Advertiser Perception Study – On Radio.

Gary Fries, President and Chief Executive Officer of the Radio Advertising Bureau (RAB), opened his semi-annual State of the Industry speech last Friday during RAB2004, the annual Radio Sales, Management & Leadership Conference that took place last week at the Adam’s Mark Hotel in Dallas, Texas, by emphasizing the increasingly significant value that Return On Investment (ROI) represents to media advertisers and their agencies.

“Advertisers,” said Fries, “are asking: ‘Is my money really working for me?’ ‘Did I get what I paid for?’ ‘Did the schedule run as ordered?’ ‘Did I get my true value?’ ROI is what shows effectiveness,” he counseled. “Advertisers need to show their stockholders an accountability of every dollar spent. Media buyers and planners are trying to accomplish this for advertisers and are challenged to show ROI. The Radio industry is not doing a good job of showing this. We have to be able to document ROI,” he stressed.

“Radio is not thought to be ineffective,” he noted. “The problem is that advertisers don’t understand ‘how’ Radio is effective. They know people listen, and they know it’s a great out-of-home medium. But they don’t know how that connects (with ROI). They must know exactly when their ad ran; and they want to know in a timely fashion. They do not feel that we run ads when we’re supposed to. “

Fries announced that the First Phase of an RAB Advertiser Perception Study, which he described as “an exciting piece of evidence,” was being released later that morning. Funded by Arbitron and conducted by TargetCast TCM and Padin & Eastbrook LLC, Fries explained that the objective of the Study is to identify the advertising community’s perception of Radio as an effective media vehicle.

Twenty-five senior level decision-makers, CEO’s, Marketing Directors, and Media Buying Executives from the advertising and agency communities were interviewed, in-depth, for a full hour. Moreover, Radio industry professionals were also surveyed.

“We in Radio have a different perception of how the ad community perceives us,” he cautioned. “We’ve been stagnant too long. We need the facts to take Radio forward.” According to Fries, the Study defines “the problems and obstacles that keep Radio back. I have never seen a study that lays the facts out like this before.”

Fries pledged the RAB and Arbitron had committed to updating the Survey annually, and explained that Phase Two of the Study will “take a deeper dive into the information,” surveying a larger group. The Executive Summary of the first report follows this release.

Fries also outlined three forthcoming research projects from the Radio Ad Effectiveness Lab (RAEL), a Radio-industry funded organization that has committed $3 million to advancing Radio’s share of advertising dollars through compelling research, which the RAB has been charged with marketing.

“That’s a war chest that will take us to the streets,” he promised. Fries pointed out that RAEL was a “partnership” with the advertising community and underscored that its research committee members consisted of professionals from agencies, advertisers and Radio industry.

The first RAEL study, conducted by Wirthlin Worldwide, will build contrast maps of Radio versus other media, and will be released in just 30 days. The second study, currently being designed with the Pre-Testing Company and scheduled for release during second quarter of 2004, will examine the results between a TV-only campaign in one market and a campaign that combines Radio with the TV schedule in a second market. The third study, from Millward Brown, will analyze six categories of consumer goods over a six-month period, and compare the results when Radio is used as opposed to when it is not a part of the media mix. The goal is to examine these effects in a total of twelve categories by the end of 2005.

Fries also proclaimed that the RAB had re-tooled and refocused over $1 million of its budget into its National Marketing efforts, including immediately increasing the size of its National Marketing staff to call on more advertisers and agencies. There will be new offices in Los Angeles, Dallas, and Chicago, an expansion of the New York office, and the re-opening of the Detroit office.

A media campaign is also on the horizon with strategically placed buys in advertising industry trade publications to promote Radio’s ability to deliver ROI. RAB is also increasing its participation in upcoming agency and advertiser events, and exploring opportunities for promoting Radio.

“RAB is taking action,” he said. “We are on the offensive and we are going to deliver on what we promised – we are taking the industry forward! Not only are we identifying concerns and opportunities, but we are implementing a blueprint to move the needle for Radio.”

The Radio Advertising Bureau (RAB) is the sales and marketing arm of the Radio industry with more than 5,700 member stations in the U.S. and over 900 additional members in networks, representative firms, sales and international organizations.

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Accountability Measures Investigation

Radio Advertiser Perception Study

Executive Summary

In the Fall of 2003 the Radio Advertising Bureau, with the financial support of Arbitron hired the New York media consulting firms of TargetCast TCM and Padin & Estabrook LLC. to research and report on the media buying community’s attitudes towards broadcast and audience accountability.

Objective

In addition to gaining a better understanding of the issues surrounding accountability, the data obtained from both surveys may help the radio industry create new revenue strategies and operational processes to improve perceived radio advertising schedule performance and reporting systems.

An underlying objective for this research was to access perceptions of radio vs. other media in terms of being an effective media vehicle.

