CUMULUS LEADING RADIO... STRAIGHT TO THE BOTTOM!

[robnokshus06]

If Jerry Del Coliano's latest scoop is true, Cumulus is poised to supplant Clear Channel as the radio group that has done the greatest damage to the radio industry.

According to Jerry, Cumulus is now offering to pay ad agencies a 50% commission for their business! The standard agency commission is 15%. Much like Clear Channel set radio back decades on adrates with their cluster pricing (Then LA CC Market Mgr. Roy Laughlin once actually BRAGGED how they had brought ad rates DOWN!), Cumulus is now so desperate to keep their few remaining heads above water that they are willing to sell out the entire industry.

When you severely discount your product you demonstrate your lack of belief in its value. According to Cumulus, their radio stations are really only worth half of what they've been charging. This embarrassing group of professional failures can only resort to dramatically undercutting the competition on price. That's all they've got. No one left to fire. Can't cut below minimum wage. Bankrupt of ideas and soon to be, just bankrupt.

 

[SaltyDog]

If Jerry Del Coliano's latest scoop is true, Cumulus is poised to supplant Clear Channel as the radio group that has done the greatest damage to the radio industry.

Who knows if Jerry's "scoop" is true. He collects information from informants for which he does not pay (Well, I never got paid) and posts it - along with his analysis which is no better or worse than mine - for an annual subscription fee. Since his sources are necessarily anonymous, there is no way of knowing if his scoops are any good.

Here's my take on the current state of radio in the U.S.: Cumulus and Clear Channel are not taking it down, it's going down on its own. They may be accelerating the process, but it's going down because of technology like it or not.

Lew Dickey and Bob Pittman know this. Hogan I'm not too sure about. So the big consolidators - Lew has admitted to being nothing more than a consolidator - have as their job managing declining revenue. They push back and try to slow the decline, but decline it will regardless of their efforts. While they are doing this, they are cutting costs.

What is their end game? Probably retirement. They can drag it out that long. They are already rich and getting richer. They don't need a good end game.

 

[TheBigA]

Based on my conversations with advertisers, what's bringing radio ad prices down is the relative cheapness of online ads. Advertisers can reach the same number of people for less, and get better statistics on the effect their ads are having. I had a car dealer tell me he's selling more cars online than by radio, and he can prove it. That's a tough argument to fight. Radio people can cry about how things used to be, or turn certain owners into enemies. But radio NEEDS to build its digital future now, while it still can. Running digital with OTA radio is easier to sell than radio alone.

 

[Goat Rodeo Cowboy]

Yes, to try and understand what is going on, we have to discipline our heads (for some of us, that is not an easy task!) and separate the business world from the political world from our favorite entertainment or communications world.

The first person to come up on my radar in this business consolidation era... modern style***... was Jim Ling down in Texas who put together Ling-Tempco-Voight 45 to 50 years ago. My memory is he was an electrician running around in his craftsman's truck doing electrical wiring, who had a very perceptive understanding of how the financing of what we today call "venture capital" works. He built a financial empire out of steel and aircraft and who knows what else.

Today we have a presidential candidate with a business career most of us don't truly understand. He developed the combination of venture capital and consolidation of business very well. You will notice from the political campaigns that some people believe that all of this qualifies him to be the best manager of government we have ever known while other people campaign that he will be a vulture in government just as as he was a vulture in business. (PLEASE!!! Do not turn this thread into a political brawl. I am pointing out that there are usually two ways or more to look at anyone's business philosophy.

Some people look at Cumulus and Clear Channel as demonstrations of how the media must fit into the modern day business and cultural trends.... while other people simply see them as vulture capitalism going over the cliff.

I see merits in both sides of the argument when it comes to the radio situation. Being somewhere in the neighborhood of being a member of the Geezer class, I have this internal love-affair with radio as we knew it in days gone by. That part of me HATES the consolidation of radio ownership interests. But part of me is still that innocent young guy in his 20s and 30s... looking for the business trends to tie my wagon to and go for the ride. That part of me waits to see this business direction bear fruit.

