INK TANK

The Connected Car Lives

 

Something unexpected can result in a sea change. That was the case when Radio Ink unintentionally focused on something that had been below the radar concerning the connected car. We had been monitoring the connected car, we knew it was coming, and we knew it would impact how people use audio in the car.

What we did not know, however, was that we would discover a dirty little secret: Radio was losing its relevance in the eyes of many automakers. That part we discovered quite by accident, when I asked some probing questions at Convergence 2013 after I thought I heard one of our connected car panelists talk about dropping AM/FM from the car. Of course, by now you know I spoke out about this possibility -- raising both fear and disbelief in the radio industry. I recently addressed this issue in another >piece I wrote .

This week we wrapped up the second annual >DASH conference , which was rooted in that discussion with the car manufacturers onstage at Convergence . Like a character in a sitcom who's spun off into a new show, this hot topic panel at Convergence was spun off into its own conference in Detroit.

I partnered Radio Ink with Jacobs Media and with connected-car consultant Valerie Shuman -- Jacobs for their deep connections in the car business and their consulting and app building with various brands, and Shuman because of her close relationships within the connected car tribe.

That simple idea has turned into a significant movement we never really expected. Our intent was to create a dialogue between radio and the car companies, first and foremost to make sure they understand the unvarnished truth about radio -- its audiences, its pros, its cons, and, most critically, the fact that radio is not a wounded and dying medium, as their Silicon Valley consultants had led them to believe.

Not only are we making good progress on this step, we have the automobile industry deeply interested in radio and in creating that dialogue. This week's conference was not only much bigger than last year's, the increases came largely from the automotive industry, and nearly 20 related industries, dominating the room.

You can >read the stories and see some of the >video from the conference, but the thing I think we are most proud of is that this dialogue has not died down. Nobody's losing interest; in fact, there's been more conversation than ever. We have managed to help Detroit understand the importance of radio and what we can offer. Magical moments occurred when our roundtable discussions gave groups problems to discuss, and as car company executives at high levels talked with radio managers, programmers, and even some tech people about how they can improve one another's business. Word got out about DASH, and the automotive industry was present in full force.

The good news is that we had about the same number of radio people present as last year, with a few new people. But the bad news is that, as WGN's Jimmy de Castro put it, "I cannot believe more radio people are not here. I'm going to make sure every possible person is here next year. They have no idea how important this is because they have not heard what we heard here this week, and have no way of knowing unless they attend." I was approached by several enthusiastic attendees who said the information they received was monumental.

Amazing to me was that the "big guys," people who handle the marketing budgets for the major car brands, didn't just show up for a quick onstage appearance, but sat in the audience two full days, taking notes and being actively engaged. They were asking for our ideas on problems they are looking to solve, but also giving us the reality we face, as they see it.

Keynote speaker Gary Shapiro opened the conference; as head of the Consumer Electronics Association, he's possibly the most powerful man in the world of innovation and electronics, and he's becoming hugely influential in the auto industry as the International Consumer Electronics Show introduces a new section on automotive technology. And he wasn't so kind about radio.

Though gracious, Shapiro suggested that radio had ample warning from him and others (including yours truly) that radio had to migrate to digital or it would one day be reinvented by others outside the industry. "Why didn't you invent Pandora or Spotify?" he said. "You knew this day was coming. You should have invested to invent your new digital competition so you can control it." It was sobering, but inspirational at the same time. He suggested that radio can still step up to digital in a much bigger way -- and must, because the migration by consumers to digital is inevitable.

Everyone in attendance was encouraged about radio. Our show of strength and interest in helping the automotive industry did not go unnoticed. And now, for the second year running, radio has stood out as an industry that wants to show their biggest spending category that we are committed to them.

The effort is far from over. Auto companies are currently designing 2018 models. In 2015, they are expecting 40 percent of car owners to purchase cars that have in-car connectivity (without involving a smartphone). They are designing updatable software so current models won't be entirely rendered obsolete as technology improves.

Yet those who buy 2015 models are living with decisions made five years ago, many of which involve hard-to-navigate radios. One manufacturer said they're trying to get things to the point where the consumer does not need 30 minutes of instruction to use the entertainment unit and where they can easily set stations and presets without pulling over. These user interface decisions were made long ago, and only now are some understanding the problems and addressing the issues -- many of which would have been ignored had it not been for radio stepping in and raising awareness of how consumers interact with their radio stations.

