This letter was sent to the radio industry in September 2015.
Your Station’s Lifelong Relationship With Auto Dealers Is About to Come to an End
Can Your Station Survive?
A Message from Eric Rhoads, Radio Ink
Dear Radio Friends,
I never thought I would see this day.
When I started in radio in September of 1969, it never occurred to me that radio’s largest local advertisers would abandon radio. Yet today, 46 years later, it’s starting to happen. And when it does, it’s not gradual, it’s all at once. If it hasn’t happened to you yet, hang on. It’s not a pretty sight.
The Phone Call You Don’t Want to Get
Your biggest local advertiser, who’s been on the air since the beginning of time, has just cancelled its advertising. Not for a brief period, not to regroup and come up with a new campaign. They have left radio and say they’re never coming back.
And it’s like the perfect storm: It’s not just a single car dealer who is leaving. Soon you receive more calls. You’ve lost another, and another.
As you pace the floors of your office trying to figure out what just hit you, and as you calculate the percentage of your total monthly budget that can no longer be counted on, you realize just how difficult it’s going to be to try to make up that revenue from other categories. How are you going to explain this to your boss?
If you’ve been around long enough, you probably remember meeting some of the local dealers when they first opened their doors, and how you helped launch their businesses. You may remember hundreds of Saturdays, over decades, where you drove your audience to the dealer for hot dogs and balloons while your morning team did remotes from the showroom floor or the car lot. The more you think about how large a role you played in building the local car-dealer economy, the more upset you’ll be that they’re leaving you.
This isn’t just another lost client. It’s a kick in the teeth after the thousands of hours of advertising, remotes, and client meetings. How can it be that you’ve suddenly lost these dealers, people who have been your friends and clients for decades? This is not just business, this is personal. After all, your station played a major role in their success, and your people showed up on weekends for decades. Now, suddenly, you’ve been dumped.
The Digital Shift Is Occurring Faster Than Expected
Perhaps you’ve already seen this Automotive Armageddon begin. Or maybe everything is just as it’s always been, nothing has changed. Maybe you’ll even be immune. But there are some critically important things we’ve learned about automotive in recent months, and they’re very disturbing if you’re in traditional media like radio, television, and even newspapers.
It all goes back to a prediction I made in Radio Ink almost a decade ago: “When digital natives move into positions of power, about 10 years from now, the advertising world will be turned upside down. This generation will reject the way things used to be and embrace new forms of advertising we can’t even imagine today. If radio does not own and control those forms of advertising, we stand to lose a significant portion of our revenues.”
If you didn’t read that in Radio Ink 10 years ago, perhaps you read an editorial I wrote just two years ago that summed up a lot of this generational change. I wrote about my friend and neighbor who works for a major national advertising agency as the account manager for a top foreign luxury automotive brand. One Saturday, when we were having a conversation by the pool, I asked about the biggest change he was seeing in their business.
The answer wasn’t at all what I expected.
He told me that the majority of U.S. dealerships have been passed to the second generation. The owners were baby boomers who had made big money and wanted to retire or take a less active role, so they’ve turned their businesses over to their kids to run. These kids were digital natives, meaning they grew up with the Internet, and they embrace digital at a level far beyond their parents.
The problem, he told me, is that the dealer groups are now dominated by digital natives, and they no longer want to do any traditional media. No newspaper, no print, no television, and no radio. He said, “In spite of all the research indicating that these media work and we can continue to grow their business with these media, the digital natives are insisting we transition to digital advertising on Google, Facebook, Twitter, Instagram, and other digital platforms.”
Gulp. I got a lump in my throat. What I predicted almost a decade ago is coming true. Just because I saw it coming doesn’t mean I’m happy that it’s actually happening.
It’s not just the dealer groups. It’s happening everywhere. Yesterday’s “kids,” digital natives, are now being promoted into significant positions in Detroit, and they are controlling the direction of the automotive industry. As a result, the digital advertising migration is happening fast. Much faster than even I ever expected.
