that participate, but they’ve certainly been informative for us. We’ve been able to gain a leading edge understanding of where it’s going, and that’s been helpful. I have to give a shout out to Tim Davis, who is our digital visionary. He’s the guy who does a lot of design and analytical work on our Techsurveys. He really was the guy who brought this opportunity to our attention, and we’ve been running fast ever since. It’s a lot of fun and it’s gotten us into some circles that we’ve never had access to before. So it’s a cool thing to be a technology company and a software company within this framework of marketing and research.
I saw both of you Tweeting that the NAB/RAB Radio Show should be in Detroit next year. Can you explain why you feel it would serve the radio community best to come to the Motor City?
Paul: We believe that the Radio Show has been primarily about entertaining ourselves, rather than telling the radio story to our advertisers. New York, L.A., and Chicago should be key cities in working with – and charming – advertisers about the value of radio and the excitement and passion of our personalities and our brands. But given what’s happening in the auto industry with in-car entertainment and information systems, Detroit is a logical destination because of radio’s relationship with cars.
Fred: It goes well beyond just in-car listening. Because automotive is still the top advertising category, the Radio Show in Detroit just makes sense. Cars are more than 4-wheeled vehicles that take us from Point A to Point B. They are consumer electronic entertainment centers, and radio has to be closely connected with them down the road. And radio would have fun in Detroit. We’d be able to catch a Tigers game at Comerica Park, and I do have a spare bedroom.
[eQB Content by Michael Parrish]
