More Consolidation is Not the Answer to Poor Business Decisions

[davideduardo]

You don't have to own stations in every market to be able to sell in every market. The network TV model shows that.

But the TV model has the same programming in essentially every market in the country. If you buy a spot in NCIS, you get comparable reach and demos in every market because the content is the same.

But in radio, when you add "sales affiliates" that don't have the same precise format and demographics; you don't have the situation that has kept radio viable in other countries but not the U.S.

What people don't see are the sales networks that exist that are based strictly on demos, not formats.

This is what has traditionally been called an "unwired network" which is an amalgamation of stations that are not identical.

And that means that in every market, the "network" reaches different kinds of people based on different formats. There is no way to reach, let's say, the AC listener with their specific characteristics with one buy that covers at least 90% of the nation's market population.

The current situation is what makes media directors and media planners leave radio off of buys more and more.

 

[TheBigA]

And that means that in every market, the "network" reaches different kinds of people based on different formats. There is no way to reach, let's say, the AC listener with their specific characteristics with one buy that covers at least 90% of the nation's market population.

There are similarities in demographics between formats. That's what radio has to focus on. A day will come when there will be no traditional music formats. The music industry is already working towards that. They control the music. Radio can't depend on music to set its sales agenda. Radio & records are not working towards the same goals anymore.

It's too expensive to own radio stations in every format in every market. Radio companies have to find other ways to accomplish sales goals because owning costs too much, and they don't have the money to do it.

 

[davideduardo]

There are similarities in demographics between formats. That's what radio has to focus on.

But that is a radio-centric statement. To an ad agency media professional, that is like trying to package things they don't want along with things they do want.

With the major trend in agency focus being measurement NOT of total people but of consumption patterns, having a buy covering a whole bunch of formats is disastrous. A single format can be defined on all kinds of consumer patterns, but different formats in different markets destroys that proposition. Instead, they can get consumption data on all kinds of web products as well as, even, with traditional show-based block television.

A day will come when there will be no traditional music formats. The music industry is already working towards that. They control the music. Radio can't depend on music to set its sales agenda. Radio & records are not working towards the same goals anymore.

They never were in my opinion. And I owned my first major market Top 40 station 60 years ago.

It's too expensive to own radio stations in every format in every market.

Not what I said. If each group moved from 5 or 6 stations in no more than half of the top 150 to 200 markets to 2 or 3 but in all of those markets, they could sell the formats nationally.

Radio companies have to find other ways to accomplish sales goals because owning costs too much, and they don't have the money to do it.

I am showing how radio in dozens and dozens of countries, from first-world Europe to Latin America to Africa and Southeast Asia, radio takes much more of the national ad budgets than it does here. That is "the other way". We have to be aware of how ad agencies work and what they need as they move from measurements of people to measurements of spending.

 

[TheBigA]

But that is a radio-centric statement.

Selling formats is a radio-centric statement. Advertisers don't buy formats. They buy audiences. Formats are a means to the end.

I am showing how radio in dozens and dozens of countries, from first-world Europe to Latin America to Africa and Southeast Asia, radio takes much more of the national ad budgets than it does here.

US agencies don't care about the rest of the world. They're selling here. When they buy Spotify or any other digital network, they're not buying formats. Radio companies can package their demographic networks together and deliver the mass advertisers want. They talked about this all week at the NAB convention.

 

[davideduardo]

Selling formats is a radio-centric statement. Advertisers don't buy formats. They buy audiences. Formats are a means to the end.

And today, agencies are starting to demand consumption based data just like they can get from some Web data providers. they don't buy "audience" in this system; they buy "people most likely to buy my shampoo and conditioner".

An unwired network... something that has been around for 70 years... just tosses stuff into a basket. Some good products, some average and some bad. But that system is not capable today of being measured for consumption.

US agencies don't care about the rest of the world.

Yes, they do. The largest ones are everywhere. Heck, in 1964 my first buy came from McCann-Erickson Corporación de Publicidad, S.A. in Guayaquil.

Big agencies look at ways to buy media based on a world view and their staff is familiar with how hard it is to buy U.S. radi efficiently compared to other nations.

They're selling here. When they buy Spotify or any other digital network, they're not buying formats.

With all the additional data, they are buying consumption patterns.

Radio companies can package their demographic networks together and deliver the mass advertisers want. They talked about this all week at the NAB convention.

And they got nowhere. Radio is too difficult to buy as it is today, and agencies that will want more and more consumption data can't get that from the hodge-podge system of radio in the United States. The proof is in the fact that where national simulcast formats are prevalent, radio takes nearly twice the percentage of ad revenue that it does in the U.S.

