To help Broadcasters get the most out of the NAB RAB 2010 Radio Show, our team gathered a list of issues devoted to digital business models. This collection isn’t focused on the usual topics of brand extension, FM on cell phones, HD, streaming, mobile apps and social. Rather, it’s a fact-based list of debilitating, online revenue challenges still confronting the industry today.

Hard to believe, but some owners still operate their digital assets like it’s 1999: build content, get traffic, sell ads around traffic by leveraging advertiser relationships. This contributes to why Radio only gets 2% of local web dollars. Compare this to Patch, Reach Local & Google that collectively get over 50% (and growing) of web budgets.

All is not lost. Even though competitors are multiplying like rabbits, Radio can still get back in game and significantly grow its web and overall revenue share.

Step #1: Radio should study the moves of  DESERET MEDIA in Salt Lake City. CEO; Clark Gilbert, has dramatically restructured his portfolio of Broadcast (KSL) , Print and Web units into a digital first powerhouse that dominates reach & revenue.

Step #2:  Address and remedy the most common, interactive choke points. The following list identifies what our team refers to as the ’800 lb. gorillas in the room’.

1. Top management & owners need specialized web training. How can you manage what you don’t fully understand? Dependence on expensive research and intellectual consultant/vendor babble only burns through cash and puts your stations deeper in the hole. Radio doesn’t need more data & analysis, it needs action in the field and updated management & compensation structure. Ex: If you delegate sales strategy to a content & tech focused VP of Interactive, you’ll just get well-trafficked sites with a ton of unsold inventory. Conclusion: Relying on VP Interactive or the Internet/marketing manager is a recipe for disaster without knowledgeable oversight from the very top. CEO’s: Get a closed door, WEB BUSINESS MODEL training session asap.

2. Director of Interactive qualified? Staff properly motivated? Too few Interactive VP’s or web managers are qualified to implement a realistic revenue strategy. While building slick sites and driving eyeballs have value, these skills do not always equal revenue & profit. Suggestion: hire a corporate VP of Interactive Revenue that reports directly to the CEO. Bonus all applicable staff based on web profit, not web traffic. Install mandatory web budgets and non-financial objectives that includes both financial incentives and penalties…for reps and management.

3. Dangerous thinking: ‘selling web cannibalizes Radio sales’. Are these words are still being uttered by some? Yes, but not in public. If those in charge would prefer to focus on their core Radio product, that’s fine. If these managers believe that “web revenue is small, so let’s not put too much time into it”….that’s fine too. But at the end of the day, if you’re not going run your web assets like a profit-first business…then why even have a digital initiative in the first place? It’s a fact. Advertisers are moving more ad dollars to online. They’ll buy digital marketing from their Radio rep, or someone else. While web revenue is still relatively small, it is the fastest growing revenue stream. At the very least, Radio should focus on growing its overall revenue share, by smartly leveraging its digital assets.

4. Limited web training of sales reps. How can they sell new products without seasoned direction & regular training? Is your staff taught by qualified web-sales trainers, or by a Radio ‘web-geek’? Is your staff forced to endure theory & classroom lecture, or are they getting real world training by being taught in the field? Radio needs to look outside of the industry for fresh and seasoned perspective on Web sales. Be wary of training from those who do not have recent local/direct, web sales experience.

5. Management structure conflicts. Conflict #1: Web managers typically report to a Broadcast manager. The  Broadcast manager has a compensation package that substantially encourages spot or total sales. This may be one of the most critical choke-points of growing online revenue. Where do you think Broadcast managers will place most of their efforts? Conflict #2: Programming departments are primary operators of most websites, including where and how content & advertising is placed. If we would never allow the PD to determine the on-air spot load, why do we allow them to determine online ad units and placements on the website? Just like your Radio station, the website must be ultimately run by those with ‘web profit & revenue first’ goals.

6. Poor attention to fast changing, online environment. Radio execs typically follow other Radio execs for determining digital plans. Some harshly suggest it’s the blind leading the blind. If Radio barely gets 2% of local online revenue, it might be best to also look outside the industry for best practices in web sales. New competitors like Patch, Reach local and Groupon are ramping up their local staffs, and are going after the budgets in your own backyard. Is your team familiar with these new players and their sales plan? How do you keep up? Do you have a plan to thwart these new competitors? One way to win is to provide Web 101 workshops to local advertisers. By taking an educational approach with clients, they’re more likely to rely on you for all of their marketing needs, and not some outsider.

7. Setting web budgets too low. This little sleight of hand allows sales staff to quickly hit web goals. Once hit, they push web sales down to lower priority. In this situation, money is left on the table and gives corporate management the false impression of successful, local web selling. Making matters worse, this (by default) allows remaining local web budgets to be redirected to online-only companies. The only thing worse? The foolish trick of reps converting spot costs to web, thereby teaching clients that web should always be viewed as a value-add. And please, don’t flaunt web revenue increases based on percentages, when you’re coming off a very low comparable. Better: grow top line, non-Radio business via web and increase overall advertiser count. Make sure every rep knows client’s digital strategy, and grow that share. WARNING: CEO’s & investors will blow a gasket when they find out some hid behind lame % increases and hit wimpy numbers, while your local advertiser base keeps spending more with digital competitors.

8. In-effective inventory & yield management. Nothing says poor web-sales management than seeing a lame Google AD Sense or network ad on your home page. Geez, you can’t sell your most valuable, most powerful ad unit to a local sponsor? That’s like placing per inquiry or PSA’s in your 7:20 stop set on a Monday morning. If more than 20% of your available web inventory is sold to 3^rd party ad networks…your local sales strategy needs to undergo a crisis intervention…now.

9. Confusing media kits, sales packages & pricing. Local business owners prefer simple offers, delivered using retailer-friendly vocabulary. They’re not sure of the value of 1 or even 10 million page-views. Most can’t even spell the word: CPM. Excel spreadsheets with ad units, cpm’s and other confusing data only frustrates the advertiser. It also freaks out the sales rep who’s trying to clearly explain the features & benefits of a cross-platform marketing program. Remember: Small business doesn’t care about your cool site chock full of marketing & programming BS. Instead, they want to see OTHER local advertisers looking and performing great using your site. They want case studies with definitive ROI. Do this, and they’ll line up to buy your cross platform and web-only packages all day long.

10. Over-reliance on vendors & research for sales strategy. This goofy analogy says it all: just because I sold you a beautiful kitchen & gave you the best cookbooks, doesn’t mean that you’re now on the way to becoming a master chef !