Radio’s perception among buyers is important to its future success, as such; the RAB, with the on-going financial support of Arbitron, seeks to create a research project that can be updated annually to gauge progress in the key area of accountability.

Survey Base

The study was conducted among “thought leaders” in the media buying community. It looked to understand attitudinal and behavioral shifts among media planners, media buyers, media directors and advertisers.

The approach to reaching the target customer base is multi-faceted

It started with a qualitative market survey among:
25 senior level media decision makers
Advertisers and agencies
Buyers, planners, management
45+ minute, in-depth personal interviews
Conducted by senior media professionals
This executive summary addresses the findings in the initial qualitative study.

There was a disciplined approach taken to the development of the survey sample to reflect the radio advertising marketplace:

The study contacted media thought leaders who were:
Directly involved with allocating budgets across media
Intimate with accountability issues
Familiar with radio and its specific issues

The survey base was comprised of top level professionals with broadcast, agency management and other top-level titles:

Title/Responsibility – # Respondents

Agency broadcast head – 10
Agency management – 4
Media planning director – 1
Media directors/AMD’s – 3
Media strategy director – 1
CXO’s – 5
Director of marketing – 1

The final sample reflected a high penetration of agency and advertisers who have strong use of radio, allowing for informative and real-world responses.

Media Used – # Respondents

Spot radio – 22
Network radio – 17
Network TV – 17
Spot TV – 19
Cable TV – 22
Syndicated TV – 18
Magazines – 15
Newspaper – 11
Internet – 15
Place-based – 11
Out-of-home – 14

As a second step, a quantitative on-line survey has been launched and is currently being tabulated. It will provide the radio industry with a deeper dive into the thoughts and perceptions on the issue of accountability among advertiser and agency decision makers. It will also survey the radio selling community on the same issue.

Media Marketplace

The situation encountered going into this study was an increasingly demanding marketplace:

Media buyers are continually being challenged to demonstrate advertising ROI
Accountability has become a critical focus – “prove” your delivery
Dramatic differences are seen between media
Schedule integrity
Audience verification
Linkable ROI
There is a recognized need for a more accurate understanding of what advertisers, media agencies and radio sales people believe:
How broadcast accountability is defined, and
How important are accountability issues when allocating media budgets between media

Top-line Findings

The following is a summary of our key findings.

Fundamental Values

Respondents were very familiar with radio and provided informed, actionable responses to our questions

Radio is not any respondent’s primary advertising vehicle
But all respondents had recently use radio as part of their media mixes
Radio is currently receiving only a minor portion of advertising budgets

What They Think About Radio and Accountability

Radio is viewed as an “imperfect” medium
Able to deliver numerous legitimate, important benefits for advertisers
Restrained by schedule integrity, audience measurement and data timeliness

Radio’s perceived schedule data limitations fall under both accuracy and timeliness
All respondents conduct some level of post-buy analysis
Many have formal guidelines for these accountability analyses
Some are very granular in terms of the data they review

Advertisers and agencies strongly believe that it is important to know exactly when their advertising runs.

They ranked radio lower than other media

Radio received poor ratings for credibility of its audience measurement

Respondents are aware of the existing radio accountability and measurement systems…but the detailed knowledge about their workings…and hands-on experience is limited

Many advertisers and agencies are attempting to create their own in-house accountability and ROI measurement models

Enhanced (commercial) ratings will increase some advertisers’ spending in radio…while reducing others.
Those who use data to more effectively place ads will increase allocations
Those, unwilling to take the extra analytical steps…may cut radio spending

EDI is viewed as an up-and-coming productivity tool for agencies
Mixed levels of current use
Limited current application outside of broadcast
Radio penetration of EDI is limited but desired

Radio’s Opportunity

The findings of this study support The Radio Advertising Bureau (RAB) Board of Directors’ statement issued after last Spring’s Board meeting which recognized the importance of full accountability and delivery of information. The statement read:

“The Radio industry is committed to providing technical resources and ongoing discussions to meet the information needs of our client relationships. “

The Radio industry has an opportunity to boost its overall presence and image within the broader media marketplace by:

Addressing legitimate, actionable concerns the market has expressed
Creating a more positive predisposition towards the medium

Current efforts in the areas of heightening the importance of schedule integrity; improving efforts to ramp up EDI; building case studies that demonstrate radio’s ROI, and the on-going research efforts of RAEL (Radio Ad Effectiveness Lab) are all moving the industry in the right direction.

In addition, the acceleration of the radio industry’s pursuit of electronic measurement through efforts such as PPM would respond to much of the accountability issues voiced by the buying marketplace.

In all aspects, radio need to move fast. Advertisers and agencies will be demanding more form us as a medium, so we have to demand more from ourselves – our stations, sellers, managers, and vendors.

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