Clearly Conflicted

[TheBigA]

Let's see, they keep cutting, and they have deepening revenue problems. Advertisers find their program to be of less value than it used to be, but gutting the programming isn't the reason why.

Have you ever spoken with an advertiser? Advertisers don't buy programs. They buy CPM. Do you know what that is?

If you check the facts, they don't have a "deepening revenue problem." The problem, as I keep saying, is they can't raise their prices, and they can't increase inventory. Until someone solves that problem, nothing else matters. More staff can't fix an inventory problem.

Radio's not getting beaten, it's giving up. Study after study says that people think that radio programming isn't as good as it was.

Once again, advertisers don't buy programming. As for studies, you ask a boomer about anything, including his spouse, and he'll say it's not as good as it was, so that doesn't mean squat. The fact is that radio listenership is doing fine. So if people don't like the programming, it's not showing in the ratings.

 

[SirRoxalot]

I speak with advertisers all the time. They talk to me about things that they don't talk to sales people about. And, yes, I know what CPM is. Do you know what relationship selling is about? This is BUFFALO. Relationships mean more than CPM, especially if a sales person has gone the extra mile to make sure that an advertiser's ads are EFFECTIVE. This ain't NYC, where it's all about the numbers. The reality here is that if you live by the numbers, you die by the numbers. If you sell VALUE, not numbers, and RESULTS, the number don't mean much.

Maybe you ought to know something about the market you're chiming in on instead of just spouting corporate blather. Go have a Michigan, or a Coney. You won't find those here, either.

 

[TheBigA]

Maybe you ought to know something about the market you're chiming in on instead of just spouting corporate blather.

There you go again...personal attacks, rather than dealing with the issues.

In the meantime, you still haven't answered my most basic question: How does CC raise revenue when it can't raise its ad rates or increase spot inventory.

 

[SirRoxalot]

But they CAN raise ad rates IF they upgrade the perceived value of their programming. They've lowered the bar on programming, which is why advertisers are unimpressed. And, they alienated a lot of advertisers in areas where they established de facto monopolies with certain audience segments by buying groups of successful stations, then gutting them of what made them valuable.

Before 2008, they ran roughshod over a lot of people - and people REMEMBER. CC's lack of adequate training for sales personnel, and the fact that CC management treats people as nothing more than numbers, infects the entire company, and too much of the industry. It ain't ALL numbers, especially outside the major markets.

 

[TheBigA]

But they CAN raise ad rates IF they upgrade the perceived value of their programming.

Really? Do have current evidence of that somewhere?

Yes, advertisers want more value, but they don't want it on the air. They want it in other platforms. The audience for OTA isn't really growing, so you can't increase rates with just on air content. You talk about "perceived value," but advertisers aren't amateurs. They're not stupid. They don't make decisions based on perception. They make it on facts. They want to see a direct relationship between their advertising and increased sales, and frankly digital delivers better ROI. Even in small markets. We were doing this years ago with 5% off coupons. It demonstrated clearly that people listen, and act on advertising. This isn't something new.

It has nothing to do with training sales people. It's about having the kind of inventory advertisers want, and presenting it properly. As I've been saying, on air inventory is maxed out. Listeners want fewer commercials, especially in music programming. That means less inventory to sell. Less inventory means less salesmen, and less revenue. Unless you fix that, and build new areas for inventory, revenue can't grow to keep up with increased costs.

 

[BTB117]

This is a great conversation. There is certainly a perceived notion that radio is losing listenership and perception is usually the reality. Raising rates and just increasing sales people especially here in Rochester and Buffalo is probably not an option. Some things that can help in my opinion would be the following.

1. For Music Stations the advertising model must change. You guys know this. Stations play 10 songs then go to 4-8 minutes worth of commercials in which everybody turns the station looking for more music or no commercials. Radio in general, not just here but everywhere should go to a model that Pandora uses where they play a 30 second ad every second or third song. Listeners will not know when the ad is coming and will be much more likely to stay on the station if they know that it is just one ad and then it is back to the music. They are willing to put up with the ad knowing a song is coming up next. This will also be more attractive to the advertiser as they will feel that they have their own slot instead of being part of a series of ads in a time frame. This is a good way to help assure them return on their investment.

2. Better websites. Some stations have great websites like WGR, others not so much. Web content has to get better to give more listeners a reason to go there and thus more advertisers reasons to buy there.

3. Simple OTA adjustments. Maybe just adding an extra all request hour or a new music spotlight or something slightly more interactive will help for the music stations. It may not be a huge help but it is better than doing nothing at all. It could be something as simple as making the all request lunch go 12-2 instead of 12-1.

