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Make radio strong again
- Thread starter Radio Bob
- Start date
the poor financial position radio is in today is not a result of loss of listeners or interest in the local station. Back In the day the local station had three maybe four salesmen calling on local businesses and selling them air time. Packages were designed for the big and small. Everybody was on air. Everybody knew the station sales guy personally. When the FCC changed the game and let big corps buy multiple stations those corps offered inflated prices to station owners who said " sure I'll sell . I never thought my station was worth that much! " . Then the big corps began cutting back staff etc to make their loan payments and relied on Ad agency buys. When 2008 came and a huge recession the big corps did away with local sales and consolidated their operation in one large city running numerous stations remotely. Gone was the local sales dpt to called on the local businesses. Suddenly Ad agency buys became everything and the corps worked to get operating costs below what Ad agencys spent to make a profit without having to hire those pesky local sales men. After the recession the Ad agency business dried up and the corps were not interested in reestablishing local business so they started selling off properties. Sure Walmart and Target took their toll but there are plenty of small businesses in many communities that will support their local station if called upon. You got to get out and hit the pavement while using today's technical equipment, computers for programing, local VO etc.
That's not true. Radio HAS lost listeners. We know that quantifiably. We know exactly how many listeners radio has lost, when they started to go away, why they go away, and where they go. That loss of listeners has had a direct impact on the financial position of radio stations and radio companies. Even non-commercial radio stations are hurting financially from the loss of listeners. So if that's your premise, your premise is wrong.
That's not true. I have worked for the big companies, and the one area they NEVER touch is local sales. You don't bite the hand that feeds you. In fact, one of the companies hired MORE local sales people, and offered MORE options for advertisers to improve business. On the other hand, I know of a small single station owner who has his daughter doing all of the sales. Of course, he doesn't have the debt you mentioned, and he can afford to operate on the cheap. But I don't see smaller owners spending more on hiring staff because radio usage has declined due to other options for the same content.
To make radio what it once was, you have to eliminate all of the new options, like streaming and satellite. You also have to return to local business, instead of national chains. I tried to go to companies like Tractor Supply or WalMart for local sales, and they referred me to their national sales agency. They don't buy local advertising. The national agency buys national networks that places those spots on local stations. So hiring more local sales people won't help when all of the potential clients are in NY.
When the internet became available in the 90s, it had an effect on everything, not just radio. Speaking for myself, there are many things I no longer buy from area stores. I shop online. I get better prices, and the products are delivered. I don't have to leave the house. That has killed the brick & mortar retail business. They used to buy advertising on my radio station. Not anymore.
There's also this mythology that because big radio companies have a lot of debt, they cut costs at the stations. That's not how they run their business. The stations are all regionalized and report to regional managers. If the particular station or cluster is doing well, they have the money to hire lots of staff. If they don't, then they need to depend on corporate to provide national programming. But there are a lot of iHeart stations that have lots of local DJs and sales people. They're the ones that make lots of money. That's how decisions are made.
If local radio sales are drying up, radio needs another revenue stream. Right now, the view is that they can make more money from online programming than on-air. The audience is growing, and it's not restricted to a local market. So that's why these companies are redirecting resources to podcasts and other online content.
You can blame big radio all you want. That won't change the facts that I just laid out. Unless you can find a new source of revenue besides :30 spots, it won't matter. All it means is that radio stations will be bought by religious owners who aren't dependent on advertising. It all goes back to the money. Fix that, and you can make radio strong again.
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Not entirely true.. and i can speak to having lived/living it.
I've worked for a b unch of stations, two in particular... 1 didn't depend on many agency buys at ALL.... another got them, but our bread and butter was local sales.. why? We had sales people whod been there 20-30 years and had incredible relationships with their clients. So good that when the sales people (2 of them in 20 years) came over from other stations, they brought the clients with them.
Cutting back staff, non local programming... is a sign of listeners having many more choices today than 20 years ago.
Have you worked small town radio sales lately? I have.
Try and raise rates? LOL!!! Try and sell a local junkyard who buys ads for the classic country show... but try and sell them on digital? They don't need it.
Trying to sell your massive 50kw ERP signal for $12 a spot when the competior is selling for $3 a spot and the client says "but john charges les". Theyre thinking about the price and the relationship they have with the station, not the price.
I have personally lived/seen/been involved with the two above examples in small towns where EVERYONE knew me, my PD/midday guy, the station owner and our sales people!
Sounds like what I'm talking about and do today. Small town here 99% of buys are local. Have never had a problem with out of town stations selling locally. Yes our rates are small per spot but we make up for that in frequency so they end up paying a good rate and it's below the local paper. We are heavy local news, local weather twice an hour. High school sports, lots of location mentions and I let the weather service break in automatically with watches and warnings. I think local can still be done with a hand full of people, we have two total and still provide a local service.
Big cities are not like small towns. Very different economy, very different cost structure, very different market in terms of what the audience expects.
Even a small owner in a big city (such as Saul Levine in LA or Service in Dallas) can't operate like a small town.
