:: By Lisa Garofolo, Senior Local Buying Strategist

In a world where shiny new technology turns heads, it was assumed that the introduction of HD Radio would garner a lot of industry and consumer attention. And it did.

But then it didn’t. HD was going to be the next wave of terrestrial radio and single-handedly save the medium. But it didn’t. Or rather it hasn’t.

HD Radio’s Hidden Cost
HD radio seemed like a no brainer….put a higher quality radio signal on a digital channel and broadcast it to the masses. The problem is that someone forgot to mention the amount of work and cost on the front end and the cost to consumers on the back end.

Better Signal, Different Content
Since a standard radio signal is fairly clear (although it is analog), in most cases, the argument for having HD Radio had to be more compelling than just quality of signal and it has yet to come to pass. So many broadcasters have decided that HD Radio will need to provide a different type of content than its sister stations on the AM or FM Band.

This approach requires additional programming, additional purchase of content, and perhaps additional cost of on-air talent. In order for stations to recoup their outlay of cash, there has to be a market for their product and thus far the market is not responding. Cars, radios, etc. have to be upgraded to receive the digital signal and with other options such as Pandora, Satellite, iPods, the demand for HD signal radio is just not there. Not yet.

Can a New Name Bring a Second Chance?
So what should we do? Perhaps we should rename it. Industry experts feel as though the biggest downfall of HD Radio is the name “HD Radio”. It conjures up an image of HD Television which really makes a way better case for clarity than that of the radio signal, which already has crispness even with the analog signal. Could the radio industry go back, retool, rename, and re-approach? It would be tough, but it may be worth considering if they want to get buy in from consumers and programmers alike.

HD.edu
For many people, the unanswered questions, from “what is it” and “how does it work,” to “where can I get it” are stifling enough to not even pursue the technology. There aren’t a great deal of websites around to educate oneself about HD Radio.

Wikipedia will overwhelm you with a plethora of information. But even with this information overload, the site doesn’t answer the basic questions that people want to have answered. What is HD radio and why should I want it? Visit www.hdradio.com for an easier education. Disclaimer: The site includes sales as well as general information. It’s not a third party industry site.

Technology vs. Marketing
I’m curious to see what HD’s next move will be. It could be the age old showdown of: technology vs. marketing. I take my hat off to technology but I put my money on marketing any day of the week.

::By Rhonda McLeod, Senior Local Buying Strategist
and Marge Pistulka, Senior Local Buying Strategist

The Great Recession of 2008-2009 hit the radio industry hard and companies suffered decreased revenue and increased debt.  As the economy recovers, some media companies are looking to cast a wider net, while others are ready to sellout completely.

Bonneville becomes Hubbard Media Group
Bonneville International has been in the broadcast business since 1964.  Recently, they sold off their Chicago, Cincinnati, St. Louis and DC radio stations to Hubbard for $505 million dollars.  Though other radio companies made offers in the $1 billion range, Bonneville accepted Hubbard’s bid as they promised to maintain the corporate philosophy of teamwork and a positive workplace.  Additionally, many of Bonneville’s top managers signed a 2-year commitment to stay on with the new owners.

What sets Bonneville apart?  They have a strictly enforced non-preemption policy.  Advertisers are encouraged to place flights as early as possible, as Bonneville does not oversell and closes their inventory once it is completely sold.

With business-as-usual projected for this group, the initial difference will be the acceptance of alcohol, lottery and casino advertising, previously declined under Bonneville ownership.  Buys should be ordered with more lead time as these three categories may put additional pressure on the inventory.  Other than that, the transition should be seamless and unremarkable.

Citadel accepts Cumulus’ offer?
Cumulus Radio, the nation’s second largest radio group with 347 stations in 67 markets, spent five months courting Citadel, the third largest radio group with 224 stations in 50 markets.  After two previous failed buy-out attempts, the two confirmed that Cumulus made another offer for $2.1 – $2.4 billion.  Though Citadel’s management has reservations about the planned acquisition, both companies acknowledge they are in the early stages of an agreement. 

The new Cumulus will have a footprint in 120 U.S. markets and 8 of the top 10 radio metros.  There is little overlap in the two groups’ markets and any divestment due to FCC ownership limits would be limited to the 6 markets where both currently own stations.  Cumulus would still be the US’s second largest group behind Clear Channel.

Citadel representatives acknowledge the possibility of future changes, but insist it is business-as-usual for now.  A final decision could be months away.  In the mean time, we expect to see stream-lined staff, more on-air voice tracking and other cost-cutting measures Cumulus utilizes.

Digital technology is dissolving the silos used to organize media types and media channels. Paid, owned and earned media are blending together across channels that are much more fluid and flexible than ever before – once again due to digital technology.

Empower MediaMarketing is tracking media convergence throughout the year and we created this video to kick things off.

Join the Conversation
No Channels is armed with the video, infographic, Flickr Group and articles that underscore how digital technology is dissolving traditional media silos. And we also want to hear from you.

There are plenty of examples – from iPad’s impact on print and broadcast (since launching a scant 9 months ago) to game consoles turning TVs into full-blown media centers.