For the News/Talk/Sports side of the equation its a little more difficult. I think that side especially the News/Talk side needs less polarizing personalities. I would love to say "Just put on more local talent!" but it has to be good local talent that while it can be at times controversial you don't want to alienate half of your audience. The hard right conservative talk radio whether it is local or national has been a real turnoff in recent years to many listeners and advertisers alike. Talk radio can still have a desired slant but it should not be so polarizing that it is a turn-off and right now it has been like that. On the sports side it just has to be more local content. WGR (Who I do not work for) has it right with 2 drive-time shows and then a daily show dedicated to the BILLS and one for the Sabres. Rochester stations think they can't get away with more local talk but they can. They don't utalize their location well enough to understand that. With the BILLS/Sabres/Syracuse and kinda-sorta Yankees there is enough there to give more than 3 hours on WHTK and 2 on WHAM.

 

[TheBigA]

3. Simple OTA adjustments. Maybe just adding an extra all request hour or a new music spotlight or something slightly more interactive will help for the music stations.

I don't understand how this would help anything unless you begin charging callers for their requests. Fewer spots means smaller operating budget and less local staff. Less inventory means less need for more sales people, because there's less to sell.

We track a lot of our requests by caller ID, and find we get a lot of requests from the same people. It's not something that attracts new listeners, but simply repeats the same ones asking for the same songs. New Music Spotlights are also not big audience draws. Neither are devices that would be useful sales tools. Anything interactive is best done on the station web site, where listeners can vote for new songs. But we find that a very small percentage of the actual audience chooses to be engaged or interactive.

 

[BTB117]

They're just little suggestions. If it provides any uptick at all then it is at least worth letting your sales people try to trott it out. They have had very little leverage. There is only so much you can do when you are forced to play the same songs in rotation over and over again so any wiggle room is a good thing. With websites, just putting polls on websites don't do enough. Websites have to be destinations for people. It doesn't help that less people are in love with their radio stadions then they used to be so you have to be creative in putting on original content that will appeal to both the consumer and the advertiser. Better blogs, better polls, pictures and information that you can't get from just any site are very important. You're looking for suggestions so I'm just providing some.

 

[TheBigA]

They're just little suggestions. If it provides any uptick at all then it is at least worth letting your sales people try to trott it out.

The suggestions I'm looking for is how to increase revenue. Your suggestions will lead to a 40% cut in revenue, which means fewer employees.

FYI: Radio stations play the same songs because it attracts a larger audience than playing unfamiliar music. The best way to cause tune-out is play a new song. You can see this if you go to a concert. The band plays familiar songs, and the crowd sings and claps. The minute the band plays a new song, the crowd goes to the bathroom or gets a beer. Same with radio.

 

[BTB117]

The suggestions I'm looking for is how to increase revenue. Your suggestions will lead to a 40% cut in revenue, which means fewer employees.

FYI: Radio stations play the same songs because it attracts a larger audience than playing unfamiliar music. The best way to cause tune-out is play a new song. You can see this if you go to a concert. The band plays familiar songs, and the crowd sings and claps. The minute the band plays a new song, the crowd goes to the bathroom or gets a beer. Same with radio.

What? How does having a better website or giving the perception of being more interactive lead to a 40% cut in revenue? I know why stations play the same songs over and over again and its fine to a point. I never said anything about fewer spots. I said not to play the spots in big chunks because people turn the station. I think you totally missed the point. I'm trying to give suggestions to sell more spots, not less. You have to do things outside the box to break some perceptions that are clearly hurting the bottom line.

 

[TheBigA]

How does having a better website or giving the perception of being more interactive lead to a 40% cut in revenue?

Do the math. If you run one :30 every three songs like Pandora, and you play 14 songs an hour, how many spots is that?

This isn't a programming problem. It's not a perception problem. Most radio stations get great ratings already. The problem is their revenue has topped out. They can't increase rates because of too much competition, and they can't add inventory because listeners will tune out. So with costs rising, they have no choice but to cut staff.

 

[BTB117]

Do the math. If you run one :30 every three songs like Pandora, and you play 14 songs an hour, how many spots is that?

This isn't a programming problem. It's not a perception problem. Most radio stations get great ratings already. The problem is their revenue has topped out. They can't increase rates because of too much competition, and they can't add inventory because listeners will tune out. So with costs rising, they have no choice but to cut staff.

If an advertiser sees a bigger return on their ad from being played in between songs then being played during a four minute chunk in which everybody changes the station then are going to be more satisfied and be willing to pay more when it is time to reup. You can do it anyway you need to to make it work. If its a :30 and a :15 or two 30's or even a 60 the listener and the advertiser are going to be much more receptive to the occasional delay instead of the four minute break of ads they don't want to hear. The bigger return on investment (Which should happen given more people will be listening instead of switching the station) is what will be the major turn on to advertisers which in turn means that you can charge more for offering a premium product and therefore make more money.

