KEEPING YOUR FRIENEMIES CLOSE: If you sell digital audio/video you probably consider broadcasters as Frienemiers, linked by market dynamics which affect all media sellers while still being tooth-and-nail competitors. So they sort of fall in between that saying from The Godfather about “keeping your friends close and your enemies closer”. To that end, the attached Inside Radio link provides a deep dive into the state of Broadcast Radio’s revenue position as we near the half way point of 2017. The results so far have been mixed to slightly down. Broadcasters are feeling the pinch of declining categories like Retail and Auto, and seeing the ripple effects of Political upheaval impacting Advocacy and Healthcare sectors. Of all the stats in this lengthy piece the two I latched on to were -7.4% and 613,657. The -7.4% stat is the drop in National Radio Revenue during Q1’17 vs Q1’16. This is a bell weather indicator that national brands are fleeing radio for digital and other forms of media, which doesn’t bode well for broadcasters in the long term. And 613,657 is the number of house ads iHeart ran across all its stations during Q1, which is up 5% over last year. That stat is telling because broadcasters only run house ads when they have open inventory. So intuitively iHeart sold 5% less paid ads in Q1 than 2016. Makes you wonder why they wouldn’t just play more music to get their ratings up?!? Regardless, this story is a great way to keep your frienemies close.
MAKING THE McAPP MEANINGFUL: Mobile Apps have been an aspirational goal for most QSRs over the past few years. But just getting consumers to download the app isn’t enough. Restaurants need to provide better reasons to interact on a mobile device. Some chains like Starbucks have done a good job of integrating mobile pay at the register but still don’t have other meaningful In-App features. Others are hopelessly lost in store locators (do you really not know where the nearest QSR is?) or mobile couponing (aka Free Small Drink Hell). But just when you’re about to give up on QSR mobile apps comes a very interesting breakthrough from McDonald’s, as featured in the attached Motley Fool link. McD’s in currently testing an order-ahead functionality which combines In-App ordering with lat-long tracking. The concept is simple – consumers order from their phone, and then the selected McDs location is pinged as that mobile device gets close to the restaurant so they can start making the order. In theory this will allow diners to skip the line and pay ahead while still enjoying a freshly made meal. I’m sure the real world application may be a little more challenging (a mile drive time on a surface street in LA takes a little longer than the same distance in Topeka), but the concept seems like an exciting an innovative way for QSRs to deliver a real benefit through their apps.
THE BIG 5, BY THE NUMBERS: Finally today, I came across this fascinating graphic from Business Insider on the revenue stream compositions from the five largest tech companies. Each has a very different business model so it’s hard to make an apples to apples comparison between them. Regardless, there are some notable observations within the media side of these numbers. Regarding Apple, check out that 11% of revenue from Services. Their music streaming (Apple Music) lives within this slice and is estimated to be around 10% of the Services total. So by the power of deductive math Apple Music makes up approximately 1% of their total revenue. It’s also worth noting Amazon’s Media business now stands at 18% of their total revenue. Considering ad sales wasn’t even a platform for Amazon four years ago that’s a pretty impressive build rate. It’s also worth noting Microsoft is almost completely out of the media business with just 7% of revenue coming from Ads, which is in contrast to FB who is almost entirely reliant on ad revenue at 97%. Nothing to do with this data but good to be aware of.
Have a great Wednesday guys!
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