I think that’s one reason, but it’s not near the top one. BROADcasting by definition is untargeted.
While broadcasting does reach a broad range of people, hence the name, it's definitely targeted. All the research done for radio is done to make sure the audience the advertisers want listen to the station.
Advertisers must pay to reach thousands of people they neither need nor want.
While advertisers will inevitably reach people they neither need nor want, they know how many people they want that they're reaching. That information helps them determine if it's a good buy. If you want to see a truly untargeted form of media that charges a fortune to reach people the advertisers don't want, look at the newspaper. We know what's happening to them. It's really more of a case of look at the newspaper if you still have one.
It’s an inefficient method compared to what, say, Facebook can offer. And BTW, contrary to your premise which is very understandable due to your perspective, there are actually literally millions of NEW ads and advertisers now. That didn’t advertise electronically just 20 years ago due to this far more efficient marketing. Broadcast advertising IS hugely beneficial for advertisers seeking to pay for and reach MASS BROADcasting audiences. That is a minority of all businesses, the overwhelming majority of which are SMALL.
I agree with some of your points here. Yes, Facebook and other online media can offer one to one marketing at a cheap price. How often, though, do you login to Facebook and see ads for small businesses halfway across the country that have no online order capability? I see ads for restaurants on the other side of the country that I will never visit at least a handful of times a week. I will also point out that a large number of advertisers you see on Facebook are the bigger businesses that don't use radio or use it sparingly. I see tons of Walmart advertising online. The only time I hear Walmart ads on the radio is when I'm listening online, and it's usually a preroll ad with video when I start the stream. Big retail uses radio sparingly if it uses it at all.
I also agree with you that the smallest of small businesses are not radio's target advertisers. Restaurants and nightclubs have always had a reputation for being no pays. Radio doesn't go after those businesses for a reason. Maybe it has evolved over the years, but, in my experience with radio, its favorite customers are small to mid-sized retail. Those are the exact places that have been contracting right along with radio over the last 40+ years. The big box retailers put most of them out of business in the 80's, and online retail has been shutting many of the rest of them down over the last 10 years or so. There's a term for what we've been seeing over the last 15-20 years. It's called "disintermediation," and radio's business model has always centered around having intermediaries.
Absolutely. And when I hear broadcasters here blame the economy, I just laugh. This must have been what it was like at buggy whip manufacturers a century ago. Bad economy. The economy is absolutely rocking..growing 5% nominally, $28.5 Trillion GDP, all time high employee pay and total employment. The issues with broadcast TV and Radio are Secular not cyclical. There’s not an economy strong enough to resurrect the industries as they operate now. All of the major broadcast groups have signaled this btw and permanently written down the values of their properties. It will be very interesting to see how these industries reinvent themselves. Content REMAINS king—great formats and great personalities are hugely valuable. Yet radio is in crisis.
I'm not convinced that radio is in a death spiral. In some form or another, it will be around for a long time. It just might not be the traditional AM/FM broadcasting we've had for the last 100 years or so. If radio evolves to more of a one-on-one medium, that will likely mean a lot more people lose their jobs, or at least lose their guaranteed paychecks. The last two years or so have been among the best two years we've seen economically since the end of WWII. Radio's problem is an evolving economy, and it may not be one that supports traditional AM/FM indefinitely. My opinion is still that traditional radio is positioned a lot better for the future than TV, which is too dependent on sports to get those high retrans fees from cable and satellite providers. If, however, you work in the industry and think it is in a death spiral, the time to get out is now, before it hits bottom. If you can't get out now, get a plan together and start it. At some point, every old technology dies. The leaders in new technology aren't always the leaders in the old one. If you'd have told me 30 years ago that online retail was going to be king by 2015, I'd have bet on Sears being the company that would perfect it. That was the company that perfected the mail order catalog to a science and would've seemed poised to do the same in the online marketplace. The idea that a company that didn't even exist yet and would be started by someone no one had ever heard of would put Sears out of business by 2020 would've seemed far-fetched and ludicrous.
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