20 or 30... maybe 50 years from now... business historians will write books that finally lay to rest the arguments we are having today about radio in downfall.... or radio on its way to newer and greater heights.

*** Consolidation Modern Style. Sometimes we think consolidation is some kind of new miracle drug (or contagious disease!) invented in the 1990s. If you have latched your wagon onto that kind of view, you need to go back and read about business in the United State back in the 1800s... and trends sometimes labeled as "The Robber Barrons". Go back and read about Carnegie and Rockefeller and others of that era.

 

[SaltyDog]

Based on my conversations with advertisers, what's bringing radio ad prices down is the relative cheapness of online ads.

That may be true, and if it is, it speaks to the still relative newness of online ads. Perhaps the cost has gone up but not as much as other media. I know some advertisers who used to use Google Adwords but have bailed out as the cost of keywords has increased.

What I think I have learned is that advertising is not one big math problem but also psychological. If advertisers believe online ads to be cool and traditional radio uncool, that has an effect on spending.

I crossed over years ago. I bailed out of radio and into online advertising sales. The best thing about it is that when confronted with "We have an ad agency", I have the luxury of saying "Sorry. I only work with principals." With 70-80% of our revenue coming from agencies, I couldn't do that in radio.

 

[TheBigA]

I know some advertisers who used to use Google Adwords but have bailed out as the cost of keywords has increased.

The only people making money with Adwords is Google.

I agree with your comment that it's about perception. Radio is on the bottom side of that.

I also like that line, "I only work with principles." Me too.

 

[SaltyDog]

I know some advertisers who used to use Google Adwords but have bailed out as the cost of keywords has increased.

The only people making money with Adwords is Google.

Adwords isn't that different from radio or any other form of advertising. It will get your ad seen, but whether or not you make any money depends on how much you pay for it, if your ad is any good, and if your product or service is a good value. I have a lot more confidence in Google Analytics than I do Arbitron.

 

[bturner]

Isn't one of the issues the fact many non-in house spots that play on radio are not able to be cleared in the online feed? I would think saving radio would include a true simulcast online. If I'm correct, is this not shooting one's self in the foot. If I were an advertiser going to an agency, I'd want to reach as many as I could with my ad dollars. If internet is that attractive, how much more attractive is radio and online?

 

[TheBigA]

If internet is that attractive, how much more attractive is radio and online?

I don't think you can effectively sell one without the other. The package is unbeatable.

 

[bturner]

I certainly agree. I've been told by a number of broadcasters there are 'rights' issues with lots of agency spots where they specify they don't have clearance for online airing. Granted, that was a few years back.

 

[PTBoardOp94]

I certainly agree. I've been told by a number of broadcasters there are 'rights' issues with lots of agency spots where they specify they don't have clearance for online airing. Granted, that was a few years back.

Nothing has changed in this regard in probably 10 years.

 

[joshzz]

Over the next few years I believe businesses will grow tired of Facebook, Google ads etc. Right now it's something new and everyone wants to try it out.

We used Facebook to help promote a big concert event we held in the spring and had no response whatsoever. The majority of those in attendance responded to our ads on our radio station network. We also advertised it on a competitor's radio station (with a different format) in our market and had a decent turn-out from that ad.

It's just going to take time for people with businesses to realize that Facebook ads etc., are about as effective as throwing money down the toilet. With radio, the ads are part of the presentation whereas ads on the internet are a distraction.

We ended up paying quite a bit for the Facebook ad. I suspect that Facebook bots and not actual people were clicking through our ad.

 

[secondchoice]

Keep good notes on your Facebook experience. I have heard of a couple of businesses that feel they were "charged" for robot or non human chicks on other sites too. I am sure once one of the "sue own your mother" lawyers will fugue this out, you might get a small refund.

 

[SaltyDog]

Over the next few years I believe businesses will grow tired of Facebook, Google ads etc. Right now it's something new and everyone wants to try it out.

Facebook was opened to the public 6 yeas ago. on September 26, 2006. Google was founded 14 years ago today.