Which ones stand out as fad, and which ones are significant? The site will update frequently with the discussion as we study the trend, curate content, provide our POV, discuss it with you and detail how brands are responding to this media blend trend.

We’ve been discussing this for some time now and I’m looking forward to more. Pete Blackshaw, Brian Solis and Jay Baer are already pointing to 2011 as one of convergence. So check out the site, share the content and weigh in on the trend. We’ll be participating — via any number of screens of course.

Cross-Posted to my personal blog, Strategic Public Relations

Radio has suffered one of the largest declines in revenue.  It reached an all-time low last November with a 20% decrease.  Things are not looking promising for a rebound in the first half of 2009, so radio groups need to be innovative by finding new ways to sell themselves.  With marketers recalculating how much they assign to their advertising budgets, agencies are rethinking how they spend those crucial dollars and cents. Retooling and condensing media plans could be standard practice in 2009.  Agencies are negotiating harder to get more for their client’s money - and more out of each medium. Radio stations are not only fighting with their “radio rivals” for a larger share, but they have to fight smarter to keep radio on media schedules. So how will radio groups sell themselves in a down economy? Very strategically.

Below are a few strategies we are seeing, or have initiated, in the current marketplace . . .

• Taking full advantage of the open inventory. Negotiated rates are down 15-30% from last year.

• Using rebate packages to put money back into a future plan, add a new medium or add to the bottom line.

• Leveraging buying power. We are buying fewer stations and asking stations to offer more added value and promotional support to be on the buy.

• Negotiating “no charge” promotions such as text messaging and online opportunities.

• Securing large ticket items as part of the buy. We were able to secure trip giveaways for a grand opening campaign, which would have previously required incremental spending from the client.

• Turning savings into opportunities. One buyer was able to negotiate and secure several Super Bowl packages for our client.

• Consolidating production costs. At no additional cost, we negotiated to have stations create a :10 spot for a client that only produced a :30.

• Securing added value and promotional support on sister stations. A station group in Michigan offered a school closing sponsorship on all 13 sister stations when only 4-5 of their top stations were on the buy.

Station groups are adapting to the changing environment and downturn by re-branding themselves. Station groups are structuring themselves differently and having one person to fully understand and sell all the arms and legs of their packages; radio, digital and mobile. The need to do more with fewer people has also inspired stations to develop turn-key packages that leverage all of the potential opportunities they have to offer to buyers.

We are being very aggressive as we continue to plan, negotiate and deliver high quality buys that are sometimes 15-30% below a year ago.  The key for 2009 and beyond is growing our partnerships with stations to produce stronger promotional support.  As we push the stations to be more innovative, we believe that our clients will be able to take advantage of some of the new opportunities that are presented in 2009.

By: Michelle Dietz, Local Broadcast Buying Director

The following provides brief overviews of satellite, high definition, Internet and cell phone radio, as well as timely options and implications for marketers.

Overview
Marketers undoubtedly have read or heard about the decline or even impending “death” of radio. Moreover, they may be under the impression that radio is somewhat of a stepchild to other media, especially television. While Empower MediaMarketing would agree that the radio industry has taken some blows – corporate consolidation, fragmentation, and limitless consumer choices – we are confident that changes in the radio field are positive ones. Today’s listeners are increasingly mobile, busy and over-stimulated, and radio executives must adapt in order to continue reaching, engaging and retaining audience. Fortunately, the industry is not resting on its laurels and continues to demonstrate it is addressing these challenges head-on.

What this means for marketers is that there are creative and impactful ways of not only reaching the traditional radio user in non-traditional ways, but methods of impacting demographics that have historically been difficult to find. Importantly, these new venues may, ultimately, help advertisers maintain communication with an audience that is migrating away from terrestrial radio. And, because many of the new radio-like industries are fledglings, there are options to get in on the ground floor and negotiate charter deals at attractive price points.

Satellite Radio
Over the past 24 months, this medium has not only garnered much attention in the press, but also enjoyed a marked increase in growth. The two primary players, XM and Sirius tout subscription bases of 6 million and nearly 4 million, respectively. Sirius struck gold late in 2005 when the company penned a 600+ million dollar deal with Howard Stern. And XM recently contracted with Major League Baseball, adding breadth to their roster.

Satellite radio imparts numerous benefits to the consumer – hundreds of niche or vertical channel offerings and 100% static-free reception that can be heard across the country without interruption. Distribution includes automobiles, mobile handsets, in-store (Starbucks, for example), in-room at hotels, in-flight, online, and through satellite TV.

The medium allows advertisers to connect with a consumer who is upscale, educated and fairly affluent. The user profile skews toward the younger male listener, making satellite an optimum environment to reach this hard-to-find demo. And satellite listeners tune in for long periods of time – about 23 hours per week. Compare that with the average weekly TSL (time spent listening) of 17 hours on traditional radio and the allure increases.

Presently, a large portion of the channels are commercial-free, an obvious attraction for listeners. However, both companies have aggressive plans in place to cultivate their advertising revenue in the next 24 months.

