607: Why Broadcasters Need to Embrace Digital? | Erica Farber – Part 2

This week we continue the conversation with Erica Farber, the president and CEO of the Radio Advertising Bureau for part 2 of the webinar series. Erica leads Radio’s advocacy by driving business, growing advertising revenue, and communicating Radio’s digital transition.

She joined the organization in January 2012 as the Executive Vice President responsible for membership and driving professional development, and then she was promoted to President & CEO.

Erica held nearly every position in Radio Sales & Management by rising through the ranks at the INTEREP Companies and serving as Executive Vice President of Radio Development.

In 2000, Ms. Farber received an American Broadcast Pioneer Award from the Broadcasters’ Foundation and has consistently been voted one of “The Most Influential Women in Radio” by the readers of Radio Ink Magazine. In 2009 she was awarded the inaugural Trailblazer award by the Mentoring & Inspiring Women in Radio Group, a group she was a founding member of in its inception of 1999.

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Are Radio Networks Embracing Digital Quickly Enough?

Introduction

George: This is the Conquer Local podcast. A show about billion-dollar sales leaders, marketers leading local economic growth, and entrepreneurs that have created their dream organizations. They wanna share their secrets, giving you the distilled version of their extraordinary feats. Our hope is with the tangible takeaways from each episode, you can rewire, rework, and reimagine your business. I’m George Leith and we’re very pleased to present a two-part Conquer Local podcast featuring Erica Farber. Erica is the president and CEO of the Radio Advertising Bureau, and she leads radio’s advocacy efforts by helping to drive business, grow advertising revenue, and communicate radio’s digital transition. She joined the organization in January 2012 as the Executive Vice President responsible for membership and driving professional development. And then she was promoted to President and CEO. She’s held nearly every position in radio sales and management, including rising through the ranks at INTEREP Companies and serving as Executive Vice President of radio development. In 2000, Ms. Farber received an American Broadcast Pioneer Award from the Broadcaster’s Foundation and has consistently been voted one of the most influential women in radio by the readers of Radio Inc. Magazine. In 2009, she was awarded the inaugural Trailblazer Award by the Mentoring and Inspiring Women in Radio Group, a group she was the founding member of in its inception back in 1999. Coming up next, Erica Farber the president and CEO of the Radio Advertising Bureau in part two of this special two-part series of the Conquer Local podcast. 

George: we’re gonna get to the big question before we go to the questions that are coming in from the folks joining us in the webinar. But I hear this all the time. You know where I’m going with this ’cause, in the preamble, we talked about it. I’m actually spending more time now with CFOs than I am with CROs, which a lot of times it was the head of revenue, or you know, a sales leader that would reach out to us. Now we’re spending time on the finance side because the question is how do we make money with digital? How do we get a profitable line of business there? There’s demand there. We can find the products and services. We might have to go through a couple of tests to find the right ones, but then at the end of the day, we’re not seeing it fall to the bottom line. What advice can you give? So what are you hearing when you talk to broadcast organizations around this idea of digital may not be as profitable as our core business or there’s just a litany of things that are said around this?

Erica: Well the easy answer is that if you don’t do this, you’re gonna be in bigger trouble than if you do do it. So that’s the first thing I would say. That it is becoming critical that we can be that preferred supplier to an advertiser. We have to test, and test, and test. They’re gonna be new relationships. We need to make sure that we have the right people in place because some of our sellers who may be terrific people and great employees, they may not embrace this and change is tough, but change is inevitable. And there isn’t one industry I can think of that hasn’t been affected by change. So we have to continue to change with the times. And yes, you’re right, George, that some of these offerings may have smaller margins, but it gets us in the door, it maintains that relationship and helps us grow. And if you start small and you just continue to try it, and grow it, and listen to the experts out there because we can’t be the expert of everything. I love the idea of team selling. And what I mean by that is, you know, it’s almost like going to a doctor. If you’ve ever had any kind of physical issue, you can ask all the questions in the world. But if you have a health issue and you’re asking the doctor when they’re talking to you, and I can tell you this firsthand, you stop listening at some point. And it’s not something that you are aware of, it’s because there’s so much information coming at you that you’re trying to understand all the information but you’re not really hearing the information. And I think the same thing goes for when you’re reaching out and working with customers and advertisers that when someone’s asking the question, it’s good to have someone with you who’s listening to the answers, and looking at the body language, and trying to understand is this getting through or is it not getting through? So we shouldn’t be doing this alone. Having partners is critical. And again, you wanna do work with experts and we can’t all be an expert in everything ’cause many of us are generalists. But by bringing in experts, they’re going to partner with us. And I think partnerships are becoming critical to all of us in this digital world. The other thing I just wanna mention, is streaming of our own broadcast signals, 17% of listening is now being done on the stream and yet many of us aren’t even monetizing our streams of our own radio stations. You know, there’s 2 million podcasts out there, but are we monetizing those podcasts? And how do you monetize? So again, that toolkit is just growing and growing and growing, but we need people and partners that can help us market these products. And don’t be afraid. And you know what? Some of ’em are gonna fail. It’s not always gonna work, but that’s okay because if we’re not trying things, we’re not doing anything and we’re stagnant. So again, we have to just be ready for that change. We wanna be the catalyst for that change and just keep going because you will have success.

