enough ads!

[Unregistered]

Enough Ads

One of the things that has not been brought up is the fact the rates stations charge is partly dictated by outside sources. In larger markets rates are set by a ratio determined by the ad agency. Radio struggles with that but in order to win the buy, assuming you're not the top station, it is to get the per unit rate down to the price ratio the ad agency is using. Simply put, if you have a high rate, you have to bonus the client with free spots to earn the buy. So, programming and charging higher rates are not going to fly. The ad agency buys demographics and numbers listening. They don't care about superior programming or the number of spots you play per hour. They are more concerned with showing the client they made the best decision and got the greater number of impressions for the client they serve. That insures there are no lone wolves out there.

 

[Shredder]

The ad agency buys demographics and numbers listening. They don't care about superior programming or the number of spots you play per hour. They are more concerned with showing the client they made the best decision and got the greater number of impressions for the client they serve. That insures there are no lone wolves out there.

that's assuming ads are even effective these days. I'm so bombarded by them I just tune them out. unless they are funny and entertaining. To this day 15 years later, I still remember a 'ghosts of christmas past' style milk ad, that ran in july of all days. it was funny enough to stick in my memory...

 

[TheBigA]

that's assuming ads are even effective these days. I'm so bombarded by them I just tune them out.

Which is why advertisers know they have to buy lots of impressions. The more you tune out, the more impressions they need to make.

 

[Unregistered]

Enough Ads

Results are not so much of a factor. When 3rd party verification can be offered the client (advertiser) that the ad agency created a media mix and content that should have worked effectively, then the advertising agency did their job. Results are not always known as in being strategically pinpointed, but more generalized. For example, was customer count up? Did your cash register ring more? If so, it worked.

I like to point out to potential radio advertisers that ask about results that radio works but may not seem to. I ask them when was the last time they told a business owner they heard their radio commercial and that was why they were at the business. I've yet to find somebody that said that.

Radio loses over TV and print because of the attention other media requires. You watch TV. You do not do other things that require your full attention while watching TV. The same is the case for print. Radio can accompany any activity and can go anywhere, so radio sells at a different level, not requiring the full attention of the listener. So, the information gets heard and digested by the listener but that 'memory' is not attached to a specific point in time. Think of it this way: you can't seem to get a song out of your head and you might not even like it too much but you simply cannot identify the very moment you got the darn song stuck in your head.

With all the negative said of broadcast radio, it is still a viable medium for advertising and reaching the masses. There can be a substantial number that tune away from the radio station when the commercials start and radio still has enough of the cross-section of the population listening, it is still nicely priced and hits your market. TV suffers just like radio. How many hit mute when the commercials begin or leave the room to hit the fridge or bathroom? Even with that percentage, television works too.

I'm not trying to be a cheerleader for radio advertising as it is, but in reality it still performs and typically leaves its customers with satisfying results. If it didn't you would not be hearing commercials at all.

 

[wadio]

Which is why advertisers know they have to buy lots of impressions. The more you tune out, the more impressions they need to make.

Correct.

Inversely, fewer (and better) ads leads to lower tune out and therefore a larger audience so that fewer impressions are needed. That means the spot rate can be INCREASED, giving the advertiser the same number of impressions for total dollars spent while buying fewer spots at a higher rate.

I believe that's what I said in Post #9:

The better tradeoff is higher rates and fewer ads.

... so apparently we don't disagree regarding the tradeoff.

 

[davideduardo]

Correct.

Inversely, fewer (and better) ads leads to lower tune out and therefore a larger audience so that fewer impressions are needed. That means the spot rate can be INCREASED, giving the advertiser the same number of impressions for total dollars spent while buying fewer spots at a higher rate.

The fewer spots - higher rates concept only works if there is a proportional change in audience size.

If a station has 14 minutes of spots today, has a 4 share and gets an average unit rate of $200 then to cut the spot to 7 minutes they have to get an 8 share to justify a $400 rate.