Adding to what BigA said, local businesses are fewer since Walmart and Target and the rest came to town. Those big chains don't buy much or any local radio and if they do, it is via an agency. And now, we have online sources for better selections and choices.
Local business is vastly less of a sales opportunity now than ever.
Just not true.
Again, there were vastly fewer local businesses that could afford radio and many now divide their budget between online and traditional media. Some car dealers, a staple of radio through the 80's, now only use web-based advertising.
You still had to call on the agencies and make presentations. I managed sales at a station in a top 20 market where we had no local sellers because there was no decent local business. But we had over 100 local ad agencies, from Y&R down to one-man shops. And I had 6 sellers calling on them, and I often went on four legged calls with them myself.
Ad agencies did not die... they moved their budgets elsewhere.
Again, those local businesses now spend a lot of their ad money online because it gets them tangible sales, leads and inquiries.
But most of those customers are moving their budgets to online services.
And... the "Big And"... radio listening time is off by as much as 70% since Y2K in nearly every market. The average person listens around 5 hours a week now... it was 18 to 21 hours a week back then.
That reminds me that if a local radio station can help an advertiser get their ads online, that saves the advertiser time & trouble. That's what Townsquare is doing. I see in their latest quarterly, digital now makes up 52% of their revenue.
Very valuable and important point. Radio, at Townsquare, is part of an overall package for local accounts. It gives the company a position as both the ad media and the ad agency for those accounts. I believe I read that may of their accounts buy nothing else except the Townsquare package as it bundles multiple media options with one salesman, one bill, and great ease in changing copy, announcing a sale, promoting a new product line and the like.
And I'm willing to bet that as much sunshine you're blowing, behind the scenes your sales staff is feeling the pressure from clients moving more of their ad dollars to social media or digital ads more than radio. I'm sure they're also feeling the strain from what BigA described; the local hardware store being replaced by a Home Depot, or what used to be the grocery and drug store closing because Walmart is expected or already there. And as more of your local market buys their day-to-day products from Amazon, more local businesses that are, or used to advertise on a station, are closing down. As those changes to local business happen, the station will feel the economies of scale and start looking for expense cuts. What's the largest expense at any business? Payroll.
I suspect that there are many people here who wish that what the thread originator posted was correct. Whether we're listeners or in the business, I don't think anyone is here unless they actually do care about radio. And the decline that we've seen in recent years is a sad thing to see. But even if we disagree on what all the causes are for the decline, the decline is real. And chances are that there are multiple causes for the decline, which means that there is no simple solution for reversing it and somehow making radio like it was back in the golden years of (insert favorite decade here).
As I said in my response to the OP, there is nothing we in radio can do that will cause the American public to replace their smart phones with portable radios, and the phone people refuse to include radios in their devices. We are now at a point where a majority of the public no longer own traditional radios outside of the ones installed in their cars. That's a problem for stations that don't stream.
D
Deleted member 76036
Guest
I don’t think a lot of you who have never worked in small market radio understand the relationships small market sales people have with their clients. Sure, there may be lots of newer avenues for businesses to get their messages out, but in small towns, many small businesses will advertise on radio. You also have to remember that even some national businesses are franchise operated and their agreements allow them to advertise locally. Fast food restaurants, especially McDonald’s, are still huge advertisers in small markets. I just double checked with a friend and he said that McDonald’s is a combination of agency and local buys at his stations. He also said, “there are tons of local buys if you get your ass out there.” Again, he’s in a small market.
Small market radio stations operate very differently in quite a few aspects from sales to programming. In the past, I would’ve said to work your way up to the large and major markets. Nowadays, I totally believe the small markets are the place to be, especially working for small companies. Of course, you have to have the right people in the building to make it work.
One more thing…believe it or not, in small rural towns, there are still local businesses such as hardware stores. Home Depot is not going to replace a local hardware store in a small town, because Home Depot doesn’t usually set up shop in small towns. And by small towns, I’m talking 20,000 and under. In most rural small towns, you’ll find maybe a Walmart, CVS and/or Walgreens and if you’re lucky, maybe an Applebees. Other than that, it’s pretty much fast food chains (which again are mostly franchisee-owned), dollar stores, auto parts stores and other small businesses.
Small market radio stations operate very differently in quite a few aspects from sales to programming. In the past, I would’ve said to work your way up to the large and major markets. Nowadays, I totally believe the small markets are the place to be, especially working for small companies. Of course, you have to have the right people in the building to make it work.
One more thing…believe it or not, in small rural towns, there are still local businesses such as hardware stores. Home Depot is not going to replace a local hardware store in a small town, because Home Depot doesn’t usually set up shop in small towns. And by small towns, I’m talking 20,000 and under. In most rural small towns, you’ll find maybe a Walmart, CVS and/or Walgreens and if you’re lucky, maybe an Applebees. Other than that, it’s pretty much fast food chains (which again are mostly franchisee-owned), dollar stores, auto parts stores and other small businesses.
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Counterpoint from a guy who did work in small market radio.
