The Evolution of Radio: Where Does Sales Comp Fit In?

Radio is a more prominent platform in media due to market disruption.

However, traditional commission sales compensation structures have been challenged to drive consistent growth. Are your sales compensation plans aligned for what’s to come in the New Year?

Alexander Group’s Media Sales practice recently brought together top radio sales leaders to discuss challenges, share ideas and brainstorm strategies on how to best manage the cards dealt in 2020 to drive growth in 2021.

Reexamining Priorities

One of the main lessons learned in 2020 was adaptability. Being able to quickly pivot and adjust with the market was vital for all media sales firms to survive, and radio was no exception.

Radio executives agreed that a key priority for 2021 will be to capitalize on adaptability as the industry inevitably continues to shift, with the most critical element being the change from linear radio to digital delivery‒and podcasts at the center of that move. The number of active podcasts and episodes have skyrocketed in the last year, and there’s no sign of them losing momentum. It will be essential for advertisers to target podcasts as they continue to expand reach and audience.

On theme with embracing change comes another priority for radio sales leaders heading into 2021: focusing on the transition to be more growth-oriented. In (re)enters digital delivery. Top radio companies acknowledge that in order to continue with their recent success, they must layer in more digital products and increase their experience with digital marketing services.

Leveraging digital assets and updating revenue streams accordingly have been essential pieces of the revenue growth puzzle for many radio executives. A few indicated that while these changes may have already been on the horizon, the pandemic clearly accelerated the pivot.

Predicting New Trends

While the industry has seen significant growth, predictability of radio trends has been difficult to pinpoint. Traditionally, radio pillars are driven by time—the more time consumers have in their car, on busses or trains, even flying, the more time they have to devote to radio. With a significant portion of the nation’s workforce not commuting or traveling, those traditional pillars have been thrown out the window. For many radio executives, one major question remains: when a more “normal” commute resumes, will we see a return of the traditional models and trends that the industry is used to? Some leaders took that a step further. Will we ever see a “normal” commute again?

To forecast and set priorities for 2021, radio leaders need to be able to review predictive models based on previous year’s behaviors. The pandemic spurred a movement of outliers, to which there is no concrete outlook. Without data to compare, executives are struggling to predict what trends 2021 will bring and how to prepare and motivate sellers accordingly.

Overcoming Challenges

While predicting new trends could be viewed as a challenge in itself, preparing budgets and setting sales compensation plans have been an added struggle for radio sales leaders. Is it appropriate to set goals using outlier numbers from 2020, or has this year set the tone for a permanent change in the industry?

Executives used some of the COVID-19 coverage to help think about upcoming budgets. They focused more on annual and recurring revenue compared to tactical goals. However, for most, 2021 includes growth goals that utilize more of a 2019 lens. One attendee noted they had to look closely at 2020 and understand what the impact was at an account level to base their forecasting on real-time feedback. They argued that 2019’s numbers were largely irrelevant by the time 2021 budgeting came around.

One of the panelists stated that they had to reevaluate their sales compensation plan in the middle of the pandemic. They conducted a full internal analysis and survey to realize their commission model was breeding complacency instead of driving towards their overarching growth goal. As a result of implementing a new sales compensation plan, they saw 20% of their sales force hit quota and 47% achieve growth. They also had seven months of growth during the pandemic, surpassing YOY numbers several times.

However you prepare your radio sales teams for the New Year, it’s clear that reanalyzing strategies, roles and coverage to provide advertisers with new digital products and marketing services will be vital for success in 2021 and beyond.

Join sessions 2 & 3 of the virtual radio sales series to discover additional insights on the evolution of radio. During these sessions, Alexander Group will uncover findings from a new radio sales study as part of our ongoing research that explores go-to-market imperatives for media sales transformation.

• Session 2: Selling Spots to Selling Services | January 20, 2021 | 10-11am EST
• Session 3: Transform the Revenue Engine | February 24, 2021 | 10-11am EST

Register for our upcoming events, or contact an Alexander Group Media Sales practice leader to participate in our media sales research.