This is a shining moment in my career and those of my partners in the DASH conference. But this discussion is far from over, and radio must keep positive pressure on the industry to continue this dialogue, and to improve the dialogue at the dealer level as well. Our interaction with dealers and stations opened some incredible discussions about the problems and needs they face, and they even called for radio to step up and help. That would never have happened without DASH.

Though I still think that there is a Silicon Valley mindset within the auto industry -- which overall is a good thing -- we have made some progress in helping the industry understand more about consumers and their use of radio and the important role it plays in their world. I think most, not all, are moving away from the idea that they want radio only  in digital form, though clearly digital radio is high on their list because of the metrics and measurability that go with it. Calls for radio to move in this direction as rapidly as possible were frequent and very much noted by the attendees.

Thanks are in order for our partners in this event for a job well done, and for the team at Radio Ink for their role. Most important, thanks need to go to the auto industry for showing incredible receptivity and open-mindednes,s and to the radio people in attendance who have had their minds opened to things that are changing consumers and in-car audio use forever.

Momentum is building. These events are already having a significant impact on how radio interacts with consumers in the car, and that will only increase in the coming years. Congratulations to all.

 

Two Giant Stories For Radio

Radio could use a shot in the arm, a boost, something to shout about to our advertisers -- and, frankly, a story to keep us psyched up. (How's that for a '70s term?)

Two stories broke this week. Each from a giant advertising concern. In fact, the same one.

Story #1: Omnicom Media Group Signs $200 Million Deal With IHeartMedia The story is that Omnicom is doubling its spend in radio over last year. It's a powerful story when one of the world's largest ad agencies validates the power of radio. Though you could whine that it's not your company, it's a powerful story for radio, and that will help every radio broadcaster. To quote that WSJ story:

"Radio is still a really important medium to a lot of our clients, especially our retailers," said Omnicom Media Group CEO of North American investment John Swift. "For a lot of our retailers, from a traffic-driving perspective, [radio] complements the rest of its media at a very efficient cost."

Mr. Swift said the increase in investment with iHeartMedia is a reallocation of spending within the radio category among fewer partners rather than a shift of spending across categories.

"This isn't about shifting spend from one channel to another," Mr. Swift said. "It is more about focusing on deeper partnerships with a select number of partners, combined with some  growth in spend as well."

OK, so iHeartMedia got a bigger piece of Omnicom's radio money shifted to its radio, digital, and entertainment platform. That may sting a while, but it certainly is great salesmanship by the iHeart team, and especially President of National Sales/Marketing and Partnerships Tim Castelli.

The next step, of course is that every radio company needs to present a platform and show they too have great abilities, and get Omnicom and other agencies to consider upping their spend.

When Bob Pittman came on board at what was then Clear Channel, I wrote a piece saying he would be good for radio because of his vision, his big thinking, and his ability to open doors. This is more evidence. And though iHeartMedia is benefiting now, don't kid yourself: The positive impact of this will ripple across all radio.

What I also find exciting is that iHeart broke new ground. Rather than just selling radio spots, they're selling their whole platform, and "as part of the partnership, iHeartMedia will work with Omnicom Media Group to develop new audio and cross-platform advertising products for the agency's clients and provide research on the efficacy of  clients' campaigns." Brilliance. In this world it has to be about giving the clients exactly what they need, not just what we want to sell them.

Story #2 Omnicom Advises Marketers to Move 10 percent to 25 percent of TV Ad Dollars to Online Video The story here, from the same media giant, is that online video is hot and that this major agency is shifting 25 percent of television budgets to online video. The company that oversees roughly $54.4 billion in advertising spending around the globe and advises advertisers such as PepsiCo, Visa, McDonald's, and Apple is showing that it has less confidence in TV and growing confidence in online video.

This isn't important because it hurts television. Frankly, a 25 percent loss of business is a sad thing for any industry. It's important because Omnicom did not shift 25 percent of radio budgets to digital, and because, in fact, the organization just demonstrated its confidence in radio. Again, this is an important story to share with advertisers.

It's important not to miss the larger point of these changes, though. Omnicom is all about what advertisers are asking for and the trends they are seeing. This investment in radio is because iHeart brought a platform that met their needs, including digital radio and customized content. Understanding the whole picture is important when you relay this story to advertisers.

Selling radio is no longer about spots. It's a much deeper proposition. It's very much about your platform, which includes your streams, your digital offerings, your radio product, listening carefully to what your advertisers are asking for, and finding a way to deliver it. It's no longer "If you build it, they will come." It's about, "If they ask for it, you will build it."