George: What I’m glad that you brought up, is the streaming and the podcast component because it is not that big of a stretch to sell that inventory. It’s a lot of the same motions that you’re making today. Plus there might be a better margin there, but you’re right, when I go to a lot of those sources, those sites are not optimized to be able to have a good experience there and they’re not taking advantage of the opportunity. So it’s low-hanging fruit for sure.

Erica: Well, and you know, again, I mentioned that webinar that I attended from Borrell last week, the number one reason that businesses weren’t buying the streams of stations is that no one had ever pitched them. 

George: Right

Erica: So again, it’s an opportunity.

George: No, it’s an enormous opportunity and thinking about it as another piece of inventory, I think is proven to be a successful tactic and then positioning it differently. It’s not just an add-on, but, you know, there’s a couple of things that have happened over the last 10 years that I’ve noticed. One, broadcast companies sometimes sold against digital and said, “No, we’re gonna stay focused on radio, we’re gonna sell radio.” And then the second one was they gave away the stream as a value add and now are coming to grips with maybe it wasn’t the right thing to do to monetize it. So there’s all sorts of different challenges. The reason I wanted to put that out there is it’s okay. A lot of the most successful media partners that we worked with today have been through a number of fits and starts to get it right. And by the way, it’s never right. It’s constantly evolving, everything’s changing. And I feel a little bit better today than I did 10 years ago when I entered the space because I think people recognize the enormous demand that is there and that their local organizations are key to solving that problem for their most precious resource, those local businesses. So I wanna get Vishal to come in now and he’s been curating all the questions that have been coming in on the chat. Erica, thank you for all of those great learnings. By the way, we did an internal training with all of that Borrell data yesterday. I highly recommend going online to Borrell and Associates and finding that information. It’s fascinating to me, some of the data that came out of that survey of local advertisers and the agencies that are in some of those local markets. So Vish you’re on, let’s get into those questions.

Erica: And thanks George.

Vishal: No worries, thank you, George, and hi, Erica. And a big shout out to all our attendees today. We have over 30 attendees, which is fantastic. Ed, Loretta from LA, Ron from KJLH radio, welcome. Now we’ve got a ton of questions to go through. However, I would encourage everyone to drop in a burning question, possibly a hard question for Erica and George in the chat if you can. We wanna keep this animated and there’s many exciting questions to get through. Okay, so I’m gonna start off with my favourite one here, John from LA, when we think about the radio business today, when we think about the radio industry today, are we in a traditional radio business or should we be thinking as digital-first companies?

Erica: Well, you know, I’m not the head of your company, so it’s gonna depend on your ownership and I would never try to step on the toes of the mission of your companies. I would say, however, you know, we put a lot of labels on everything. What we wanna be is a trusted partner to provide solutions to any and all advertising and marketing issues a client may have. We just wanna be the preferred supplier. If you choose as a company to say digital-first, if you choose to say we’re a broadcast company, that is an individual decision of that company. But in order to be successful for long-term growth, you wanna provide solutions, profitable solutions for your partners in your local marketplace.

Vishal: Now that’s a great segue into Ashley’s question. And Erica, at the start you mentioned as an industry radio broadcasters, they’re a bit all over the shop. So the question here from Ashley is how can we best enable radio sellers to embrace digital and effectively sell through omnichannel campaigns? And I’d love to just add to that if we’re all over the place, what tips can you give to those radio broadcasters which are potentially lagging to kind of get on an even keel as an industry?