It’s Not Just a Phase. This Does Not Look Good for Radio
National automotive brands are finding that their business has totally changed. Consumers are making most of their buying decisions online, and they’re conducting most of their research before they ever arrive at the dealer. The test drive is just the last step in a long process. According to the dealers, before consumers arrive, they already know the exact car they want, the accessories, and the price they intend to pay, and they’ve selected the dealer based on their online research.
The days of driving consumers with gimmicks to get them to show up at a weekend promotion are almost over. In fact, dealers now want to control who comes in, so they know consumers are sold before they walk in the door. It’s a giant change from the days of remotes and hot dogs. According to many of the dealers we’ve met, they don’t think they need radio anymore.
Low-Cost Advertising Alternatives That Are Working
To make matters worse, automakers and the dealers they are training have told us they are in love with the idea of dominating Google and other search engines, and that AdWords, Facebook, and other digital platforms are not only low-cost, they let dealers track exact results and give them the ability to target a narrow shot to specific neighborhoods and demographics. Car dealers’ social media outreach is more sophisticated than most, and most dealers now have dedicated digital advertising departments and social media people.
Oh, and it’s working. So much so that most of the Detroit brands are reinforcing those efforts by shifting co-op dollars away from legacy media to digital. This is money you used to get that is going to Facebook and Google.
My Accidental Discovery of What May Be Radio’s Biggest Issue in Decades
Frankly, I never paid much attention to the automotive category. It’s always been something radio dominated, and could take for granted. At least half of all radio listening took place in the car, and automotive made up a huge chunk of local revenues. Until just a few years ago, it never crossed my mind that it could be at risk.
But then I started hearing early rumblings about the “connected car.” In-car Internet, in-dash audio systems with Pandora already on board. It instantly concerned me that radio could lose its monopoly in the automobile.
So, because I was curious, I invited a panel to discuss the connected car at our Radio Ink Convergence conference. That’s when the fireworks began, and the connected car has been a big topic in radio ever since.
One of the panelists at Convergence, a major auto-industry consultant, said radio will be removed from cars eventually, even suggesting that might start happening in just a few years. So I did what any self-respecting publisher would do: I wrote about it in a full-industry e-mail.
Within minutes of that e-mail’s going out, I was receiving calls from industry leaders telling me that my editorial was causing a tsunami of negativity for radio. One company head told me the next day that his advertisers and investors were backing out because of it. Others threatened to blackball me if I didn’t recall my statement. We even learned that a major national cable company distributed the article to its entire sales team nationwide with instructions to spread it to all local and national advertisers. I even got a defensive call from the vice chairman of General Motors, who told me they were keeping radio in their cars “for the near future.”
It was not a good day. Everyone was angry. I had hit a nerve.
Well, in spite of the threats, loss of some subscriptions from angry radio groups and pulled advertising by others, the story turned out to be true. This was a classic case of shooting the messenger.
A Happy Accident, in Spite of a Lot of Angry Broadcasters
In spite of all the negativity, I’m happy I stumbled into this. I believe radio was about to be removed from cars. Many top brands were coming to believe that radio was no longer relevant and that consumers did not want radios in their cars. If I hadn’t asked about it at Convergence, it just might have happened. We might have been shocked to see cars rolling out with Pandora on the dash, but no AM/FM radio.
Once I discovered plans were in the works to take radio off the dashboard, I knew something had to be done fast. Many within the radio industry were so angry at me, and they didn’t want to believe it. It looked to me like nothing would be done. Who could actually believe that radio would disappear from cars?
It became clear to me that I had to keep the pressure on this topic, keep talking about it to help broadcasters accept it, so they could fight to keep radio in cars. But I knew I had to do more, and do it fast, so we could get the automotive companies to recommit to radio. I learned that one major brand had hired a youth-culture research company who told them millennials don’t want or need radios in their cars because they don’t use radio. They were all drinking the Kool-Aid. We had to turn this around.