Radio has some major perception problems. Millions pay a subscriber fee for "Ad free" satellite radio because they do not like what regular OTA radio is offering. I am writing you while on break at work and I like millions of others are listening to their Pandora or other streaming provider instead of a local station online which I could do but would rather put up with the occasional ad to hear songs from bands I like and not hear the same songs over and over again. I also like that I can fast forward for X number of songs in an hour. Now some of that is not radio's fault, you are kind of stuck but to say there are no perception problems is not correct.

No solution for radio is going to be perfect but the definition of insanity is doing the same thing over and over again and expecting different results. Nobody wants you to cut staff. Use your staff to come up with some out of the box thinking to help drive up revenues thats all.

 

[SirRoxalot]

Radio has worked in the past, and continues to work for the companies that invest in that portion of the programming that ENHANCES the music. If you're simply a music delivery service, you'll lose to new technologies who can do that better - at least on devices that are connected to the Internet. You may do OK with generic, canned programming if other technologies are unavailable or expensive, but otherwise you need to add something that the on-line services can't. Timely, locally relevant content is the "value added" portion.

Of course, on-line broadcasters could do the same thing, but you have the problem of the delivery system, which generally isn't as portable or robust as FM radio. Sorry, but AM gets short shrift here. It's been so battered by bad technology that it's a wheezing invalid these days. And, on-line broadcasters generally don't have the money to invest in timely, locally relevant audio content because they're paying rights fees. They also lack decent studio space, although the generally poor audio quality of streaming isn't as picky as OTA FM.

The simple fact is that streaming is not a replacement for radio, and won't be for some time to come. If you live in a major metropolitan area, and can afford a decent data plan for your cell phone, you may not be tethered to a LAN in order to get audio content. Realistically, the coverage will be spotty, and grow increasingly so as you move away from the most densely populated areas. If you're able to connect to a wireless LAN, it will be better, but not so portable. Radio offers at least some channels with robust audio in most areas. Cellular doesn't. OTOH, radio has limited range, and serves a fairly well defined geographic area.

So, the answer is to play to your strenghts. Program directly to the people that you reach - which on-line can't do as effectively. Add content unavailable through other audio services. Yes, people can look stuff up on their smart phones. Reality is that they can't do that while driving, working, or tending to the myriad other chores required for daily living. Unlike some people who constantly post on this board, the majority of listeners LISTEN for a reason. They're BUSY.

If you don't deliver content unavailable elsewhere, your business will suffer. You'll have no added value, which means you can't ask advertisers to pay a premium for that programming that attracts listeners to your station in the first place. BTW, one of the most laughable lines from TheBigA in a while is:

Most radio stations get great ratings already. The problem is their revenue has topped out. They can't increase rates because of too much competition, and they can't add inventory because listeners will tune out.

That's simply untrue, as demonstrated by the people who sell radio in the trenches every day. Even if you live in a transactional market - and larger markets lean that way - numbers don't always directly translate to revenue. Some stations do better than their cost per point would indicate because they're foreground programming, and advertisers have seen that their advertising is more effective on those stations. That's where relationship selling - which TheBigA ignores - comes in.

Come to Buffalo. I'll introduce you to a lot of people who've done very well selling both with and without rating books. Over time, they've established track record for success that advertisers recognize and are willing to pay extra for. Only rookies live and die by the book - mostly because they have no other choice.

Lastly, there would be sufficient money for programming if the Corporate Raiders leading these organizations hadn't severely overpaid for their properties, and hadn't recycled that debt several times - paying higher interest rates each time to forestall bankruptcy. Those guys are playing a financial shell game, they're not trying to build or grow companies. It's about real estate transactions, not operation of broadcast properties. The companies actually concerned about operating and making a profit are generally doing well. The ones speculating are the ones in trouble.

 

[TheBigA]

So, the answer is to play to your strenghts. Program directly to the people that you reach - which on-line can't do as effectively.

They're already doing that. Revenue growth doesn't keep up with increased expenses. They need ways to add more revenue without raising rates, adding inventory, or adding staff. You still haven't come up with a way to do that.

That's simply untrue, as demonstrated by the people who sell radio in the trenches every day.

Say what you want, but Entercom is getting great ratings. Townsquare is getting great ratings. The stations that don't are 1K AM stations that aren't going to be helped by adding more expense. The problem is that even with great ratings, revenues have ground to a halt. THAT'S what this thread is about. How do you increase revenue when you're already the #1 station in town?

