Why I Became a NextRadio Disciple

Those who know me well know that I’m an “early adopter” who likes to try every new gadget and technology that comes along as soon as possible.  That is especially true of anything related to music and audio streaming, as evidenced by the wide array of outmoded MP3 players that fill my desk drawers and the ridiculous number of streaming apps on my smartphone.  You’ll rarely find me working in my office, driving my car or walking through airports without the accompaniment of audio streaming from radio stations around the world or from “Internet-only” services like Pandora and Spotify.

It is from that perspective that I initially didn’t get what the point of NextRadio was.  Quite honestly, when Emmis CEO Jeff Smulyan—someone I’ve always respected and appreciated as a long-time client of my company—started campaigning on behalf of the platform, I had some serious reservations.  Why would I possibly need to use the FM chip in my smartphone when I could already listen to thousands of radio stations via streaming?  Sure, doing so drained my smartphone’s battery pretty quickly, but with an extra battery nearby and a “grandfathered” unlimited data plan from AT&T, I had streaming audio pretty much anywhere and anytime I wanted it.  If my client station in Fresno wanted my feedback on the new imaging they put on the air, streaming was my ticket to audio entertainment and providing good client service.  In other words, NextRadio wasn’t going to allow me to do anything I couldn’t already do, plus it was limited to only allowing me to listen to local stations whose signals my smartphone could receive.

As you are hopefully aware, Coleman Insights and our knowDigital division have recently completed a two-phase research study on NextRadio.  Our conclusions were very bullish on NextRadio and I was quoted in the media expressing my belief that NextRadio could help increase the audience for local FM radio.

So what changed?  Why did I become a believer in NextRadio and why am I—beginning with this blog post—joining with Jeff and the NAB to get radio broadcasters to support its rollout?  I hope the next few paragraphs convince you to join me and my colleagues and support this initiative.  NextRadio will not solve all of radio’s problems, but it will tackle some of them, and the research we have done strengthens my belief in its potential.

My conversion started at a Radio Advertising Bureau (RAB) meeting in Detroit in April 2013 when Jeff presented an update on NextRadio to the members of the RAB board.  It provided me with an opportunity to see its impressive interface in action, and more importantly, I heard Jeff forecast the eventual near-elimination of unlimited data plans for smartphones, which is an undeniable trend in the wireless industry.  Jeff also repeated his belief that streaming as a business model was relatively unattractive for most radio companies.

Still, I remained skeptical.  How would the radio industry—which, in my opinion, badly fumbled other promising initiatives like HD Radio—make NextRadio something consumers wanted and even demanded from their wireless carriers and from smartphone makers?  Even if we could get the industry to rally around a common positioning and marketing theme, what would we need to say to capture the attention and interest of consumers?  As a researcher, the answer was obvious to me: talk to them.

Jeff was barely off the stage when I approached him and stated that even if the case for NextRadio was as compelling as he was claiming, it wouldn’t work if the industry did not unite behind a consistent messaging and positioning strategy.  I went on to say that we needed to objectively talk to consumers, find out which benefits of NextRadio resonated with them the most and then market NextRadio with a focused message that communicated how the app delivered those benefits.  Jeff agreed and invited me to visit him in Indianapolis and discuss this further, which Jon Coleman and I did a few weeks later.  From that meeting came a plan for conducting a two-phase research project, which Jeff persuaded the NAB to support.

The first phase of the research began a few months later, when Sam Milkman of our knowDigital division and I flew to Chicago and conducted one-on-one interviews with young smartphone owners.  We went there with questions about which of NextRadio’s benefits—low battery usage, low data plan usage, interactivity etc.—should be at the core of how the app should be positioned and marketed.

Only a third of the way through the interviews, however, two much more basic conclusions were coming through loud and clear.  What blew Sam and me away—and, in hindsight, seems incredibly obvious—was that (1) young consumers were not listening to radio as much as they wanted to because they did not have access to radios for most of the day and (2) despite the impressive growth figures for services like iHeartRadio, TuneIn, Radio.com, etc., most young consumers were not listening to radio via streaming because they didn’t know they could or didn’t know how to do so.

As we mentioned in our presentation of the qualitative phase of the research, the first finding is stunning to anyone over the of age of 40 like me who grew up with AM/FM stereos and clock radios in our homes, radios on our desks at work and transistor radios and Walkmans that allowed us to take radio with us everywhere we went.  The 20- to 39-year-olds we talked to, however, don’t have these things and on an unaided basis told us that they pretty much only listened to radio when they were in their cars…because that was the only place where they had radios!

That leads to more details on our second finding about most young consumers not listening to audio streams of radio stations.  Some will argue that radio is losing the streaming game to Pandora and other “Internet-only” providers because of problems with its content.  I will not argue against the idea that radio stations need to make their on-air products more compelling; it’s what my company is in the business of helping stations do every day, and I have argued with more clients than I can count about their need to reduce commercial loads, invest in—rather than eliminate—air talent and experiment and innovate to build brands that truly engage consumers.  But to argue the idea that radio would generate larger streaming audiences if it offered more compelling content is to miss another point that becomes crystal clear when you talk to real consumers: most of them are unaware that you can listen to radio stations via streaming and even those who are aware are not clear on how to do so.