As was very nicely detailed by "unregistered" agencies set a pricing goal for audience delivery. They call it "Cost Per Point" and it is usually referred to as CPP. A point is 1% of the population in the buy demo. An agency looks at each station's rate, its rating (not share) and calculates if it meets the CPP goal. If it does not, they may ask for bonus spots, a rate reduction or simply skip buying the station.

So, since advertising is bought at commodity rates most of the time by agencies, a station can not charge a significant premium because it has fewer spots and still get on the transactional buys.

And if all stations were to cut to half the commercials, none would have a competitive advantage and the agencies would still have the same CPP goal for the market... meaning every station would bill half of what they bill now.

 

[TheBigA]

Inversely, fewer (and better) ads leads to lower tune out and therefore a larger audience so that fewer impressions are needed.

You obviously don't sell radio advertising. Advertisers buy maximum impressions. That's what they buy. They don't care that you as a listener are tired of hearing their spots. You getting tired of their spots means that you've heard them and have formed an opinion, which they consider a victory.

Increasing the price for fewer impressions is NOT what they want to buy, and just guarantees you will lose the sale to someone else.

Your theory only works when radio is the only outlet for advertisers, and we all know that's not true.

 

[MarioMania]

Do people listen to ads?

I sure don't, I want to hear music

 

[TheBigA]

Do people listen to ads?

Yes lots of people do. Even YOU listen to ads. Although you tell yourself you don't. One thing they try to teach is subliminal advertising, that reaches you with a message that you don't even recognize. It happens all the time.

 

[Shredder]

Yes lots of people do. Even YOU listen to ads. Although you tell yourself you don't. One thing they try to teach is subliminal advertising, that reaches you with a message that you don't even recognize. It happens all the time.

we all did. remember those shows from the 80s that we all love and enjoyed as kids? yeah. one big ad toppled in with more ads. no wonder our brains are fried .

 

[wadio]

You obviously don't sell radio advertising.

Don't make assumptions.

Advertisers buy maximum impressions. That's what they buy.

Correct.

They don't care that you as a listener are tired of hearing their spots.

Correct.

You getting tired of their spots means that you've heard them and have formed an opinion, which they consider a victory.

No they don't. They don't care about "victory." All they want is impressions. You said so yourself.

Increasing the price for fewer impressions is NOT what they want to buy, and just guarantees you will lose the sale to someone else.

Of course. Let me say it again: Better programming (including fewer ads) = larger audience. Larger audience = more impressions per AQH. That commands a higher rate.

It's not rocket science.

 

[TheBigA]

Let me say it again: Better programming (including fewer ads) = larger audience. Larger audience = more impressions per AQH. That commands a higher rate.

The #1 station in NYC is WLTW. Does that mean they have BETTER programming? Or that more people like them? There's a difference. If fewer ads = larger audience, WNYC would be #1.

Even if they get more impressions on a top rated station doesn't mean that's the audience they want to target. As you said, some are pre-sold on Gambling, even though he doesn't have a bigger audience. But just because a station commands a higher rate doesn't mean they'll be satisfied with fewer commercials, or that larger audience = more impressions. Because each time you play an ad, you make additional impressions, reaching different people who maybe weren't listening the first time the ad ran. Multiple plays of the ad means making additional impressions, even though the average audience is high.

But if you sell radio time, why not speak with an advertiser yourself. They're the ones with the money, and making the rules here.

 

[davideduardo]

Of course. Let me say it again: Better programming (including fewer ads) = larger audience. Larger audience = more impressions per AQH. That commands a higher rate.

But the degree of reduction needed to increase ratings significantly is seldom in line. If it were, every #1 station would cut the commercial load by half and double the rates.

The truth is that you have to decrease commercial load by, let's say, 40% to get a 20% increase in ratings. So, since you can't increase rates more than 20%, the proposition is a losing deal.