Yeah...a lot of that is true.
But a lot of it doesn't really work that way in practice.
Let's take Ukiah, California, population 15,000---100 miles north of San Francisco.
I spent 22 months there as a PD and jock at KUKI-AM in 1976 and 1977 when the population was 10,000.
Other than a McDonald's, a Taco Bell and a Sambo's, everything in town was locally owned. Sure, you had franchises (McDonald's, Taco Bell) and national or regional brand name stores (Albertson's, Safeway, J.C. Penney, Montgomery Ward, Western Auto, Ben Franklin, NAPA Auto Parts, Rexall, Bank of America, )---but even those could access co-op money and could and did advertise.
Everything else was mom and pop--and competing with each other, which was an incentive to advertise. Restaurants, appliance stores, clothing stores, furniture stores, hardware stores, banks, movie theaters, pharmacies, car dealers.
We were perpetually sold out.
Walmart hit town. Virtually every mom and pop whose business was something you could buy cheaper was gone within three years. Maybe 15 different businesses.
And Walmart doesn't buy local radio.
Costco's been there about six years now. They don't buy local radio either.
In-N-Out came to town. They don't buy radio. Used to. Don't anymore.
Harbor Freight is there.
And----son of a gun, so's Home Depot.
The core of downtown, which used to have all those mom and pops? Nail salons. Small cafes. Microbreweries. Boutique-style clothing stores.
Yeah, you can try to sell them, and you might have some success, but by and large, these small businesses don't budget for advertising, especially radio advertising the way the mom and pops of 50 years ago did. And if they do risk some money, there'd better be a measurable increase in business traceable to the ad buy.
KUKI is still there, but they have fewer than five employees (we had 15) and thanks to move-ins, there are 14 strong signals instead of three—-as well as all the other things people now listen to instead of over-the-air radio.
Actually, up until about a year ago, I owned stations in small markets. As has been said many times, when Walmart, Home Depot, Target, CVS, Walgreens, etc., all roll into or near town, those local businesses are in big trouble and won't have money to advertise on the radio. It may not happen to you yet, but it's coming, guaranteed.
Sure, but I'll bet he's under increasing pressure for smaller-value contracts. And restaurants plus health clubs are notoriously poor payers. That's mainly because owning a restaurant is about equally a bad business to be in as radio.
The right people eventually become unemployed people when the environment around them changes through no fault of their own.
Are you joking? They don't have to set up in a small town but will be close to that community. And guess what? Folks from your small town will drive 20-30 miles to visit a big box store.
One of my stations was in a town that had a population of 18,536. Home Depot opened up between ours and the community next door. The local True Value closed after about a year. Shortly after that was Walmart. Now, the local grocery store was a Safeway, which bought radio regionally. Our town wasn't large enough to garner more than about ten ads a year for Safeway. And when the local car dealers all went to online and social media ads or consolidated their dealerships to the neighboring community, then things started to get unsustainable for the ONLY radio station in the town.
So were you able to sell the station as a station? Or did you sell the tower land and hand in the license? Just curious.
One Class A FM was sold to a Catholic organizatiion. The Class-C was sold to EMF, and the tower sold to the local cellular company.
The remaining AM license was turned in. About five years earlier, another Class A FM was sold to iHeart.
Thank you for sharing.
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Deleted member 76036
Guest
Thanks for the replies. However, I still stand by my comments.
I’m not here to argue and I'm not discrediting those who tried and tried to make things work. I also understand that things can change and sometimes, they can change very quickly. In this industry, you can’t take anything for granted and both my friend and myself realize this. Every market, whether it’s small, medium, large or major is unique. There might be similar characteristics, but there’s also characteristics that make them different.
My friend’s situation and community might be unique in the way that although they have a little over 9,000 people, there is a lot of industry, a lot of good paying jobs and that results in more people supporting local businesses. Sure, some people will drive to a big box store in a neighboring community. That’s just the way it is. However, his stations are still able to bill an incredible amount. Doing the math to consider the differences in population, his stations are consistently billing at or more than what the top stations in DFW bill.
Again, there are a dozens if not hundreds of factors that go into this and I don’t think anyone who has worked in small market radio has had the same experience.
I’m not here to argue and I'm not discrediting those who tried and tried to make things work. I also understand that things can change and sometimes, they can change very quickly. In this industry, you can’t take anything for granted and both my friend and myself realize this. Every market, whether it’s small, medium, large or major is unique. There might be similar characteristics, but there’s also characteristics that make them different.
My friend’s situation and community might be unique in the way that although they have a little over 9,000 people, there is a lot of industry, a lot of good paying jobs and that results in more people supporting local businesses. Sure, some people will drive to a big box store in a neighboring community. That’s just the way it is. However, his stations are still able to bill an incredible amount. Doing the math to consider the differences in population, his stations are consistently billing at or more than what the top stations in DFW bill.
Again, there are a dozens if not hundreds of factors that go into this and I don’t think anyone who has worked in small market radio has had the same experience.
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