The Next Steps to Keeping Radio in Cars
What if, I wondered, we could bring the car companies together with radio, to talk about all this? Would it even be possible? Frankly, I didn’t know a lot of people in the automotive world, but I knew someone who did. A few phone calls and a lot of ideas later, I partnered with Fred and Paul Jacobs of Jacobs Media in Detroit, who have deep connections in the automotive business. Together we came up with an idea for a conference to not only bring the radio and auto industries together, but to help each side understand the other.
A Moment in Radio History
Not only did we pull off the conference and bring together top car brands with radio leaders, we even arranged for broadcasters and people from the leading auto brands to share a friendly meal. Following the conference, our contacts in the automotive industry told us that they had sold out on radio, didn’t believe it was relevant any longer, and that their plans had been to phase radio out of many car brands. Their research had been flawed; we were told flat-out that they had no idea how relevant radio was today. But after hearing our stories and statistics, they were convinced that radio had to stay in cars.
I’m honestly convinced that we made history that day, and I honestly believe that moment in time resulted in radio’s remaining in cars for the near future, and hopefully over the long term.
So What Does This All Mean for Your Local Station?
Happy accidents occur when you put people together. When the Radio Ink team and the Jacobs Media team immersed themselves in this automotive world, we learned a lot about what’s next, what the car companies are planning, what their biggest issues and concerns are, and how they plan to market their companies from this point forward.
Plans That Don’t Include Radio
It’s critical to understand how far underwater radio and other legacy media are. The dealer groups, at the urging of Detroit, are shifting their entire advertising strategy to digital. Car dealers, as mentioned before, have digital marketing teams. There is a general feeling that they no longer need expensive “old media” when they can buy inexpensive online media and accomplish their goals. Though I don’t want to suggest that some local used-car dealers won’t continue with radio, we are seeing incentives and reimbursements for legacy media going away. And that will mean, for many dealers, their plans won’t include radio.
Are You Playing Dead Yet?
They say there are many stages of denial before one accepts change. I have already been through my stages of disbelief, then anger, that radio is going to lose the automotive category. I don’t like it — and I’m not yet willing to accept it. Not without a fight. Not without a strategy. I refuse to roll over and play dead. You will have to pry my radio from my cold dead hands before I give up on keeping radio front and center in the car.
If we’re winning the fight to keep radio in the car, we can certainly put up an incredible fight to keep radio advertising in the budgets of the automotive business. But you need to be angry and full of conviction to solve this problem.
“Oh, This Is a Corporate Problem. I’ll Let Them Deal With It.”
Have you ever caught yourself saying this? Do you have a dartboard in your office with pictures of corporate officers? Do you sometimes feel they are making decisions that might not be in the best interest of your station, your listeners, your employees? Do you wish you could make your own decisions on more things of importance?
Now is your chance.
Here is your reality. As a radio professional, as a leader of others, as the one responsible for the budget, it’s your butt on the line. And, if and when you lose this job, you still have to get another. That’s why it’s important to be as fine-tuned a selling machine as possible. You may not get support or training the way you need it from the corporate people, but that is no excuse to become a slacker and not keep up with the trends you need to understand and manage.
And, when all is said and done, when the budgets are not met and you’ve lost the auto-industry billing that makes up 5, 10, 15, 20 percent of your total budget, your company will pull the plug on you fast — even though you begged them to send you to the DASH conference to learn how to save your automotive billing.
This is one of those times when they may not pay and you’ll have to bite the bullet, hop in the car or onto a cheap flight, head to Detroit for one night and two days, and take on the responsibility for educating yourself, not just to keep your automotive billing strong, but to remain relevant in the workforce. You’re going to need these weapons, whether or not you can get corporate approval. Take a sick or vacation day or two, and invest in yourself.