Erica: Well, first of all, it starts at the top. You know, many times a new idea starts at the bottom and rises. In order to be successful I truly believe if we do not have the support top down, it’s not gonna happen. And you know, how a company works and how that feels, the culture of an organization doesn’t change overnight. It’s organic and you have to continue to repeat it, but you also have to walk the walk and talk the talk. It’s one thing to say you are a digital-first company, it’s another thing to actually be a digital-first company. So it takes a major commitment from the entire organization to put their arms around it and learn together and grow together. And again, it’s education, education, education and continued. George said it, not everything is gonna work, but you’ve gotta take some baby steps. Don’t start running around the block. If you have a relationship and you have a new partner and say, oh, now we’re a digital company. No you’re not. You have to understand it yourself. You have to train everybody around us. We have to have the right people in place that all believe in it, understand it, and if they don’t understand it, we need to have partners with us that can help us understand it and/or help us explain that and present it to our clients. It’s a big commitment, but again, everybody within an organization has to be on board because if they aren’t, it’s not gonna happen.

Vishal: Thank you for that. Paul from Milford or Medford in Oregon asks, “Should radio companies look beyond the markets they operate in to grow digital revenues?” And that’s a great question from Paul because we often think about radio stations as being very hyper-local focused.

Erica: Why not? Again, if your home base is Medford, which is beautiful by the way, and you have a client that has locations in other markets and you can be that expert, there are people that can help you. And so whether if you need other radio stations, please call the RAB because we’ll help put you in touch with people that can help you do that or get you to the right stations. But at the same time, your digital partners can also help you grow that in other markets. So I would definitely say why not? There are no right or wrong here. We’re writing this as it happens, but if you have someone who is willing to do that and has developed that trust, absolutely see it all the way through.

George: I wanna punctuate that, Erica, the way that I look at it is we were handcuffed by having to have that tower in the field with the broadcast on it, and anyone within earshot was a customer. But now with digital solutions, our best friend, cousin, aunt, uncle, brother, sister, mother that has a business somewhere else, you can serve them. And by the way, they’re looking for somebody that they trust. So as long as you have some trust there with your family member or friend or whoever it is, and they have a business and a pulse, you can solve their problem with digital. So you’re not handcuffed by being within the realm of where that signal reaches to.

Erica: That’s such a great point, George. And, you know, just thinking about our own stream, the people that are listening to the streams of our stations aren’t necessarily in our market. They could be people that moved out of the market that grew up with that radio station, or they’re searching for a format and they say, “Wow, I really like this sound of this radio station.” Or they’re from another country who just are interested in that radio station. So I love that analogy about being handcuffed. You’re absolutely right.

Vishal: Now we’ve got a question here, and I’d love both your perspectives on it. Erica, you’ve been such a strong advocate of the radio space. George, you’ve had a very interesting experience in transitioning from radio to a technology company and all we think about is growth, even if it’s not profitable at first. So the question here from Dan is how do you convince CEOs that are not seeing strong enough margins from digital to add headcount for an unprofitable business segment? Kick it off with you, Erica.

Erica: Well, look, we know that everyone is looking at P&Ls. It’s critical. Not all of us have deep pockets. And unfortunately, a lot of privately owned businesses, and there are many radio stations that are privately owned, they don’t have those deep pockets. So, you know, if you can break even, that’s a win. And as I said, let’s do some baby steps first, let’s figure out who are the appropriate partners that can help us, get us there. And I know that with our partners, there’s all kinds of ways to monetize those partnerships, as well. And so that’s one element for negotiation. And then as you grow, how someone’s compensated, then it grows on the other end. It’s not gonna be upfront. You know the one thing I think is interesting is if you look at a lot of digital companies and you look at the average tenure of the people who work there, there’s a lot of churn. You’ll see young people start working. You’re like, oh, I’m with this digital company and then, you know, I see it all the time. And then I’ll hear from that same person, they say, “Oh, I changed jobs. I’m in a new digital company.” They don’t think anything of being in a company for a year, a year and a half and moving to another company. For many of us in the radio industry, we look at that and say, “Well that’s sort of odd, you know, where’s the loyalty to that company and where’s the loyalty to that?” So it’s a very different mindset. So there’s a churn on the personnel side, but you also have to figure out there’s gonna be a churn on your side as to what you’re gonna do. So if you walk slowly, you negotiate your partnerships properly, and again, there’s a lot of negotiation. There’s a lot of room there for all of us when we’re dealing with our digital partners. And let’s just see what works. But please start trying. It’s like that dart board. Keep throwing that dart, you’re eventually gonna hit and when you hit, it’s gonna be big. George, you may have something you wanna add to that.