Facebook is just one brand name of social media. I think it will fade because it's software isn't all that good
but other brands will fill the void.

Radio's challenges have to do with the interactivity that the Internet permits. Radio companies are touting their
services as "curated music" but I doubt very much that many users are longing for someone to curate their music
for them.

 

[secondchoice]

I know Facebook's shareholders who bought the IPO are very unhappy.

 

[Goat Rodeo Cowboy]

I know Facebook's shareholders who bought the IPO are very unhappy.

I realize there were a number of IPOs during the first decade of this century, but it was a pretty quiet landscape compared to the last 20 to 25 years of the 20th Century. The DOT-COM bust around the year 2000 just brought things to a crawl.

We have a whole new generation of people of all ages who for the first time in their lives are prepared to maybe put a bit of money into a promising stock. (You can be 22 or 62 years old and be in the demographic.)

I don't know why people are freaked out over Facebook stock prices coming down. All three of the companies that went public while I was working there went into the doldrums following the IPO hike. I didn't know any other outcome was possible. ;D

With Mr. Romney in the presidential race this year, there is a lot of focus on Bain Capital. What does a company like that do? How does it work? This is NOT a comment on Bain Capital specifically: When there is venture capital involved in a new company from day one, we who are amateur investors have no idea what is going on in the background. I watched as one of those companies where I worked sell off major assets so they could pay off bonds before they declared bankruptcy. Who owned the bonds? Venture Capitalists who had a lot more to lose if their bonds went bad than if their stock went bad. They got their bond money back. They lost the value of THEIR stocks... and I lost the value of MY stocks.

Just looking at it from a distance, and with no desire to have any money invested in either operation, both Clear Channel and Cumulus scare me. I have no confidence that either company has a lot to gain by concerning themselves with: "What is good for our industry?"

 

[TheBigA]

Just looking at it from a distance, and with no desire to have any money invested in either operation, both Clear Channel and Cumulus scare me. I have no confidence that either company has a lot to gain by concerning themselves with: "What is good for our industry?"

Here's a question: Was Apple's lawsuit against Samsung good for the electronics industry?

 

[SaltyDog]

Just looking at it from a distance, and with no desire to have any money invested in either operation, both Clear Channel and Cumulus scare me. I have no confidence that either company has a lot to gain by concerning themselves with: "What is good for our industry?"

Here's a question: Was Apple's lawsuit against Samsung good for the electronics industry?

No, nor should Apple be concerned with "the electronics industry" nor should Clear Channel and Cumulus be concerned with the broadcast industry. The CEO's get paid to look out for their shareholders.

 

[Tom Wells]

Just looking at it from a distance, and with no desire to have any money invested in either operation, both Clear Channel and Cumulus scare me. I have no confidence that either company has a lot to gain by concerning themselves with: "What is good for our industry?"

Here's a question: Was Apple's lawsuit against Samsung good for the electronics industry?

Kinda depends on whose ox is being considered.

At the point radio needed hi tech, a patent pool was established, and all radios became more standardized and
open standard design was a boon to radio.

Imagine if anyone suggested a corporation NOT wage patent war these days!

I thought the whole point of multi-national industrial exploitation was to get around such nasty concepts as patents.

Apple has nothing to gripe about. They are masters in the devalution game.

I still see "Apple" as a record label, nice green apple on one side, sliced green Apple on the other side.


Modern corporatism will slit its throat glady to satisfy the stockholders lust for profits, and yes, CEOs are paid
to make this happen, business be damned to whatever degree essentials will permit, without inducing coma or death.

 

[SaltyDog]

Modern corporatism will slit its throat glady to satisfy the stockholders lust for profits, and yes, CEOs are paid
to make this happen, business be damned to whatever degree essentials will permit, without inducing coma or death.

When we buy a stock, we buy it with the expectation of a return on our investment. You can call my desire for ROI "lusting for profits" if it suits you but hyperbole aside, there are few other reasons to buy a stock. I am not buying stock with the hope and expectation that a company will put the good of the industry above its own financial results.