Why Attend DASH? How It’s Different This Year
The reality is that there are two major reasons to attend DASH. First, you and your program director need to understand how rapidly the dashboard is changing, how rapidly consumers are changing their listening behavior when they get connected cars, and how you need to change your programming to reflect this change — especially because new-car sales have been massive in 2015.
If you’re not taking the proper steps to preserve your audiences, you stand to lose them. Though we all thought they were loyal to their favorite stations, all evidence is that after 30 days of living with a connected car, their habits change. And if you’re believing the “data lie,” understand that it is a lie. People, especially younger people, consider data charges just a normal part of life.
The Sales Reasons to Attend DASH
While the rest of the radio industry is stuck in yesterday’s world of cut-and-paste sales packages to take to car dealers, you’ll be exposed to some earth-shattering realities you really won’t want to hear. But, in the midst of the bad news, there is some great news. We have discovered some very specific ways you can not only turn this anti-radio and anti-legacy-media trend around, to preserve the dealers you have, and prevent the coming mass migration to digital.
This isn’t just theory. We’ll expose you to the Detroit people and let them tell you exactly how you can slip your foot in the door in this closed digital world, and what you need to offer to be relevant.
You’ll be totally surprised. It’s not what you think. I know we were surprised.
You’ll spend a day and a half exposed to the top automakers and dealers, and to the people who are actually getting their money. You will hear from the customers what they need, what they still want, and what they don’t want. They’ll even tell you why your people are making stupid mistakes that are driving them further away from radio.
So, Eric, Why the Letter and Not an E-mail?
I don’t want you to just hit “delete.” It’s too easy, and this is a huge and very serious issue. I want to get your attention and personally invite you to attend DASH. In all these years of doing conferences, I’ve never used an appeal like this. But if we don’t reverse this trend by getting as many managers as possible to this conference, we all stand to lose.
I’d like you to consider a day and a half in Detroit. You don’t have to leave the airport, we’re in an airport hotel. You have my 100 percent money-back guarantee that this will be eye-opening, cutting-edge information you’ve not heard before. If, at the end of day one, you think you’ve wasted your money and haven’t already gotten back your investment with what you’ve learned, just tell me you’re not coming back for the second day because the conference sucks, and I’ll write you a refund check on the spot.
Radio, and specifically your station, has got to retain what is at risk of disappearing. You’ll be licking your wounds for a decade if you lose your automotive advertising, and it truly is at risk.
You may not be feeling it yet, or maybe you’re already getting the calls and hearing from the reps that the dealers are not committing for 2016. We’re already hearing stories of dealers who have shifted their budgets after decades with radio and television. Do you want to take the risk that it could be your stations next?
For less than $1,000, you can get to Detroit, get a night at a hotel, and attend the conference. How much commission will you lose in override with just one major automotive advertiser going away? What is the impact on your staff, your team, your future, your job? Will you look back and wish you had spent a little to save a lot? There is always a way to find the budget. Is it worth it to secure your job or career?
We believe it is, which is why I’m urgently suggesting that every manager in radio needs to hear these things for themselves, not rely on a secondhand report from someone who did attend.
I hope you’ll make the decision to secure your future and preserve your automotive advertising. We’re already expanding our space, but there is a limit to the number of seats we can fit in. Now is the time to make the decision.
To reserve your seat at DASH, November 4-5 at the Westin Detroit Metropolitan Airport, phone 561-655-8778 now and have your credit card ready, or visit www.DASHCONFERENCE.com and click the register button.
PS: This all boils down to trust. Chances are you’ve known me for decades of giving you Radio Ink, of exposing industry issues and ideas. Honestly, had I not stumbled into this connected-car issue and brought it to light, I believe there would be some 2015 and 2016 models without radios. I honestly believe we are revealing critical information that will help you save your billing and retain automotive advertising you may otherwise lose. I know I’m staking my reputation on it. Sign up now.
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