Radio’s revenue decline is not the result of the rise of other audio entertainment options. The real issue is that too many in the industry have wrongly blamed these platforms for radio’s struggles, instead of recognizing the true cause: the systematic dismantling of radio’s sales force.
Of all the decisions radio companies in the United States have made in the last few years, none has proven more costly than the reduction in the size of their sales organizations. This choice, which continues to be compounded to this day by the further elimination of sales managers as well as other important sales resources, has directly weakened the industry’s ability to generate revenue. It needs to be reversed.
The radio business must rebuild its sales departments.
One of the most important lessons from the Ehrenberg-Bass Institute for Marketing Science is that a business’s financial health depends on two key pillars: Physical Availability and Mental Availability. In How Brands Grow Part 2, Professors Byron Sharp and Jenni Romaniuk put it simply: “brands, even in complex high-involvement or intangible categories, compete largely for mental and physical availability. Growth depends on building these two market-based assets at a faster rate than the competitors.”
Over the past decade, radio companies in the U.S. have slashed their sales forces, often by more than half, dramatically reducing their physical availability.
Physical Availability
Physical availability is exactly what it sounds like: A brand needs to be present and within reach when customers are ready to buy.
Think about it like this: In Tulsa, Oklahoma, there are 20 McDonald’s locations, 10 Burger Kings, and 14 Wendy’s restaurants. A customer in the mood for a cheeseburger has almost twice as many chances of driving past a McDonald’s compared to a Burger King or Wendy’s. With this massive advantage in physical availability, it’s no surprise that McDonald’s generates more revenue than the other two brands combined.
Now, imagine McDonald’s suddenly announced it was closing half its locations. What would Burger King and Wendy’s do? What happened in the radio business is equivalent to Burger King and Wendy’s responding by closing half of their stores as well!
Every Radio Seller Is a Store
In a B2B context like radio sales, every seller is a store. When radio stations cut their sales teams, they cut their ability to reach and serve advertisers.
The result is fewer customer conversations, fewer deals closed and declining industry revenue.
According to BIA Advisory Services, total radio revenue is projected to fall below $13 billion in 2025, down from its peak of $15.3 billion in 2016.
How can we seriously discuss the financial difficulties facing radio without addressing the fact that the industry has cut its own physical availability in half?
The Conversations That Aren’t Happening
There’s a crucial difference between a radio seller and a McDonald’s cashier. A McDonald’s cashier is reactive. When a customer walks up to the counter, (“I’ll have a Quarter Pounder with Cheese, please”), the staff has two choices. Satisfy demand or maximize demand (“Would you like fries with that?”).
Radio sellers, on the other hand, don’t just fulfill demand—they create it. But that only happens if they are given the time and resources to do so. When the number of sellers and sales managers is cut, all the conversations that could have created demand are cut as well.
Less creation of demand means fewer advertisers. Every cluster we’ve analyzed is serving less than half the advertisers they were serving ten years ago.
It also leads to higher Key Account attrition. Even where stations have managed to retain their largest advertisers, their reduced sales teams lack the bandwidth to develop future Key Accounts.
The revenue loss from this trend hasn’t bottomed out. As long as radio companies keep cutting their ability to create demand, their ability to generate revenue will continue to erode.
Mental Availability
If physical availability makes a brand easy to find, mental availability makes a brand easy to remember when a purchase decision is made.
If there is one thing that the radio business has always done exceptionally well, it is building the mental availability of its brands. From their talented, funny announcers outdoing each other to command the attention of the listeners, to the promotional stamina the radio stations lent important local causes, to the money they spent on media, like television and billboards, radio was always exceptionally good at staying top of mind.
Maintaining mental availability costs money. One radio leader with whom we spoke recently described the snowball effect: Loss of revenue leads to fewer resources to maintain mental availability, which reduces the future demand for the medium, etc.
The Road Back
The folks at Ehrenberg-Bass talk about mental availability as the asset that builds the potential of the enterprise, while physical availability is the asset that turns that potential into revenue.
Radio still enjoys more mental availability than its current sales teams have the ability to monetize.
We urge radio leaders to commit to this one straightforward goal: End this year with more salespeople and more sales managers than you have today.
More salespeople mean more conversations, more advertisers, and more revenue. Without them, the industry will continue shrinking—not because demand has disappeared, but because there aren’t enough sellers left to cultivate it.
The solution is simple: Reopen the stores. Rebuild the sales teams. The future of radio depends on it.
