Radio companies are in the midst of (another) dramatic round of cutting costs. I get it, but cutting costs has a cost, especially when you consider the depth of recent changes.
It’s hard to lose passionate, raving, loyal fans. It happens over time, little by little. And it happens to even the best, most established radio stations. Some of it is unavoidable, but many times, it’s self-inflicted. Most of the time, stations lose share the same way businesses lose customers.
Imagine being a regular customer of a local Mexican restaurant. It is one of your favorite spots; you’re there at least once or twice a week. You are proud to take visitors to introduce them. It’s hard to lose share with loyal customers, but it can be done.
How Stations Lose Share
Now imagine that the main attraction (along with the margaritas) is a unique soup. It’s a large serving with chicken, rice, and fresh ingredients. It also comes with a side of chips smothered in cheese. It’s not cheap, but a great value.
However, they decided to make small changes because of increasing costs. First, they reduced portions and tried hiding it by serving it in smaller bowls. Management likely reasoned:
Most customers won’t notice, but we’ll save 10% on costs. That means more profits.
You notice, but it’s okay. But the changes continue. There is less chicken and more broth. It’s watered down. Reducing it more “won’t matter, right?” and they preserve profit margins. In addition, they still offer chips, but with less cheese, saving another few pennies.
It’s annoying, but they still have your business.
The Last Straw
Now imagine that they slowly increase prices by 25% in addition to reducing costs. They offer less value at a higher cost. Management probably justified it:
Raising prices slowly won’t lose customers. Nobody has complained. They probably haven’t noticed.
Soon, the restaurant will not be your favorite. They lose share by trying to trim their way to success.
Is This About A Restaurant?
As you’re attracted to a Mexican restaurant for the soup (or margaritas), audiences are attracted to a radio station for specific reasons. They pay with their attention, and you realize value by selling commercials to your fans.
When listener value is reduced, listening costs increase. What happens next? It happens gradually. Small changes add up until the listener experience is less exciting. Tuning in is not as important.
When revenue slips, cuts continue. You cancel a perceptual research project, promising it’ll return, but it usually doesn’t. A year later, quarter hours are down.
Since music tastes don’t change much, you try to survive with a music test every two years instead of twice per year. Nobody will notice. A music test only affects 10% of the songs so that we can get by.
The morning show is in the top three, but you save a few dollars by eliminating the phone screener. Soon, callers aren’t prepared, there are technical issues, and the show isn’t as sharp or as exciting.
Ad rates decrease as the business cycle changes, but corporate demands that you maintain the profit margin, and marketing is next on the chopping block. The cume is strong, so you reason that you can get by without a campaign this year, and last year’s contest positively impacted ratings in both spring and fall. But can’t we get the same impact with a $100 prize instead of $1,000? Contest players will play for less.
Several large clients shifted ad budgets from radio to digital, so you compensate by adding a spot (or two or three) each hour. It’s just a 10% increase in the cost of listening—one less song per hour—no big deal.
What’s Next?
You lose share, and the spot load is at dangerously high levels. But the cuts continue.
Do we need a PD for each station? Can’t one person oversee three brands? And why shouldn’t the PD have an air shift? If they can’t do a good show, they shouldn’t be managing air talent.
Come to think of it, the PD could do a live show on one station and voice track on another.
Music is important, but the midday personality works seven hours a day (a four-hour live show and voice-tracking four stations). She owes us another hour. Maybe we can get the music logs from another market. It’s almost the same.
Conclusion
Radio has sliced and diced costs to the bone, and it’s impacting listening. Responsible management is critical, and budgets matter, but there comes a point of no return. Like the chicken soup, the product isn’t as valuable.
Listeners are making a statement:
You are losing (or lost) my business.
Their tastes haven’t changed. They still love what you try to do, and the percentage of listening (share of radio listening pie) compared to other stations has remained constant.
But, like the Mexican restaurant, the magic is gone. What will you do about it?
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Tracy Johnson is a talent coach and programming consultant. He’s the President/CEO of Tracy Johnson Media Group. His book Morning Radio has been described as The Bible of Personality Radio and has been used by personalities worldwide.