 

The Battle of My Life

Chances are, you and I have had a relationship for a number of years in this industry. I got into radio at age 14, so now, 45 years later, I've gotten to know lots of people. I spent a decade on the air, spent many years as a programmer and programming consultant, and then years owning a small group of radio stations. I've spent time with you through the many promotional products I've brought to the industry and through countless industry gatherings. As the publisher of Radio Ink, which I've owned since about 1986, I've probably written well over 700 editorials challenging this industry on one issue or another. Chances are you have disagreed with me on some things -- and maybe agreed, from time to time. In all cases, the goal has been to better our industry, to challenge our thinking, and to help you take steps to whatever may be next.

Radio Is Magical

I fell in love with radio as a kid, way before I made a conscious decision to spend my career in this industry. Radio had magic for me as it entertained, made me laugh, and brought me the music I loved. When I was blessed enough to become a member of the radio industry, starting in 1969, I was enthralled with being on the air and entertaining people. Later, as I moved into ownership, I was deeply committed to radio's ability to transform the lives of small businesses -- that grew into large businesses with radio. Some of my favorite moments were driving coast-to-coast listening to stations around the country, including distant signals on AM at night, listening in between the noise. Truly, I'm a radio geek.

Deep Commitment to Radio

I have always loved this industry and been deeply committed to it, which is why have continued to publish Radio Ink, why we doubled down and started half a dozen different radio conferences, why we bought Radio + TV Business Report and RadioDiscussions.com, why we do the 40 Most Powerful People in Radio, the Radio Wayne Awards, the Radio Executive of the Year, Radio's Most Influential Women (MIWs), and so much more. It's driven by a passion for radio.

The Shot Heard 'Round the World

In June of 2012, as I was listening to a panel at my Convergence conference, I couldn't believe my ears when I heard a representative of the automotive industry predict that radio could be taken out of cars eventually. Instinctively I leapt from my seat, grilled the panel, and probed what they said. This was the shot heard 'round the world as an editorial I wrote spread more than any of the other 700 over the past decades. I was hearing from some very angry radio broadcasters concerned that I would publish this news, I received threats that my career would be destroyed if I continued, and I've lost some relationships over it.

Maybe Everything Isn't OK

At that moment in time, though, many were shooting the messenger and claiming I was being irresponsible. But I was trying to gain clarity on a situation I thought was potentially bad news for radio. What if radio was removed from cars? Heresy! How dare I? It will never happen! Yet I heard it with my own ears and have it on tape. Soon after, I received a call from the vice chairman of GM telling me radio would remain in their cars for "the foreseeable future." Whew. I guess everything is OK. But it really wasn't.

Detroit May Have Misinformation

What I had discovered, quite by accident, was that many in the auto industry were buying into the Silicon Valley perspective that everything digital matters and anything analog does not. I soon started hearing from others telling me radio was no longer a part of the lives of consumers and that consumers wanted other things, like online audio, in their cars. I discovered that consulting firms were feeding this information to Detroit, and I knew we'd better make sure that Detroit knows the full story: that radio is alive and well.

Radio Has Become Hard to Find

Two years ago, the connected car was not on the radar of the radio industry, and today it's front and center, a top priority. Radio, in fact, is not guaranteed a future on the automobile dash. Though we have made great strides in convincing the automotive world that radio is thriving, there are many center console units that have placed radio under hard-to-find layers of button-pushing that has to be done while driving. That sends a signal to me that some don't value radio as much as we think they should. Recently, driving in a connected rental car, I almost had a wreck as I navigated several layers of menus just to find the radio.

Radio's Future Is in Detroit's Hands

If you're of the mindset that radio will always be in the car and that a car is, as the famous Bill Burton always says, "a radio on wheels," it's time to understand that our future is being determined as we speak by some very smart people in Detroit and Silicon Valley. Though we have made great progress in raising awareness of the continued consumer love affair with radio through our DASH conference, there is much work to be done. And the coming conference will be an opportunity to make more progress.

Radio Is Fighting for Its Life

Little did I know that when I wrote that editorial in June 2012 that it would lead to a dialogue between radio and the automotive industry. But that's just what happened, and last year we launched the DASH conference with Fred and Paul Jacobs of Jacobs Media and connected-car expert Valerie Shuman of Shuman Consulting Group. And little did I know that just two years after that editorial, radio would truly be fighting for its life in the car. Thankfully, we discovered it, revealed it, and still have a chance to change it. Otherwise it would have occurred without input from the radio industry.