 

[TheBigA]

And today, agencies are starting to demand consumption based data just like they can get from some Web data providers. they don't buy "audience" in this system; they buy "people most likely to buy my shampoo and conditioner".

As I said, they're not buying formats. So owning an AC station in every market doesn't matter.

 

[davideduardo]

As I said, they're not buying formats. So owning an AC station in every market doesn't matter.

No, it totally matters because certain consumer patterns match their entertainment choices. And it is in this area that, if Nielsen does not move faster, they will be supplanted by players that come from the new media side and that will not favor broadcast radio and TV.

 

[EricStein]

As I mentioned before, the biggest issue of OTA radio is at the sales level. It is hard and complicated and tedious to buy. Oh, and inconsistent market to market.

There is less and less local direct money because of big-box stores and internet sales thinning the herd significantly. And national agency accounts find radio very hard and complicated to buy.

It's interesting that in nations where there are many "national stations" radio has nearly twice the percentage of ad revenue as in the U.S.

And what, in the U.S. is called "network" is never a compete national coverage with 24/7 consistent demographic targeting across the country. At best, "network" sell a few decent stations along with a plethora of rimshots, far suburban and otherwise useless stations which don't deliver the entire nation uniformly.

I find it ironic that the national radio sales industry has been consolidated to the point where there's one huge rep firm (and one much smaller firm), and national agencies still find it difficult to buy. What happened to the promise of "one call gets you all stations" that was supposed to happen when the reps started to consolidate in the '80s?

 

[bobdavcav]

The problem is that no company has, for example, a country station in every one of the top 150 to 200 markets. Some have a big handful, but none even approaches being a "national" service.

Even if all the iHeart CHR stations (or any other broad format) ran the same format, it would not reach anywhere near total national penetration. If we think "network" we have to use the model of CBS, ABC and NBC television where every rated market area has an affiliate and the majority of network shows are carried on every one of them. Ad agencies like that, as it is one buy that has a measured national reach. Make a few of those buys, and you have a full campaign. You can't do that easily with radio.

That makes sense, and even in the scenario I proposed, full national coverage would be significantly less because in the bigger markets, there's still quite a bit of local programming on the air. My question though is wouldn't it be easier for agencies to buy multiple markets than to buy markets individually? I would think buying 50 of the top 250 markets would be better than buying those 50 individually.

 

[TheBigA]

That makes sense, and even in the scenario I proposed, full national coverage would be significantly less because in the bigger markets, there's still quite a bit of local programming on the air.

By necessity, as defined by the union. Also keep in mind that there are really only two companies that are even prepared to do national programming. Those two companies only account for maybe 1200 out of 16,000 radio stations. The rest seem content where they are. Unless something changes in the ownership situation, I don't see this changing.

 

[ted chittenden]

By necessity, as defined by the union. Also keep in mind that there are really only two companies that are even prepared to do national programming. Those two companies only account for maybe 1200 out of 16,000 radio stations. The rest seem content where they are. Unless something changes in the ownership situation, I don't see this changing.

Also keep in mind that not one of the radio station owners has stations in all of the top 100 markets. For example Iheart (formerly Clear Channel), the largest, owns no radio stations in either Buffalo, NY, or Kansas City, MO.

 

[davideduardo]

I find it ironic that the national radio sales industry has been consolidated to the point where there's one huge rep firm (and one much smaller firm), and national agencies still find it difficult to buy. What happened to the promise of "one call gets you all stations" that was supposed to happen when the reps started to consolidate in the '80s?

Even when there is a rep, there is a separate order for every station and every buy.

A rep firm is each station's sales offices in the cities where the station is not located. Think of a rep as a remote seller, who also gets a commission on top of the agency commission, the NSM's cut and so on.

 

[davideduardo]

That makes sense, and even in the scenario I proposed, full national coverage would be significantly less because in the bigger markets, there's still quite a bit of local programming on the air. My question though is wouldn't it be easier for agencies to buy multiple markets than to buy markets individually? I would think buying 50 of the top 250 markets would be better than buying those 50 individually.

But they can buy the whole country on other media with a single order.

 

[TheBigA]

Also keep in mind that not one of the radio station owners has stations in all of the top 100 markets. For example Iheart (formerly Clear Channel), the largest, owns no radio stations in either Buffalo, NY, or Kansas City, MO.

However, iHeart syndicated shows are carried in both of those markets on stations owned by other companies.

 

[TheBigA]

A survey of some comments that have been submitted for the FCC's "delete" project:

Radio Rallies for FCC Reform While Detractor Fights to Keep Caps - Radio Ink

Broadcasters and business leaders push for ending local radio ownership caps while musicFIRST defends current FCC restrictions.

radioink.com

FCC’s ‘Delete’ Initiative Prompts Industry-Wide Call To Cut Legacy Regulations.