That’s right, after all the promotion you’ve probably done of the Listen Live button on your website, the availability of your stream through iHeartRadio, Radio.com, TuneIn, etc. and how you can listen via your station’s own smartphone app, there’s a significant portion of your audience that just doesn’t get it.  Consumers have heard of some of these options, but many are not clear on what they are, how they can use them and what benefits they will derive from using them.  A very large consumer segment clearly does not get that they can listen to their favorite radio stations on their smartphones.  We can debate why this is the case—my belief is that the lack of one unified way to stream stations is likely the culprit—but the reason is beside the point.  Many consumers know how to listen to Pandora or Spotify; far fewer know how to stream their favorite radio station.

Thus, we came out of the first phase of the NextRadio research with a clear mandate, which Sam and I presented to the NAB’s radio board in February: we need consumers to get the basic idea that NextRadio allows them to have FM radio on their smartphones.  All of the other benefits of NextRadio like low battery and data plan usage and the interactive interface are great, but if we can’t get consumers to think of radio as a portable medium that is accessible on the devices they already have with them virtually everywhere they go, we will never fix the distribution problem that is one of the many challenges our industry faces.

Fortunately, our recommendation was well-received by the members of the NAB radio board, which includes senior executives of many of the largest radio groups in the country.  The reactions we received from these executives and my interactions with them and key people at the NAB over the weeks that followed our presentation convinced me that getting the more than 70 radio groups supporting the NextRadio initiative to unify around a consistent positioning and marketing campaign wasn’t a pipe dream.

We then followed up the qualitative phase of the research with a quantitative study completed with a nationally-representative sample of 801 respondents, which we released last week.  The purpose of this second phase was to help us more precisely target the consumer segments we should focus the positioning and marketing campaign on and to further refine the messaging we should use.  We have purposely not released that information publicly, as we are still working with the NAB and many of the leading radio groups to finalize the plans for an industrywide marketing campaign to formally launch NextRadio, which is tentatively slated to begin later this year.

However, one thing we did see in the data that we felt was worth releasing—to help galvanize industry support for this initiative—was how positively consumers reacted to the NextRadio concept.  In the qualitative phase of the research, when Sam and I gave consumers time to play with the app during our one-on-one interviews, they really liked it.  They found it easy to use and told us that having something like it would allow them to listen to radio in places where they currently couldn’t but wanted to.  A lot of them provided examples—such as being at a job site or working out at the gym—of not wanting to use up their data plan by listening to Pandora and being tired of the relatively limited personal music collections they had downloaded to their phones where having the ability to listen to local FM stations would be a welcomed change.  Those kinds of reactions were the next big step in my conversion to NextRadio disciple—it was really clear that consumers frequently found themselves in situations where they wanted to listen to local FM radio but didn’t have the means (or didn’t know they had the means) to do so…and they saw the potential of the NextRadio app to address their need.

With all that said, I was surprised by how positive the reactions to NextRadio were in the quantitative research.  I’ve been involved with consumer research for more than 25 years—and am in my 20^th year at Coleman Insights—so I am confident in my ability to put the consumers’ responses in the appropriate context and I know positive consumer response when I see it.  Also, I have a team around me in Jon Coleman, Sam Milkman, Chris Ackerman and John Boyne that brings another century of research experience to the situation—and we all were impressed with the consumer response in the quantitative data.  We know that not everyone who claims they will use NextRadio in our study will do so, but in comparison to our measurement of consumer interest in a wide array of products and services over the years, NextRadio looks very strong.

So, here’s the bottom line for me:

• The consumption of local FM radio is being limited by the fact that consumers don’t have radios in many of the situations in which they would like to listen
• The radio industry’s efforts to get them to use streaming to listen to local FM radio have not been especially effective
• Consumption of audio streaming on smartphones is being limited by the decrease in the availability of unlimited data plans
• Consumers embrace the NextRadio concept

The radio business faces a lot of challenges and NextRadio is far from a panacea that will cure all of its ills.  We need more compelling content, we need fewer commercials, we need more innovation and experimentation and we need to do a much better job of marketing our stations.

We also, however, have to address our distribution problem and I believe NextRadio could be a huge step forward in doing that.  To ignore the potential of NextRadio to address our distribution problem because it doesn’t solve every one of our problems is flat out stupid.  Right now, NextRadio is in its infancy and with limited distribution and lack of any consumer awareness yet, it has barely scratched the surface of what it can be.

That is why I urged Jeff Smulyan, his colleagues at Emmis and the NAB to invest in research that will help improve the industry’s chances of succeeding with NextRadio and to their credit, they stepped up.  It’s why I urge every radio group in the United States to also step up and support the positioning and marketing efforts that will flow from the research we’ve done.  My Coleman Insights and knowDigital colleagues and I want to be a part of the solution; I hope the readers of this blog post want to do the same.