A Battle Radio Cannot Lose

As a manager, I think it's important that we understand that it's critical that radio make every possible effort to maintain its dominance in the car, where 50 percent of radio listening is done. Our argument for recency -- consumers hearing a message right before they enter a store -- is at stake. Our increased time spent listening during heavy traffic is at stake. Our drivetime inventory is at stake. If we let radio's dominance in the car slip away, a significant percentage of our revenues are at stake. Losing the battle for the car would not be a good omen for radio's sustained future.

Dealers Are Abandoning Radio

Radio and automotive have always been joined at the hip. Radio has always been a significant tool for selling cars. Radio has done millions of car lot remotes with hot dogs and balloons, and has run billions of automotive ads. Yet you may have noticed that is changing. We have discovered whole networks of car dealers that are substituting digital offerings for radio. We are seeing dealers who are no longer using radio. Is our biggest advertising category at risk as well? You should read this blog post Jacobs Media released Monday. It's frightening to think that radio is losing that connection. You need to be empowered to do what you can do locally.

Your Role at the Local Level

This is a pivotal moment in radio history. And though me, Fred and Paul Jacobs, Valerie Shuman, and the 300 or so people attending our DASH conference next week are working hard to do our part to keep radio a significant player in the automobile, we cannot do it alone. This is a time when every smart person in radio needs to be engaged. You need to be working it at a local level to make sure radio remains on the radar -- and not just as a distant blip. This is not something we can hope others will solve for us. This is so important it would be smart to gather your local radio group to focus on this giant new automotive challenge.

Selling Radio's Deep Connectivity to Detroit

For decades I've brought you challenges. But this may be the battle of our lives, and right now I'm not convinced we are winning that battle. Yes, radio will be in most (not all) dashboard systems for the near future, but what about five years out? Data consumption by consumers will drive decisions. Auto companies can track every button pushed in a connected car, can track how much time consumers are spending with radio vs. their music library or favorite Internet audio source. That data will make the decision about radio in the car, ultimately. Meanwhile, it's critical to help the automotive world understand radio's deep connection with audiences, its strong numbers. Last year at DASH, every person attending had a chance to share their feelings in roundtables. You actually can make a difference, which is why we structured the conference with interactive components.

A World Without Radio?

As a manager, you should not assume radio will prevail on its own. Having spent time with major automotive executives, I can tell you that their data is telling them something different from ours. Though we cannot see a world without in-car radio because we're so close to it, the auto world is interested in seeking advantages to sell cars. Though we think radio is a must, not all people in that industry feel the same. It was the auto industry that was really behind the adoption of 8-tracks, cassettes, CDs and even mobile phones (remember when they used to come mounted in the car)? They have the power to determine the direction in the future. And although their systems have always included radios, today those radios are often hard to find and hard to use -- not easy and automatic, as listeners are accustomed to.

Understanding What You're Up Against Though I'd love to have every manager in radio attend DASH so they can hear the specifics of how the world is rapidly changing (it's an eye-opener), if you cannot come, at the very least you and your program directors need to go drive connected cars. They are all different, so you need to experience multiple brands. You need to make an effort to understand the new world car dealers are moving toward so you can find a seat at the table and keep radio in the game. When was the last time you, as a manager, sat face-to0face with the dealers in your town... to listen, not to pitch?

Radio's Pivotal Moment I'm not interested in selling fear, though it may appear that way here. I'm often criticized for not being Mr. Positive and taking the pro-radio stance at every turn. While some think radio in the car is secure because consumers will demand its presence, consumers, we are learning, may not care as much as we hope they will. Time will tell, but some of what we are seeing is less than encouraging. We will reveal more new research next week. If radio loses its dominance in the car, we lose a significant part of our business. Again: This is a pivotal moment for radio.

Radio Foot Soldiers I'm calling for your help. Radio Ink brought this issue to the forefront of radio and this small team of Radio Ink/Jacobs Media/Shuman Consulting Group has orchestrated this event to build a dialogue between radio and the world of automotive, but we cannot do it alone. This requires foot soldiers in every market who understand what is happening and who work collectively to make change, market by market. Detroit listens to local dealers, and if those dealers insist that radio has a prominent place on the dash, and must be easy to find and use, they will get their way.