Radio Listeners Don't Change Dial During Ads

New People Meter Data Indicate Stronger-Than-Expected Retention Rate

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NEW YORK (AdAge.com) -- Radio has been flat in revenue and declared the least engaging medium in recent years, but new electronic measurements and surprising statistics may help the medium rebound quicker than expected.
Jeff Haley, president-CEO, RAB; Betsy Lazar, executive director-advertising and media operations, General Motors; and Peter Smyth, president-CEO, Greater Media and recipient of this year's Radio Executive of the Year award.
Jeff Haley, president-CEO, RAB; Betsy Lazar, executive director-advertising and media operations, General Motors; and Peter Smyth, president-CEO, Greater Media and recipient of this year's Radio Executive of the Year award.

At the Radio Advertising Bureau Conference in Dallas last weekend, new RAB CEO Jeff Haley and countless others spoke of the century-old medium as if it had never gone out of style, despite being dismissed as obsolete by some advertisers and consumers in recent years.

Matching revenue to consumption
One-hundred-forty-million people "are listening to the radio right now across America," Mr. Haley said in his Feb. 9 morning keynote. "By this afternoon, nearly 194 million will have listened. ... Radio is a $20 billion industry, but if revenue matched media consumption, we'd have $40 billion more."

Radio's biggest challenge of late has been its relationship with advertisers, who have been concerned with radio's reach in recent years. Arbitron's 15-years-in-the-making Portable People Meter was finally put to the test in Houston and Philadelphia last year, and Jon Coleman, of North Carolina-based research company Coleman Insights, was on hand to report surprising statistics from a study conducted last August.

The biggest misconception about radio these days is that commercial pods don't hold listeners' attention, Mr. Coleman said. A poll conducted in November and December of 2005 found that radio-industry employees believed commercial breaks had a 68% retention rate, while advertisers and agencies estimated the rate at 63%. And that was wishful thinking on both parties' part. "When I talked to my clients, several said, 'I lied, because I was so afraid of what the answer was going to be so I hyped mine up.'"

Commuter-friendly medium
No hype was necessary -- the actual retention rate was 92%, a number bolstered by strong results from four-minute and six-minute pods. Mr. Coleman attributed this industry disconnect to the overestimation of radio as a primarily in-car medium, yet the study showed commercial breaks during the morning commute hold more than 94% of listeners. "Broadcasters should make advertisers more aware that radio is a commuter-friendly medium."

The PPM data can at long last offer conclusive proof of radio's effectiveness in reach, which Mr. Haley plans to present to 35 key advertising partners this year.

And at least one auto manufacturer was on hand to show its support. Betsy Lazar, executive director-advertising and media relations for General Motors Corp., told the crowd in her Feb. 9 lunch keynote that radio and car companies alike need to adapt with each other to increase their focus on research and accountability.

"GM values radio partnerships," she said. "Broadcast radio's been in decline for more than a decade, but moving to digital media alternatives is to alter the course away from a medium with a wide sense of urgency."

However, given her company's announcement to cut $600 million in ad spending, Ms. Lazar also took the majority of her hour-long presentation to do some free advertising for GM, engaging the audience in a Q&A composed entirely of questions pointing to statistics about her company's most successful vehicles and features.

Brand loyalty
As more stations continue to experiment with HD radio -- which, like its TV counterpart, will continue to expand as more consumers become aware of and purchase the devices -- and increase their web content, the key to keeping radio on the road to increased revenue will be brand loyalty.

"You've got to understand that once you start to force feed a product into a marketplace, it's exceedingly easier to move into the interactive part," said Peter Smyth, president-CEO, Greater Media, and this year's RAB Radio Executive of the Year. "Once you own that community, why wouldn't we leverage that brand different things? The commercialization of the traditional method is going to change demonstrably, and my hope for the RAB is to make that something people will want to be a part of."
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