Since I'm not a radio professional and radio is only a hobby of mine, (I'm an Airchecker: I record and collect radio station airchecks), I was just curious, how much money is put into changing the format of a station? Thanks in advance if you reply.
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Changing formats
- Thread starter neosolbrudda
- Start date
Definitely depends on the market, the station, and what point in time the format change takes place, however, one station I worked for spent $500,000 on changing a format in 2005.
So is that for promotions, music, new logo, etc.?
What went into spending that much on it?
I was in engineering, so I couldn't tell you exactly the specifics, but having a good relationship with my GM, I remember him throwing out that figure. Just off the top of my head, I would guess changing the logos on everything would be quite expensive, all by itself. The station had a van, and a larger trailer with permanent remote equipment in it for broadcasting live from festivals (both dedicated to this station). The trailer was rather large. Then you've got the front sign outside the station that needed changing. There was still a fair amount of paper used in 2005, so I'm guessing business cards, invoices, air talent pictures, that kind of stuff also needed updating. Some air talent was also updated at the time. The launch was kept a pretty good secret in the 5 station facility (that in itself is amazing), so I'm guessing lots of preparation needed to take place before the launch. I personally don't think it was worth the expense (especially since the highly successful morning show crew was not changed at all), but hey, what do I know.
Even with a big sign and a van wrap and stationery, I can't see more than $20 k going on that sort of thing.
The biggest expenses in a format switch in that era are launch promotion (billboards, TV, etc), hiring and dismissal costs, legal for call letter changes and service mark research and registration, a consultant for the new format in some cases, and on-air contesting. Also possible is expense for sales promotion such as trade publication ads, a presentation for local agencies, etc.
Correct, such as severance pay for former staff, job search expenses for the new staff, and the cost of operating a station commercial free for a period of time. Then the delay involved in getting new sales research that can be used to market the new format to advertisers. All of that is expensive because you're taking a format that made an amount of money, and then that income goes away.
In most cases, stations get their music from a company like TM Century. Unless the terms have changed since I left radio, you get access to their entire library. So, the only additional cost for that is the time it takes to load the new music into the automation system. Jingles and imaging are often on the same type of plan. So, if you change formats, you don't have to spend a lot on either. At least one station where I worked got its imaging off of barter. So, changing from one package to another wouldn’t have cost any extra so long as we kept airing the spots. We even traded out the painting of our vans. Plus, we got a new van every year anyway as we leased them from a local auto group.
The actual change itself would've cost us very little. I don’t know if that operation was typical or not, though. I understand it had more trade than a lot of other operations. We once hired a sales manager from Norfolk/VA Beach, and he said we had more trade than the stations he left despite us being a lot smaller of a market. The big costs, as the others have mentioned, are promotions and the general lack of revenue from building a new product without any numbers to sell.
I remember reading in one of the trades about the format change from KHYI “Y95” to “Power 95” to “Oldies 94.9,” and the company that did their jingles also did their music and said, “We changed Y95 to Oldies 94.9 and did everything but paint their vans.” Of course, that’s somewhat of a cautionary tale of a format change. Oldies 94.9 stumbled out of the starting gate (despite being well-programmed). Evergreen LMA'ed the station roughly a year after it launched but before the book came out, and it finally started showing signs of life only to have changed formats to country.
Not any more. They got out of that business a couple of years ago. CDX is still in business. There are several companies that handle distribution of current music. If you're part of a group, they'll supply you with the library you need.
Lost revenue is the biggest cost of all, unless the prior format is doing so poorly that it was losing money.
Unless the new format targets somewhat similar audiences, revenue is totally lost. If the format is similar, existing clients who continue can be offered some kind of "pioneer" package that is 2 x1 or even more.
I've changed formats on dozens of acquired stations over the years, and on the average it takes around 4 to 6 months to get back to prior billing if the format works and nearly a year to reach full potential. You can get faster reaction in a smaller market that has little agency business, and slower in an agency driven one.
I have had just one "overnight" success where the first month doubled the sales record on what had been the market's highest biller. But in another case, the format did not work at all, and the error had to be wiped clean and restarted after about a year. Evey situation is different.
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