Local Media Needs a Blue Ocean Strategy.
There is incredible pressure on local media companies these days created by disruption from the tech giants of the advertising business. Google, Meta, TikTok, Amazon and all the traditional media giants have created a rush to consolidation to ‘compete.’ Local radio is consolidating, local tv is too, and the FCC is rumored to be looking to remove or reduce the ownership rules that many believe have hampered revenue growth in local tv and radio.
I’ve got bad news for the consolidators, I don’t think getting a larger footprint and more inventory will solve your problem. You have a strategy problem. A larger footprint and more inventory to sell might help with the national / network low bucket business by giving more stuff to sell. It won’t solve your revenue growth strategy. Yes people like Amazon with Demand Side Platforms and Real Time bidding might provide more low yield revenue, but with everyone competing on price in the space, it will not effectively grow your business. You see, everyone will get more inventory. You need a value strategy too.
Creating a Strategy: “Executives are paralyzed by the muddle. Few employees deep down in the company even know what the strategy is. And a closer look reveals that most plans don’t contain a strategy at all but rather a smorgasbord of tactics that individually make sense but collectively don’t add up to a unified, clear direction that sets a company apart—let alone makes the competition irrelevant. Does this sound like the strategic plans in your company?”
― W. Chan Kim, Blue Ocean Strategy: How To Create Uncontested Market Space And Make The Competition Irrelevant
In 2005, W. Chan Kim and Renee Mauborgne published the book “Blue Ocean Strategy” which is a great resource to analyze the local media industry today. There has never been a better time to develop a business strategy whether you work for a consolidator in media or a smaller operator. The ‘search’ business is on the cusp of disruption with the advent of Large Language AI models that provide answers to many questions people have, not just links to a customer website. This is bad news for those media companies who are focused on reselling these products for revenue growth.
The online advertising space for publishers is a mess. I defy you to find anything on a website these days that you can consume without being overrun with video ads, display ads, Taboola Ads (whatever the hell that is), or pop-up ads. It’s impossible to read, and the advertisers are really getting zero value. This is what a “more inventory” business strategy looks like in display, video and audio.
Just look what’s going on in the traditional media space. Local media content is disappearing. I don’t mean you should have live & local DJs in the radio studio all day, but you do need content that people in your trading area care about. After all, Howard Stern when he was in traditional radio was a syndicated talent who used his ability to create local advertising to drive local ratings and revenue success. He was not in Albany NY, or Syracuse NY when I had his show, but the community tuned it. He provided content you couldn’t get anywhere else, that’s why he is a star. Who are the stars in local radio today?
I used Edison Research for years, and they used to ask a research question that I called, “Miss a day, miss a lot.” It was a measure of how the audience felt when they didn’t tune in your station or show each day. Today, we have eliminated most of what is special on local radio stations between the songs. People became ‘too cool’ to think that local live broadcasts mattered and putting on local events became too risky. Shows are vanilla, repeating national content, and rarely taking calls to engage their listeners.
If you are to have a revenue strategy, it must start with your Unique Selling Proposition. More inventory to put into the low-price bucket network of trading desk or DSP platform purchases is not a revenue strategy. You start with your product, can you or your sales team define what makes it special, why should someone buy it as a listener or viewer instead of the unlimited number of options on the internet. This is also true in local television. The industry knows they need more content but repurposing the 6 PM news at 4PM and 5 PM and just repeating the same stories is not creating content. It’s just more news inventory, with a declining value for each minute as viewership spreads out and lowers ratings and rates.
In local radio, why aren’t you advertising what’s unique about your product on billboards, or television or direct mail. Where are the unique promotional ideas or even the non-unique ones? If I miss your station for a day, do I miss a lot? Are your shows creating unique content, and a one-of-a-kind listener experience? If not, then how can your sales team differentiate your product from the other options for my ears?
There is an old saying, “More of the same, will give you…. more of the same.” The authors of “Blue Ocean Strategy” put it like this:
“Focus on innovating at value, not positioning against competitors”
― W. Chan Kim, Blue Ocean Strategy, Expanded Edition: How to Create Uncontested Market Space and Make the Competition Irrelevant
1. Meet with your sales teams. If you work for a larger company, meet with all your sales teams. Don’t spend time looking at whether they have 5x pending in their CRM. Anyone can make stuff up and put it in pending. Learn about their process, what they hear from prospects, where your strengths and weaknesses are.
a. Ask how they present their stations to potential clients. Can they clearly explain what makes your station unique, and does it connect with you or your advertisers? Without a clear difference, you're just competing on price, which is a tough market.
b. Find out how their sales managers spend their time. Do they mostly review reports and do routine tasks, or do they actively coach, find new clients, and help close deals with the sales team?
