The lockdown-induced crash of the local advertising market has put many private radio stations in serious difficulty. Not just in Germany, but across Europe. This is because advertising is, and will remain, the only source of income for private radio publishers.
And local advertising revenue collapsed by up to 60 percent in Germany alone in the pandemic year 2020. The fact that radio stations did not have to close in droves during this time is thanks, in addition to state aid, to the fact that at least some of the advertising inventory, i.e. the available advertising spaces, continued to be booked and sold through large national audio marketers. In the national advertising sector, revenue losses were also significantly less severe in the crisis year 2020, with „only“ around seven percent.
However, this form of national „basic security,“ if I may call it that, also comes at a price. It's well known that deals with larger media agencies, conditions for major clients, and commissions disproportionately reduce the net revenue that reaches the publisher.
However, radio publishers have the opportunity to supplement the aforementioned „national basic security“ with local/regional revenue streams. For example, they can offer their local and regional advertising inventory directly and equally successfully electronically on the audio market. This can be done in parallel to the classic, established business model.
From my perspective, it would be downright negligent to rely solely on the „familiar“ paths in the future, as has been the case for the last twenty, twenty-five years.
Whether with or without Corona, whether in economically good times or in times of crisis: What is there to stop local and regional advertising inventory from also being presented on the big digital „stage“? Why is it not already commonplace to offer, distribute, and sell available local advertising spaces electronically and automatically? So that, for example, a young Berlin fashion label can find a suitable advertising slot on a Munich local radio station directly, lightning-fast, and simply, to advertise its new shop in Schwabing.
„We don't have the know-how or the resources for that!“ many radio publishers will now retort. But you don't need them at all, I claim. Because all of this can also work electronically, of course – i.e. fully automatically and at breakneck speed. Including, if one is willing to do so, the price negotiation between supplier and demand.
Of course, this isn't possible by phone or email. The negotiation is based on algorithms that match supply and demand in real time and calculate corresponding prices.
The „digital“ sector has been showing us how this is done for a long time: they've automated processes and ensured that supply and demand meet electronically, in real-time. One could now say that this works digitally because in the digital world the ratio is 1:1 (1 provider – 1 user), whereas with linear radio the ratio is 1 to many listeners. I say this can also work for radio, albeit with a changed approach. The corresponding technology, i.e. the necessary software solutions, already exists today for the audio sector too!
That's why it's not a vision, but in my opinion long overdue, that radio or audio advertising on online platforms, so-called digital marketplaces, becomes electronically bookable. Theoretically, even worldwide.
This is how cloud-based electronic audio networks are created, which can then be interfaced with digital platforms, such as DSPs (classic for the digital advertising business).
Radio still holds so much advertising potential. With its large reach and proven presence and impact in the region, it can be wonderfully used to supplement digital campaigns and make them even more effective.
Therefore, it's not a bonus, but a virtual obligation, to make radio advertising slots electronically bookable and tradable! And as quickly as possible, so that the „digital natives“ among advertising professionals don't lose sight of the 100-year-old traditional medium. And so that radio publishers gain a second strong and lucrative advertising pillar.
Until next time, in that spirit.
You are Nico Aprile
These posts might interest you