Lastly, there would be sufficient money for programming if the Corporate Raiders leading these organizations hadn't severely overpaid for their properties,

You can't keep talking about something that happened ten years ago. It's done and gone. We can't change the past. We have to deal with the cards in front of us now. They also "overpaid" for a lot of their workforce. Employees got salaries then that reflected the revenues radio was making at the time. How many of those employees are willing to take pay cuts now because radio isn't delivering the revenues it once did? I dare say no one is volunteering.

 

[TheBigA]

If an advertiser sees a bigger return on their ad from being played in between songs then being played during a four minute chunk in which everybody changes the station then are going to be more satisfied and be willing to pay more when it is time to reup.

Advertisers have the option of placing their spots at any point in the schedule. It's all up to them. There's no rule or law that requires 4 minute breaks. But they'd have to pay more, and typically they prefer not to have exclusivity. Every now and then an advertiser comes in with such a huge budget that they will ask to buy the whole schedule. But most don't have that kind of budget, and most ad budgets today aren't growing and must be spread around to other media. It would be nice to think you could go to an advertiser and ask for more money, but if their budget is spent, they can't pay more regardless of results.

Radio has some major perception problems. Millions pay a subscriber fee for "Ad free" satellite radio because they do not like what regular OTA radio is offering.

The fact is that Sirius has about 21 million subscribers vs 239 million users of OTA radio. If people don't like what's being offered, they're welcome to pay, but obviously the majority are happy with free.

 

[SirRoxalot]

TheBigA's view is that there's no revenue growth available for radio. Perhaps he knows something that the rest of the industry and most investors don't know.

http://www.marketingcharts.com/wp/radio/radio-ad-revenue-growth-forecast-downgraded-28169/

Growth ain't great, and we're still not at pre-recession levels, but revenue is projected to grow. And I'm talking REVENUE, not profit.

Different companies are making different choices about how that revenue will be invested. I guess we'll just have to see what strategy is most successful.

 

[TheBigA]

TheBigA's view is that there's no revenue growth available for radio.

Not my view, but the view expressed in the report that you posted at the start of this thread. There's no growth in OTA, so as a result, CC is investing in new media.

And if you read the very first sentence in the study you posted, you'll see this: Radio revenues will continue to shift in the next 5 years, as income from online advertising grows by about 10.8% annually versus 2.5% growth for over-the-air (OTA) revenues.

Granted, the second sentence says this: Nevertheless, OTA revenues will continue to account for the vast majority of radio revenues.

I don't dispute that either. But we're talking about where the GROWTH is. It's not in OTA. So any company that is interested in growth knows that it will only come from other areas because of the two factors I've identified: Stations can't raise their spot price and they can't increase inventory. So adding more salesmen won't change anything because they don't have any more inventory to sell.

The other factor to consider is that the report you posted is an INDUSTRY study. Individual company and station revenues will differ. CC is a company that invested a lot of money online 7-8 years ago. So they're in a better position now to reap the rewards.

 

[SirRoxalot]

You are the only one that seems to contend that they can't raise their spot prices. Better salespeople, and/or more sales people - which allows better service for advertisers - could help get the spot price up. If you want to raise revenue, that's how it's done. What we're seeing on the ground HERE is that the number of sales people has dropped precipitously, and that too many good, experienced sales people with established client relationships have left the industry because of short-sighted commission policies and over-intrusive reporting requirements.

The groups that have done the best have kept their top sales people by letting them do what they do best - SELL. CC might want to advise their spreadsheet jockies that one number counts in sales more than the myriad data points they want. That's the number of dollars a sales person actually brings through the door. Radio needs to hang onto talent, in sales and programming, not alienate it. Talent is what takes stations to the top.

 

[TheBigA]

You are the only one that seems to contend that they can't raise their spot prices.

Advertisers don't pay extra because a radio station has more salespeople. The station has to give the advertiser something MORE. If ratings are holding steady, and there's no extra inventory, what do salespeople have to offer for more money? What CC is doing is building a new platform that it can sell in addition to on air. That's what's driving more money. Same with Townsquare. The two big Buffalo companies that haven't discovered online are Entercom and Cumulus. They're leaving money on the table.

 

[SirRoxalot]

They're also crushing Cumulus, which has gone from #1 to #3 in sales during the Citadel/Cumulus era. Entercom has arguably the weakest station line-up, and is #1 in sales in the market. They must be doing something right.

As far as "leaving money on the table" is concerned, how much of the money going into radio station on-line is either bonus, or coming out of the money budgeted for radio? Provide that answer, and your point might have some validity.