Bridge Ratings Analysis: Traditional Radio’s Recipe for Success

Contrary to popular theory, traditional (AM/FM) Radio is beginning to figure out where the future lies. Its success rests with a new recipe of listening categories/devices. Its advantage is its massive, broad audience with which to leverage traffic to these new devices.

From Bridge Ratings’ latest “Device Usage Study,” it is clear that traditional Radio has begun the process of building a new paradigm of time-spent-listening conceived of more than just its broadcast towers.

Of the 19 hours a week of total listening to terrestrial Radio programming, 94% or 18 hours comes from its AM/FM listening and 6% or about one hour comes from simulcast listening via the Internet. There is insufficient data to indicate how much, if any, listening is derived from mobile devices at this time.

In order for traditional Radio’s advertising model to sustain new technologies and swift changes in audience behavior, adoption of these new devices must not only continue, it must accelerate.

Continued distribution via the Internet is a must as well as through mobile devices such as smart phones and cell phones.

Traditional Radio has done an acceptable job of furthering its listening through streams of its simulcasts. Not only should this continue but an effective strategy to escalate growth is to invest in the resources required to develop and distribute alternative brand channels that offer niche, customizable content as extensions of their primary brands.

Research has shown that brand variations or extensions on the streaming side will not cannibalize the main channel, but in fact it will attract additional listening from not only primary brand-centric fans but listeners who may have otherwise listened to the primary brand.

Furthering terrestrial radio content distribution to the mobile space will enhance audience revenue potential. There are two tactical paths:

• Distribution of the primary terrestrial content. Limited growth.
• Creation and distribution of alternative streams established with mobile short-term listening in mind. These channels should be customizable either through interaction with the mobile interface or a web site accessed by the user as part of a set up.

Bridge Ratings projects that by 2012, if technology is aggressively pursued, terrestrial Radio’s aggregated time-spent-listening should increase to about 20 hours per week. Additional listening should be sourced from the addition of incremental growth in simulcast streaming of AM/FM stations via the Internet and mobile devices.

Additional insight into audio consumption by technology has been revealed as part of Bridge Ratings’ “Device Usage Study” released in April 2010.

While time devoted to pure-terrestrial Radio listening is likely to continue to fall or moderate over the next few years, expansion onto new technology should recapture — and even add to — some of the lost time-spent.

Businesses craft strategies that reflect their unique portfolio of customer needs, internal resources, and partners. When you think about it, business has always been about managing combinations of different building blocks. As market conditions change, businesses pick up some new blocks, discard others, and rearrange the combinations.

The success or failure of all media companies over the foreseeable future rests on how well they arrange these building blocks.

(Source: Bridge Ratings, 04/28/10)