In our experience with these companies, EM2 has explored a myriad of viable options for advertisers, and both are able and willing to develop programs highly tailored to an advertiser’s need.

In addition to selling traditional media buys, both companies offer customized integrated packages, exclusive sponsorships, and in some cases, regional and/or local traffic updates.

HD (High Definition) Radio
In a nutshell, high definition radio technology allows traditional AM and FM stations to transmit their signal in a digital versus analog format. Unlike subscription-based satellite radio, HD is free; that is, once the consumer purchases an HD receiver. At the time of this writing, those units are an expensive $300-$500 apiece, but are expected to drop to a more palatable $200 by year’s end.

For the consumer, this shift translates into a number of advantages, including FM radio with CD-quality sound. AM radio sounds as good as current FM analog and both transmissions have little or no hiss or static.

From a marketer’s standpoint, the most interesting and appealing benefit that comes with HD radio is what is referred to as “multicasting,” which means a station can broadcast two or more channels on the same FM frequency (does not apply to AM). For example, KISS-FM in Cincinnati is a CHR station, while its HD counterpart is an old school rap format. An excellent reference on this subject, including a list of stations already broadcasting in HD, can be found at hdradio.com.

The multicasting feature will allow stations to target smaller, niche audiences, serving new or current listeners, much like cable TV did in its earlier years. Currently, these digital channels are commercial-free but we expect that business model to change to include ad space in the coming year. Herein lies the plus for advertisers – targeting very specific audiences at attractive rates. We also believe there will be opportunity to explore alternatives to the traditional 60-second spot, including 30-second ads, total program sponsorships/entitlements, and possible integration into programming content.

As of this writing, there are nearly 700 stations broadcasting digital signals, but that doesn’t mean people are listening – yet. At the end of 2005, 85,000 HD receivers were in the hands of consumers – a figure that we would consider to be small. However, rapid growth is expected with predictions that sales will increase to 500,000 units by the end of 2006.

Internet/Online Radio
Online radio is a simple concept – radio programming that is transmitted via the Internet versus the broadcast airwaves. Programming originates either from terrestrial stations simulcasting their signal or from web-only stations. Because there is an infinite amount of “space” available, along with the fact that the Internet is not FCC-regulated, it is difficult to estimate how many online stations exist. However, it’s safe to say the number is in the thousands.

Chances are you’ve listened to one of your favorite broadcast stations on your computer and the chances are even greater you’ve tuned into one of the big networks through Yahoo!, AOL Radio Network, Live365, or MSN Radio. A December 2005 study by Arbitron and comScore Media Metrix revealed that more than seven million listeners (cume) tuned into online radio during an average week, the highest number reported to date. A large chunk of those listeners, 4.1 million, are tuning into the “big three” – Yahoo!, MSN, and AOL.

Even though this number is not, in the Internet world, considered critical mass, it’s hard evidence that this medium is vibrant, growing and offers untapped opportunities for advertisers.

Internet radio provides a forum for traditional :60’s as well as less-utilized :30s, :15’s and :10’s, all of which can be scheduled to play in regular commercial breaks or as “gateways” or “pre-rolls,” which run when a listener launches a radio website.

Perhaps more importantly, online stations offer an alternative way to reach the sometimes-elusive 18-34 year old audience. Traditional radio has experienced declines in this demo, whereas the bulk of new online listeners are comprised of this age group. The younger demos are heavy users of online radio via podcasting and we predict they will also exhibit heavy usage via cell phone downloads.

A distinct advantage of online radio for advertisers who purchase traditional radio at very low, run-of-station, or direct response rates is that they are far less likely to have their spots pre-empted. And, like HD radio, this medium offers nearly endless niche targeting possibilities.

Cell Phone Radio
A cousin both to satellite and Internet radio, cell-phone radio is in its infancy, but we expect this area to advance fairly quickly. To date, a number of wireless carriers have begun offering subscription-based radio programming via cell phones.

For example, Sprint PCS customers, for a monthly fee of $6.95, can access 20 commercial-free Sirius Satellite stations via a multimedia handset. And this January Motorola launched its subscription-based digital iRadio with 435 channels, also commercial-free. A true advantage of Motorola’s technology is that it has no bandwidth limitations, which means 100s of targeted options for both advertisers and listeners alike.

Interestingly, Motorola also sells a phone that is compatible with iTunes, which will allow customers to download content from that service.

With over 2 billion wireless subscribers worldwide, it’s clear this is an area that lends itself readily to connecting with a mobile and engaged audience. Like satellite radio, we would anticipate that it’s only a matter of time before carriers introduce advertising into their business model to build and enhance revenue streams. Naturally, this would open up a whole new avenue for traditional or even Internet radio advertisers.

New Opportunities Abound
In this ever-evolving, complex media environment, radio has successfully stayed abreast and continues to explore and invent new ways to remain attractive to consumers and marketers. With HD, the industry maximizes the benefits of traditional radio, while satellite offers similar, but different, advantages. Radio has jumped on the Internet bandwagon and soon will be a force in the wireless cell phone arena. Empower MediaMarketing encourages all its clients to consider their marketing needs and discuss with our planning experts how new radio options might assist in their business success.