Some changes look to be permanent
By Steve Faguy
LAST YEAR WAS A bad one for radio.
According to data compiled by Standard Media Index, which tracks national advertising sales in Canada, ad revenue in the industry dropped 35% in 2020, almost three times how much it dropped in 2019 overall. In the second quarter, as lockdowns hammered the economy and closed businesses and events, it was down a staggering 76% from the previous year (see above, and below).
In August, a report released by the Canadian Association of Broadcasters warned 50 radio stations could close in four to six months and another 150 in the following 18 months.
The economic fallout of the Covid-19 pandemic was certainly devastating for the industry, but radio executives who talked to Cartt.ca say it merely accelerated and heightened more fundamental changes that have been happening for years now.
“I think the biggest (effect of Covid-19) has been the devastation of the local advertising market,” says Troy Reeb, executive vice president broadcast networks at Corus Entertainment. While national advertising has held up relatively well — “it’s not like Canadians don’t need to use the products that they’ve always bought,” he said — local advertising (think local restaurants, local events, furniture stores) took a major tumble.
“Local businesses, where people buy those products, restaurants where they eat, stores where they shop, have been tremendously negatively impacted, and that has really impacted locally focused media of which radio is probably the greatest,” added Reeb
When the going gets tough, advertising is one of the first discretionary expenses to go, says Kevin Desjardins, president of the Canadian Association of Broadcasters.
“A lot of those businesses are struggling to stay afloat. They have to find efficiencies somewhere and so unfortunately advertising is one of the primary places that they would look to try to find ways to batten down the hatches and keep themselves together.”
Rod Schween, president of the Jim Pattison Broadcast Group, says he prepared a report on local advertising for his quarterly meeting with Pattison. “I had to stop the report when it got to 60,000 lines because there’s just that many interactions with small businesses, and some of it is a hundred or thousand dollars at a time. To them, that’s the world to spend that kind of money.”
While national advertising has rebounded, he says, “it’s our local business that’s going to be impacted and I think going to be impacted for a longer period of time.”
For My Broadcasting Corporation President Jon Pole, the pandemic’s impact on advertising has been more nuanced. “When we really drilled down to the business we lost, it was all things like events,” he says. “We missed out on the fair, the concerts we used to do. Stuff like that we couldn’t control. We have not experienced the horror show that is being reported by the big guys.”
“There are a lot of businesses that have done very well in this pandemic, and if you’re working with them, they want to do things to give back.” – John Pole, My Broadcasting
He credits MBC’s personal connections to advertisers for softening the blow. “There are a lot of businesses that have done very well in this pandemic, and if you’re working with them, they want to do things to give back,” he says. “So all you need to do is bring them the idea and say ‘hey we’re going to do a special event. We need you to be a sponsor of it.'”
Still, more long-term trends are hitting the industry from both sides. As audiences are being lured away from radio by podcasts or streaming services like Spotify or Apple Music (which are not subject to CRTC regulations), advertisers are also turning to online platforms that promise them more targeted audiences at cheaper prices.
“It’s like structural challenges on top of structural challenges at this point,” Desjardins says. “Government measures to mitigate the economic impact of Covid-19, including wage and rent subsidies and public service advertising, helped a bit. But I think that the economic impact of Covid-19, we haven’t seen the worst of it yet.”
Pattison laid off 40 people last summer and accepted 30 early retirements in dealing with the impact. “All of that was about rebuilding our organization to be ready to hit the ground running when we get on the other side of Covid,” Schween said. “Do we have all the right people with the right skills?
“You see this time and time again when significant events happen in history. They accelerate trends that were already in play and then you get new habits that get formed through those significant events that stay on the other side of that so you either anticipate and adapt and innovate to that or you get left behind.”
One change that may outlast the health crisis is more remote work and home studios.
“We’ve realized now that we could have writers and producers pretty much anywhere in the world at all times a day writing and producing commercials for communities they don’t live in.” – Steve Jones, Stingray
“This isn’t about cost savings or eliminating content. It’s just about allocation of resources,” said Steve Jones, senior vice-president of radio at Stingray. “We don’t do this, but we’ve realized now that we could have writers and producers pretty much anywhere in the world at all times a day writing and producing commercials for communities they don’t live in… It’s something to think about. The world is really our playground now and I think there’s a lot of opportunity for us to tap into some of that, but we haven’t done that yet.”
Pattison, which operates 48 radio stations in western Canada, wants to keep on-air and news teams in their studios as much as possible, Schween says. “We felt that that was where they could deliver the highest quality content and product and inform our listeners, and serve the advertisers that remain with us as best as we possibly could. So to do that, we moved a lot of other team members out.”
However, Schween says that move has had had an impact on staff, psychologically.
“I’m starting to lean towards bringing more people back because honestly, I’m worried about the social impact of this,” Schween says. “In some cases we’ve been on some Zoom calls where team members have started to show that they’re feeling pretty isolated and haven’t seen their teammates in a long period of time.”
Sales sides of the business have seen changes through 2020, too. “Some of our sales leads used to be on the road 40 weeks, 35 weeks a year, and we haven’t been able to do that in Covid. I think we probably were traveling way more than we needed to,” Schween says.
At MBC, adapting to the pandemic was easier because of how its stations are designed.
“Everything we do, every station we built, every studio we have, everything has always been built to be accessible from anywhere,” Pole says. “All of our sales people, everything they have is in the cloud. So the immediate part of people getting people to work from home, that was a Tuesday for us. It didn’t disrupt our world very much.”
Please click here for part one and here for part two of our series studying radio in Canada.
Part four will look at how the pandemic changed Canadians’ listening habits.
