George Brusstar said:
>>Or, are the younger listeners turning away from FM radio toward Ipods and Internet radio?<<
Bingo.
Or, the other alternative is to realize that the 18-34 audience is more fragmented than the older segments.
Many stations would love to program unique formats that appeal to "undesirable" demos. Unfortunately the big-market culture of being addicted to agency buys forces these stations into the shackles of what Madison Avenue wants. When stations and groups learn how to effectively re-design their business models and efforts into concentrating more on direct (local) sales, they'll regain some autonomy and be able to serve the general public again. (In some markets, 80 percent of the stations target the same 20 percent of the population. And if you have testicles, there's not much for you on the FM band in many places.)
The "big market culture" is not a culture at all, but, rather, a reality. In larger markets, the bulk of the local clients that can advertise on major radio stations is big enough to have an agency. But, more than that, in today's world the major retailers, manufacturers and service providers are national in scope, and can not place ads locally as they have no local office to do such a thing.
The bigger the market, the fewer local direct accounts there are that can afford the rates that are appropriate for a major radio station. And more accounts that come out of agencies are required to sustain a station.
Selling to agencies is not a "cop out" as it is just as hard as direct selling, although the process is totally different... often involving presentations via one's rep firm to agencies in places as remote as Seattle or Atlanta or San Francisco.
To get on buys that are numbers based (and don't think that the successful car dealer who has no agency does not look at numbers) the audience of a station must be somewhere in the 18 to 54 range. That is vastly more than 20% of the population. It's more like the vast majority of the adult population, in fact.
Even the more thoughtful direct accounts have a knowledge of who their clientele is, and they will attempt to buy on a station that matches the buyer profile for the people who make use of the advertiser's offerings.
The migration toward more direct sales will happen.
Actually, as retail consolidates more over time, there will be less direct business.
The percentage of direct buisness a station does is directly related to the station's market rank and ranking in the market.
A station that is #32 in LA will do mostly direct business. It will charge low rates that are accessable to smaller businesses; it can make money, but not the way it might with higher ratings. A station in market 286 will likely do almost all local direct business, as agency buys on a national level seldom get that deep... if high rated, they may get some regional agency business, such as regional car dealer and supermarket money, but this will be much more limited than the case in much bigger markets.
This model is not going to change.
Radio, complete with its massive inferiority complex, is like the pathetic guy in school who'll do anything for the pretty girl (ad agencies). Once all of the present-day teens and young adults (none of whom listen to FM or AM, despite the self-serving "statistics" and questionably-commissioned "studies" the terrestrial radio apologists try to shove down our throats) age into 25-54 in a few years, Madison Avenue will kick radio to the curb faster than that high school cheerleader dumps the nice guy for the football player weeks before the Senior Prom. And radio will be forced to adjust, spending thousands on seminars and so forth to train guys to go after Mom-and-Pops and smaller-scale regional businesses. And those local advertisers will be older. And those stations will begin to revive formats that appeal to these decision-makers. They'll have to go after the few listeners left who still believe in terrestrial radio (older Americans). Perhaps those folks are the real "nice guys" in the school. Radio, for the most part, has crapped and crapped on them. Yet they'll still keep listening. Soon, chances are, they'll get their reward.
In the meantime, radio per the PPM reaches over 95% of the population weekly, and radio has to offer the services advertisers want. Radio has no "inferiority" complex; we are a service industry and we provide a service that advertisers want, not one that we stubbornly want to offer but that nearly no advertisers want to use.
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