Contributor: Jimshade Chaudhari, SVP Product, Marketron
Every year, the RAB-Borrell Digital Benchmark report catalogues the health of digital marketing in the U.S. radio industry. Every year, the results are interesting ̶ but none, I would venture, can compete with 2020.
Borrell Associates’ multiple surveys and in-depth analysis make last year’s trends strikingly clear. In a year when nothing went as planned, digital advertising proved to be a bright spot. Radio stations successfully relied on evolving digital strategies, compelling products, new service offerings and the education and confidence of their sales teams to provide their clients with the right marketing mix for 2020 and beyond.
Digital advertising grows 11.8%, offsetting decline in broadcast sales
Radio stations, on average, saw a 25-35% decline in core radio advertising revenue in 2020. This steep decline in broadcast sales, however, was offset by digital channels. Digital sales increased by 11.8% from 2019, bringing radio’s digital revenue to $1.1 billion in 2020, and made up 17% of total sales ̶ a four-point jump from the year before.
Why the strong numbers? As in-person experiences dried up due to the pandemic, advertisers pivoted quickly to shore up their digital presence. “Advertisers needed help with their websites, help being found and help finding creative ways to manage their social media during uncertain times,” the report states, and radio stations with a solid digital strategy stood prepared to pick up the mantle. In fact, almost half of radio stations that responded to the survey agreed that their “strong digital game plan minimized any negative impact” of 2020’s downturn.
Targeted display and audience-extension banner ads topped the list of sources of digital revenue, followed by streaming audio commercials, social media, basic display/banner ads and SEO or paid search. Stations also got creative. 53% of stations held virtual events in 2020, such as concerts, virtual remotes at clients’ stores, job fairs, boat shows and even happy hours. They worked, too; one station’s virtual event drew more than 40,000 views.
In addition to expanding into virtual events, many stations found digital services to be a significant new revenue driver. In 2016, only one in five stations offered digital services. Currently, 81% of stations sell digital services like website design, SEO and social media management. Advertisers need both tools and the expertise to use them, and leading radio stations are poised and prepared to meet their needs.
Advertisers shift focus and dollars to digital channels
From the advertisers’ perspective, 2020 brought laser focus on websites and digital channels as life moved online. This trend shows up in a number of stats from the RAB-Borrell report, including:
- 23% of radio buyers paused their radio spend in 2020, with 43% of that group blaming the pandemic and 33% saying it was too expensive. 24% said they “moved the money somewhere else,” presumably to digital.
- Radio buyers now spend roughly the same or more on individual digital products as they do on radio advertising.
- Nine out of the top 10 marketing tactics used by radio buyers are digital, led by 96% of radio advertisers also buying social media.
Digital revenue and advertising spend should see double-digit growth in 2021
2020 not only accelerated the adoption of digital advertising at radio stations, it prepared them for the years to come. In 2019, 26% of station managers reported that their companies had no digital strategy. Now, that number is just 2%. Nearly all stations currently have a digital strategy, and a full 10% of station managers consider their strategy “brilliant” while another 50% thinks it’s “good.”
It’s no surprise, then, that the numbers for 2021 are promising. The RAB-Borrell report anticipates an 18% increase in digital revenue this year, which would bring the industry to net YoY growth for the first time in more than six years. Local advertising spend is also expected to rise. Respondents to the survey were planning an average increase of 13.6% in 2021, far above the usual single-digit year-over-year growth.
Station managers reported confidence in their people as well as their strategies. In 2020, 35% rated their sales teams’ digital abilities good to excellent; in 2021, that number jumped to 49%. Sales teams are putting their skills to use more often, too. Nearly two-thirds of radio sellers are including digital products in every single sales pitch.
That confidence, however, doesn’t mean that the need for strong training has disappeared. Training existing sales reps remained the number one factor that would have the most positive impact on digital sales for the third year in a row. In addition, 80% of radio managers said their sales staff received training at least once a month, and half said at least once a week. Radio stations clearly understand the critical role that continuous training plays in empowering their staff to offer the latest digital products and the best solutions for advertisers and agencies.
What else did station managers believe would positively impact digital sales? Having more and better digital products to sell was a close second, behind training, with 35% of respondents agreeing that they need more/better offerings, up from 11% the year before.
Digital success depends on the right vendor partnerships
Finally, the report touches briefly on what I see as the biggest takeaway to these industry shifts: radio stations’ partnerships with third-party providers to deliver exceptional digital offerings. The report comments, “Stations can use their own staff to voice radio spots and program them and manage an in-person event, but they’ll need an outside provider to manage a virtual event, handle SEO or fulfill orders for audience-extension ads.”
Station managers realize this and recognize the importance of choosing the right vendor(s) for supporting their clients’ success. In Borrell’s survey, product and services features came out as the most important factor in selecting a vendor. While price came in second, it was more than 20 points behind the quality of the third-party product, just ahead of training and support. This demonstrates stations’ dedication to providing multi-tactic campaign strategies to meet client objectives.
If I had replied to Borrell’s survey, that question would have been a tough choice. It’s obviously critical to have the features and functionality that you need to execute an impactful digital strategy. But price matters too, of course, and training can be make-or-break. You can have the best products on the market, but if your staff can’t sell it, it won’t do you much good.
In reality, radio stations don’t have to choose between the best products, services and training ̶ they’re all important. They simply have to find a vendor who can provide the right balance of each to achieve their clients’ digital objectives. Based on the findings in the report, it appears many stations are already striking this balance and giving their clients more options ̶ and more outcomes ̶ than ever before.
As the RAB-Borrell report shows, 2020 brought challenges and opportunities to radio, just like everything else. I’m optimistic for a better 2021 and the continued relevance and success of digital advertising in the radio industry.