George: Yeah, Erica, thanks for teeing that up. The way that I look at this is that I think that CEOs need to understand that experimentation is needed to grow and you have to be not afraid to fail fast. Now that said, I have spent the last 10 years in a tech company that is venture capital funded. The word I hate the most is burn because we didn’t burn any of the money, we invested it in people and we invested it in a little bit of technology, but most of it was people. And I had to prove to the CEO and usually the CFO, and the investors that when we hired 50 salespeople, it was gonna cost us money for a period of time, but there was going to be a climb out of what they call the J-curve. And all of that is based upon data. And I think that when you’re also talking to the CEO to get buy-in, Dan, it’s a phenomenal question. There has to be a payback, like as we acquire these new customers, and I’m being very careful of what I said there. As we acquire these new customers and focus on that, that it’s a new logo, we bring it in, we get it to break even to Erica’s point, and then we expand the relationship with that customer later. But we should know what the lifetime value is. We should know what our churn is of those customers. We should know how many we’re acquiring on a month-to-month basis. And when I ask that question to traditional radio companies that are entering digital, they can’t tell me how many new customers they acquired last month because a customer is a customer. If we get money out of them, that’s good for us. So we gotta be thinking about an acquisition motion and what the payback is going to be on that. Then an expansion motion of we now have that logo, we have that customer, what are we able to do with it now? Because actually there’s way more money to be earned from these clients on the other side of acquiring them. But if we separate that and go into the CEO and the CFO and say, “Here’s the investment we’re gonna make to get new business, here’s the investment we’re gonna make to grow that business and I’m gonna show you what’s working and what’s not so we can fail fast, experiment, and build out a profitable business unit.” So you’re not selling digital, you are building a profitable business unit that sits right on side with the radio. And now I’m gonna throw my thing out about whether we’re digital first or not as an industry. You are digital-first you just don’t know it yet. And you happen to sell radio as one of the items. I’m gonna be way more bold than Erica. She’s way more politically correct than I am. But we gotta get there. And if we look at the other companies and Erica you mentioned directory and we also have our friends in the publishing business. We’ve already saw what happened. So you know, we’ve got 10 years of experience. When I entered this space, it was just starting to happen and it happened. So we’ve been lucky in broadcast we can learn from that, but we gotta be thinking about profitable business units. That’s the key to this whole thing. And there has to be ROI and there has to be payback.

Erica: I wanna add one more thing. I honestly believe, and this is a broad generalist statement that many times we don’t think big enough. And what I mean by that is when we’re targeting an advertiser, sometimes we’re almost afraid to ask them for a number because we think they’re gonna say no. And it’s much easier to start with a really big number and have it narrowed down than to start with a small number and then they start negotiating that down and then we have nothing. So again, when we’re thinking about our prospects and when we’re thinking about growing our businesses, we need to be developing relationships with customers that they’re also thinking big that we can have long-term relationships with that actually we can go in and ask for that hundred thousand or 250,000 versus do you have $5,000?

George: Well, and that came from our legacy, Erica, where we were competing against five other stations in the market and we were getting our percentage hopefully a little bit more than our fair share, that was what I was taught over the years, of the radio budget. But in digital now you’re working on their entire marketing funnel and their entire customer journey. And I find that a lot of reps are seriously underestimating how much money that business is prepared to invest to get the outcome that they’re looking for.

Erica: Well, and you know, we talk about budgets being decreased, traditional advertising budgets, but they have marketing budgets, they have promotional budgets, they have co-op budgets. So there they have social media budgets, they have digital budgets. They have so many different budgets and historically many of us have only been competing for the traditional advertising radio budget. So again, we have to think bigger and understand these organizations that will say, “Well, my budget is only this.” Well, they have a much bigger budget because they are doing. They have signage, they have social media, they have digital. We need to be in that door getting those numbers, as well.