I've done a lot of large market launches with low commercial loads where the loss of potential revenue was considered a promotional expense to "buy" market position. But that only works in very congested markets where you have fairly direct competitors, and it's not a permanent solution.

 

[wadio]

I'm sure that's true, David, but somewhere there's a sweet spot. If your commercial load is already at 18-min/hr, the effect of a 40% change will be different from a 40% change from a baseline of 8-min/hr.

What I'm suggesting is that there's an inverse relationship between bad programming and excessive spot loads (both of which directly lead to audience loss) and spot rates. There's also the subject of ad clutter. Advertisers want their ads to be heard and will pay a premium for that.

If we accept the existing model that terrestrial radio must be cluttered with ads, then we're doomed in the presence of "new media," I believe. BTW, I'm not saying a solution is possible but I think it's worthy of discussion.

 

[Ai4i]

we all did. remember those shows from the 80s that we all love and enjoyed as kids?

I am twenty years older than you:
"Crest has been shown to be an effective decay preventive dentifrice that can be of significant value when used in a conscientiously applied program of oral hygiene and regular professional care...Council on Dental Therapeutics, The American Dental Association".

Or, how about this one:
This is a test of the emergency action notification system. The broadcasters in your area, in voluntary cooperation with the federal communications commission, and other federal, state, and local authorities have devised this system to keep the residents of your area informed in the event of an actual emergency, possibly an attack warning. If this had been an actual alert, you would have been instructed where to tune."

 

[Shredder]

I'm sure that's true, David, but somewhere there's a sweet spot. If your commercial load is already at 18-min/hr, the effect of a 40% change will be different from a 40% change from a baseline of 8-min/hr.

What I'm suggesting is that there's an inverse relationship between bad programming and excessive spot loads (both of which directly lead to audience loss) and spot rates. There's also the subject of ad clutter. Advertisers want their ads to be heard and will pay a premium for that.

If we accept the existing model that terrestrial radio must be cluttered with ads, then we're doomed in the presence of "new media," I believe. BTW, I'm not saying a solution is possible but I think it's worthy of discussion.

18 minutes an hour? god I hope that was an example. No matter HOW good the show is, I'm not bother with it unless the show breaks are 30 minutes long un interupted ;o).

even 8 minutes is far too much. hell, people are complaining that 6 minutes on CBS FM are too long (and I agree!)

 

[TheBigA]

If we accept the existing model that terrestrial radio must be cluttered with ads, then we're doomed in the presence of "new media," I believe. BTW, I'm not saying a solution is possible but I think it's worthy of discussion.

"New media" is also increasing its spot load. And they're making sure those ads are being seen. A lot of web sites require you to sit through a :30 video ad in order to view a single story. Free media means ad-supported media. That includes radio, online, TV, and mobile. Get used to it. And it's not being driven by radio companies, but advertisers. You have convinced yourself that advertisers will pay a premium for fewer ads, and we don't see many examples where that's true. If radio companies could make the same amount of money for fewer ads (which translates to less work), they'd gladly do it. Occasionally an advertiser will want that. But it's not the norm.

 

[dcowboy7]

The #1 station in NYC is WLTW.

Actually WCBSFM is #1 WLTW #2.

Could say Z100 is #1 since they $$ bill the most.

or WLTW #1 25-54.

or Z100 #1 18-49.

 

[TheBigA]

Actually WCBSFM is #1 WLTW #2.

Could say Z100 is #1 since they $$ bill the most.

The context of my post was responding to the opinion that the best programming attracts the most listeners. So that begs the question: Is WCBS-FM the best radio station in NYC? And then, how many commercial minutes an hour do they run? Is their commercial load affecting their ratings?

 

[dcowboy7]

That what im saying though how do you define best ?

Just cause its #1 overall that may mean alot of older listeners which doesnt really help billing.

Thats why Z100 is never #1 in overall ratings but yet still bills the most due to great demos.