Earlier this month, Nielsen released an In-Car Radio Study in cooperation with iHeart under the headline: “Tuned-In: Why Removing AM/FM Radio is a Multi-Billion Dollar Gamble for Automakers.” Over 1,000 recent and prospective new car buyers were surveyed. While I don’t have access to the entire study, let’s consider what has been released for public view.
As you can imagine, both companies have an interest in showing the importance of having radios in new vehicles.
That’s not to question the results. In fact, when advocates put out studies, the surveys are typically better because opponents of their interests love to find flaws and discredit the results. I learned that decades ago working at the NAB, so let’s assume Nielsen did excellent work on this study.
The Purchase Journey Numbers Don’t Add Up
The spin is how important radio is in the new car “purchase journey” (marketer-speak for “I want a new car”). But if you look closely, the results should scare all of us in the industry.
When reviewing Nielsen data with stations in the past, I’d always point out the Persons Using Radio (PUR or PUMM in PPM) estimate. It’s often just a single digit, and if you subtract the PUR from 100, you get the rating for those not using radio in that demo/daypart combination, often over 90%. Yes, weekly cumes are still good, but that’s one quarter hour in a week. At any given time, radio usage is low.
Let’s try that same arithmetic with this study. Nielsen’s results said 51% of those surveyed would not purchase a new car that didn’t have a radio. That means 49% would be willing to purchase a new vehicle that didn’t have a radio. The current set of US vehicles available without any radio consists of the Rivian R2 and the upcoming Slate electric truck. Full disclosure: I made a $100 refundable deposit on a Rivian R2 but haven’t decided whether I want one or not. We’ll see.
Among men, Nielsen reported a majority (54%) would be willing to buy a vehicle that didn’t have a radio. For 18-34s, that rose to 60%! You don’t need to strain your brain to guess that the strongest support for requiring a radio in a new vehicle purchase came from the 55+ crowd, where 67% must have a radio.
Smartphones Beat Radio in the Dashboard
In years gone by, the radio would have been the most important entertainment option in the car. Whatever era, compared to 8-track players, cassettes, and CD players, I’m sure the radio was number one. By using conjoint analysis, Nielsen reported that consumers now place more value on smartphone integration. That’s Bluetooth, CarPlay, Android Auto, etc., so that users can run Spotify, Apple Music, podcasts, etc., through the speakers.
It was no surprise that radio was valued more than SiriusXM, considering that a large majority of vehicle owners don’t use the service (current subscriber base is about 33 million, with over 7 million in the “total trial funnel,” which appears to mean they’re not paying for it yet). With nearly 300 million vehicles registered in the US, some of which can’t receive SiriusXM, most don’t use that service, so a lower value is understandable.
“Built-in subscription music apps” was last in perceived value, but again, that’s not surprising. Most users of music apps know they can listen in a vehicle via Bluetooth, CarPlay, Android Auto, or, for older cars, the good old mini-jack. It’s the same reason there’s little need for built-in Wi-Fi in your car when your phone has unlimited service. I’ve had built-in Wi-Fi available in a couple of my vehicles, but why pay twice?
Further, Nielsen found that four in ten drivers prioritized connecting their phone the moment they step into a car, but only a quarter made the radio the top priority. I must admit that I’m in the first category.
An Industry Wake-Up Call
The last paragraph of the Nielsen release properly stated, “innovation should add to the dashboard, not strip away what drivers already value,” but this study should be yet another wake-up call for our industry. It’s fine that half of those who have recently purchased or are in the market for new wheels require a radio, but half don’t.
Do you remember the best hockey movie ever made, Slap Shot, from 1977? The Chiefs were losing in the championship game, and between periods, the general manager, Joe McGrath (Strother Martin), runs into the locker room and yells, “We’re losing! They’re burying us alive! You’re blowing it!” Perhaps that’s an over-the-top analogy for radio today, but in my view, this is the latest snapshot of an industry in decline.
We all know it, but to paraphrase another famous movie, “Monty Python’s Holy Grail,” “we’re not dead” (and no, the quote “I’m not dead yet” was never spoken in the film). Like the Charlestown Chiefs, can radio come back and win?
Let’s meet again next week.