FCC Commissioner Brendan Carr’s sweeping “Delete, Delete, Delete” deregulatory push is turning into a broadcaster wish list bonanza. It has drawn nearly 500 filings from broadcasters and other industries seeking

www.insideradio.com

Pretty much what one might expect,

 

[ted chittenden]

A survey of some comments that have been submitted for the FCC's "delete" project:

Radio Rallies for FCC Reform While Detractor Fights to Keep Caps - Radio Ink

Broadcasters and business leaders push for ending local radio ownership caps while musicFIRST defends current FCC restrictions.

radioink.com

FCC’s ‘Delete’ Initiative Prompts Industry-Wide Call To Cut Legacy Regulations.

FCC Commissioner Brendan Carr’s sweeping “Delete, Delete, Delete” deregulatory push is turning into a broadcaster wish list bonanza. It has drawn nearly 500 filings from broadcasters and other industries seeking

www.insideradio.com

Pretty much what one might expect,

I'll bet Carr will get rid of the EEOC requirements--it dovetails nicely (sic) with this administration's complete opposition to diversity, equity, and inclusion initiatives.

 

[bobdavcav]

But they can buy the whole country on other media with a single order.

To me, this almost seems like the perfect being the enemy of the good. Why not just sell the national content as national content however much of the country it covers? No, I'm not advocating for all of radio in this country to be nationalized, I don't think we can get to that scale very quickly in the current environment. However, the stations I mentioned earlier in this thread have no local content at all, but iHeart still pretends they're local. Love them or hate them, EMF has this down to a science. They buy stations to put their national programming on. They do not buy a station and put a bunch of out of market voice trackers on who pretend to live in the local area while keeping the station's local brand, and they are almost at full national coverage with their flagship K-Love network.

 

[davideduardo]

To me, this almost seems like the perfect being the enemy of the good. Why not just sell the national content as national content however much of the country it covers?

That is complicated for ad agencies. They want guaranteed reach across all markets, not an inconsistent spattering. They can get true guaranteed national coverage on cable channels, ad-supported streaming subscriptions, even old-fashioned network TV.

No, I'm not advocating for all of radio in this country to be nationalized, I don't think we can get to that scale very quickly in the current environment.

The international trend since the times of Radio Caroline in England has been to privatize radio to a greater or lesser extent. Generally, the most free economies have the least government run radio. As soon as a government becomes socialistic or pse8udo-communist, they take over broadcasting. That was what Castro did in Cuba in one of his first moves, and what has been done in Venezuela and Nicaragua in a gradual seizure of radio and TV operations.

However, the stations I mentioned earlier in this thread have no local content at all, but iHeart still pretends they're local. Love them or hate them, EMF has this down to a science. They buy stations to put their national programming on. They do not buy a station and put a bunch of out of market voice trackers on who pretend to live in the local area while keeping the station's local brand, and they are almost at full national coverage with their flagship K-Love network.

And that is the model that works commercially from Chile to Costa Rica to most of Sub-Saharan Africa to most of Europe and lots of S.E. Asia. And those are the nations where radio takes a much bigger piece of the advertising pie... not because of the programming per se but because it is easy to buy for advertisers and their agencies.

 

[Delete My Account]

One thing in the comments about regulatory reform struck me as amusing.

EMF wants to reform the "Rural Radio" rules to allow more move-ins. And they argued that service to smaller communities wasn't as much of an issue because of the internet, satellite radio, etc. Fair point.

But then they argued that niche broadcasting should be a reason to allow stations to move in to larger communities. Which, logically...would have as much or more access to streaming/mobile broadband, equal access to satellite. It struck me as the inverse of the exact same thing. If anything, broadband and cellular is slightly to more unavailable the more rural a community is.

Not that I think that more radio stations is the answer. I just found it an argument that could be argued exactly the same in the opposite direction, and not the best form of the argument.

 

[TheBigA]

Generally, the most free economies have the least government run radio. As soon as a government becomes socialistic or pse8udo-communist, they take over broadcasting.

How would you describe this country? You think we have a free economy? Ask Mark Zuckerberg about how free things are for his business. You think our media operates with a free economy? Ask CBS, NBC, and ABC how free they feel. What we're seeing is a national government trying to use its regulatory power to control broadcasting. The head of the FCC throws out this open question about deleting lots of regulations. That's the carrot. What we haven't seen yet is the stick. You want deregulation? What are you going to do for me. That's what's next in this process.