George: One other thing that I had at dinner the other night, Erica, with a sales manager of a rock radio station and we were done the steak and we’d finished the potato and now we’re into the wine, maybe two glasses of wine. And this manager was talking about the deal that they had lost to the country station in town. And I’m sitting there thinking there is so much money being spent on digital and you’re not losing any sleep over the money that you lost on the digital side of this, that that customer is spending. So, you know, again, great salespeople, they’re very competitive. They wanna win. They know their product inside and out. One of the tests that I love to work with sales managers on and CEOs is if you were to ask a radio rep to give me all the objections that they have to handle on a radio buy from a customer, they’d just bang ’em out. The minute that they can do that for search engine optimization, digital display advertising, website and e-commerce, the minute that they can be that proficient at dealing with the objections, you are going to build a hell of a digital business.

Erica: No question, no question.

Vishal: Fantastic, alright, thank you both so much. Really rich debate. Really appreciated your perspectives, learned a lot. Now before I hand it over back to George, just wanna apologize, Milford, Mike and Gary, I do see your questions and we will answer them separately in a blog post that we will publish following up from this webinar based on the content today. So we’ll reach out to you to answer those questions and get additional perspectives from Erica and George. So just wanna thank you for that. Now before I hand it back to George again, just wanna thank everyone for coming. You get a replay of this webinar. You get a lunch and learn invitation as well. And this episode will also be available as a podcast. Just wanna give a shout-out to Erica and the great work the folks at the Radio Advertising Bureau are doing. Anna’s going to post a link to the RAB so you can check out some of the great advocacy work you do. We’ve certainly been very, very impressed. And of course to the master podcaster, George, please take a look at the Conquer Local podcast he runs. It’s award-winning and we’ve had some great guests. We’ve had Corey Elliot, we’ve had Marc Campbell, and Lauren Jones in the last couple of weeks and they are terrific. They provide some terrific sales advice and also perspectives on the media industry. So thank you with that. And with that, I will leave it to George to close.

George: Thanks, Vishal. So, Erica, I had one last question that isn’t on the script. So Vish and Anna, our team, they’re freaking out because they’re, oh, George is going rogue. But one thing has happened and I’m in the middle of budgeting for next year, and the Chief Marketing Officer came to me and said, “You can’t spend the money that you used to spend, but you do get to pick a couple of conferences to go to.” And I always used to enjoy going to the Radio Show and I know there’s been some change in there. So I think that our guests that have come to this are probably looking for that too. So what do I wanna go to next year? What do I wanna invest in to learn more about the radio business?

Erica: Well, obviously the NAB has a strong presence in April and I would just say stay tuned because there are some other opportunities that may pop up in 2023. The people in the country arena are very fortunate because they have the Country Radio Seminar, which is a great robust conference. And you know, there are several other conferences as well. But I would just say just, you know, continue to look at the trades and see what’s available to you and what your specific needs are. My plug for the RAB, if you ever have any questions, we would invite all of you, whether you are a member or not, to please reach out to us and we will be happy to guide you depending on your need, so.

George: Thanks, Erica, for that. And we’ll make sure that we have all of Erica’s contact information in the show notes. And I still remember fondly my RAB training when I was a young sales rep and I know that when I was managing it was mandatory that the reps take that. So thank you to you and the organization for all the great work that you’re doing in building professionals. I believe that sales is a noble profession and the work that the RAB has done over the years has helped thousands upon thousands of families feed their kids. So thank you for that.

Erica: Well thank you, George. And again, thank you for this opportunity to have this conversation. And before we close, I just wanna wish everyone a wonderful holiday and to an incredibly successful and profitable 2023.

Conclusion:
George: So many valuable takeaways from our second webinar with Erica Farber, the President and CEO of the Radio Advertising Bureau. If you’re a radio broadcaster and you’re fearful about taking the leap into digital, stop being worried. More than half of all advertisers are buying digital from local media companies and there’s an enormous opportunity out there. So don’t be scared to give it a go. Reaching out to partners will help you to be more successful in your delivery of digital solutions. And don’t be afraid to experiment. You have to ask that leadership team for support. You are a sales leader and you’re going to the CEO or the CFO, you have to get their buy-in to make sure they’re driving that change. And by iterating and learning from what your customers are looking for, you’ll be successful in delivering digital to those customers. If you liked Erica’s episode discussing why broadcasters need to embrace digital, let’s continue the conversation. Check out episode 230, Mission Radio to Digital with my good friend Jamie Cohen. Episode 546 and 547, the two-part webinar series on Strategies to Boost Radio Ad Sales with Corey Elliot from Borrell and Associates. Please subscribe and leave us a review wherever you listen to your podcast. And thanks for joining us this week on the Conquer Local podcast. My name is George Leith. I’ll see you when I see you.