2. Meet with local customers and non-customers. Find out why your customers buy you and learn about how you can get more customers like them.
a. Why don’t other local businesses advertise on traditional media. Meet them, ask them.
b. Most non-customers believe no one listens to local radio or watches local television. Find out why they believe this? Learn about how you might attack this problem. It’s not a new one; I was told this in 1985 when I first started selling radio advertising.
3. Invest. Most local operators or managers of larger companies have way too few sellers. There is local business, but it’s not going to walk in the door. You need to invest in local sellers who know how to create new business.
4. Create an innovation budget. Set aside 5% of your revenue (I’m making that number up) for local markets, by market size, to invest in local marketing, new revenue generating events or new ideas. A lot of the innovation in advertising the last few years has been focused on taking the cost out of the business. What about innovation that drives growth? What about promotional ideas that differentiate your local brand?
5. Redefine your business. You are not in the radio or television or digital business; you are in the marketing solutions business. You cannot provide solutions if you don’t understand customer problems. You need to find LOCAL advertisers with marketing problems that you can help solve, and you need a team that understands how to ask questions, listen and solve problems. Remember, you can compare the price of a product, but you cannot compare the price of a solution. Train your sellers to sell the solution, not your inventory.
6. Make sure your local leaders have a plan. Hitting budget is not a plan. Hope is not a strategy. Take them through an exercise where they explain the USP of each brand, talk about their prospecting strategy. Do they have enough sellers? What categories are they focused on? Most successful local publishers are focused on products you cannot get delivered to your door. Windows, doors, roofing, home improvement, professional services like medical, legal, dental, eye care. The malls may be closing but every city in the US has tons of these types of small and medium businesses. Don’t wait for them to discover the Amazon DSP, and run lousy ads that are cheap. Meet them, help them, provide these local businesses with marketing solutions.
7. Segment your price strategy. Dedicate 20 or 30% ( or 40%) of your inventory to network or low bucket business and hold the rest of it to generate business that values your product. Don’t change the percentages allotted to low priced business chasing a cheap dollar, task your team to sell the balance at a higher price. Create some demand on low price business to see if you can grow there too.
8. Consider if you are consolidating, shutting some stations down to create LESS inventory. That’s right, shut down some of the local competitors that are not profitable, and reduce the available local inventory in the market. If not, at least build a price strategy built on leveraging lower performing products to grow the in demand products. Ultimately, you have to create demand.
A few years ago, I had a conversation with a media executive on this topic, and he informed me that I didn’t understand the business. He told me that the stations didn’t price the inventory, that the clients did. I told him that they might as well declare bankruptcy if that was the way they would operate. Three years later, that company declared bankruptcy.
I’m not suggesting that we turn back the clocks, pretend it’s 1999, and hire back a building full of sales managers, traffic managers, national sales manager, and the like. I am suggesting that if your only point of differentiation is that you are a broadcast business, you play more music, repeat the same local news for three hours or that you have cheaper inventory, you are battling in the red ocean and ultimately will fail.
A “Blue Ocean” strategy is one that is focused on uncontested spaces to do business:
· Create uncontested market space.
· Make competition irrelevant.
· Create and capture new demand.
· Break the value cost trade off.
· Align the system in pursuit of differentiation and low cost.
Whether you are an operator of a scaled company, or a smaller company competing in this space, finding a blue ocean strategy where you differentiate your product, and create a revenue strategy that takes advantage of that differentiation is the key to revenue growth.
I know, I don’t understand how it is today.
It’s funny, I heard that a lot twenty years ago when I created successful turnarounds in several cities. Maybe the key to a blue ocean revenue strategy is to be the person who doesn’t understand the way it is and believes it can be different.
If you want to read the book Blue Ocean Strategy, there is a link above in one of the quotes to their website. It’s worth a read.
Michael Doyle, the SalesMD, retired at the end of 2020 after 35 years selling and managing radio stations, His final 15 years in the media business was as Regional President and President of Sales Operations for a large, multi-city company. In 2022, he took a 3-year assignment as Interim Dean of the School of Business and Management at SUNY Brockport where they turned around a declining enrollment trend while adding additional concentrations for both the undergraduate and graduate programs. People told him declining enrollment couldn’t be changed. The program grew 46% in student enrollment in just three years. He didn’t understand that it couldn’t be done in higher education either. Perhaps not understanding the status quo is the key to success.
He can be reached at mdoyle@MDMediaSales.com.