enough ads!

[randarand97]

Results are not so much of a factor. When 3rd party verification can be offered the client (advertiser) that the ad agency created a media mix and content that should have worked effectively, then the advertising agency did their job. Results are not always known as in being strategically pinpointed, but more generalized. For example, was customer count up? Did your cash register ring more? If so, it worked.

I like to point out to potential radio advertisers that ask about results that radio works but may not seem to. I ask them when was the last time they told a business owner they heard their radio commercial and that was why they were at the business. I've yet to find somebody that said that.

Radio loses over TV and print because of the attention other media requires. You watch TV. You do not do other things that require your full attention while watching TV. The same is the case for print. Radio can accompany any activity and can go anywhere, so radio sells at a different level, not requiring the full attention of the listener. So, the information gets heard and digested by the listener but that 'memory' is not attached to a specific point in time. Think of it this way: you can't seem to get a song out of your head and you might not even like it too much but you simply cannot identify the very moment you got the darn song stuck in your head.

With all the negative said of broadcast radio, it is still a viable medium for advertising and reaching the masses. There can be a substantial number that tune away from the radio station when the commercials start and radio still has enough of the cross-section of the population listening, it is still nicely priced and hits your market. TV suffers just like radio. How many hit mute when the commercials begin or leave the room to hit the fridge or bathroom? Even with that percentage, television works too.

I'm not trying to be a cheerleader for radio advertising as it is, but in reality it still performs and typically leaves its customers with satisfying results. If it didn't you would not be hearing commercials at all.

One of the things that has not been brought up is the fact the rates stations charge is partly dictated by outside sources. In larger markets rates are set by a ratio determined by the ad agency. Radio struggles with that but in order to win the buy, assuming you're not the top station, it is to get the per unit rate down to the price ratio the ad agency is using. Simply put, if you have a high rate, you have to bonus the client with free spots to earn the buy. So, programming and charging higher rates are not going to fly. The ad agency buys demographics and numbers listening. They don't care about superior programming or the number of spots you play per hour. They are more concerned with showing the client they made the best decision and got the greater number of impressions for the client they serve. That insures there are no lone wolves out there.

 

[randarand97]

AA few things I will point out that have not been stated.

I believe Wadio is trying to say better programming may mean a larger audience and thus a higher spot rate in regard to the cost per point ratio. I doubt that would lower the number of commercials per hour since if you are doing that well, more want to be on your station and any business owner tends to not turn away business and money when they are trying to be successful.

The Big A makes a great point in that non-commercial radio is listener based versus advertising based in focus and has not produced market leaders in regard to the size of the audience they attract. It might be me, but I see public radio and commercial radio as apples and oranges. I tend to think of public radio looking to serve a specific part of the market that will feel strongly enough about their preferred style of radio being available to them locally that they will pay to keep it viable. Commercial radio seems to say we have X number in this demographic formula and we want every one of them if we can get them, so we will be the top station or one of the top stations that is always on the advertising agency's buy sheet. In other words, I see public radio as not striving to be a market leader but commercial radio tends to want to own that segment of the market.

Now, what if somebody tried to do what Wadio suggests? The question is if it can be done and more importantly, if it can be done, what is the debt load going to be. For example, I manage an AM station in a top 10 market. I had to find the best way to make the station financially viable. Simply put, how can I get enough revenue as quickly as possible to reach a point of making a profit. The least time it takes the closer you are to profit. Time will kill your chances because you keep building that loss day after day until you reach that point and there is a very real point where investors say it is a lost cause or a very real point where the debt can never be recovered with your plan.

I had folks trying to get me to change format to oldies. Truth is I'd love to. I explained my current operation and what oldies would cost. When you look at the expense in the monthly budget versus the income potential and the time it will take to reach breakeven, you could easily run things up into the millions. But your potential in income would barely pay the interest on the initial outlay of cash and if you did better, then another station, whether it be a better AM signal or an FM that is hungry would steal your format because you are making money. Now your income pie is split and your chances to recover all that start up cost will likely never happen. That leaves you hopping to another format and the investment dollars keep increasing as you take shots in the dark trying for format and income success. Simply put, the fastest and easiest way with the least expense means there is a better profit potential. And, that's the route you take.

But before you complain put this scenario to play with your home, your car, etc. Would you spend $5,000 on a $2,000 car or put $100,000 in improvements on a home worth $70,000 in a neighborhood of $70,000 homes? And if you bought a house for $50,000 in that $70,000 home neighborhood, how much money would you invest? You'd need to spend as little as you can and the time it takes to sell directly affects your profit after you deduct those monthly house payments. You can see, radio is much like this. You have to get out what you put in and then some. When you can't that means foreclosure if you can't pay for the home.

People hate that last statement and spout "You're licensed to serve the community". The reality is I am. I'm just not serving your segment of the community. In a major market no one station can serve all the people, so you carve out your slice of the pie. But here is the most important fact: if you don't make enough to keep the bills paid, you are silent, dark, and your service to the community is how many can hear you when you yell at the tower site.

Success in business, which applies to radio and public radio too, is determined not so much on how well you are programmed but whether you can pay the bills and have some overage in the bank to pay for those emergencies that seem to happen all too frequently. I know that is harsh but it is very real world.

I'm sure that's true, David, but somewhere there's a sweet spot. If your commercial load is already at 18-min/hr, the effect of a 40% change will be different from a 40% change from a baseline of 8-min/hr.

What I'm suggesting is that there's an inverse relationship between bad programming and excessive spot loads (both of which directly lead to audience loss) and spot rates. There's also the subject of ad clutter. Advertisers want their ads to be heard and will pay a premium for that.

If we accept the existing model that terrestrial radio must be cluttered with ads, then we're doomed in the presence of "new media," I believe. BTW, I'm not saying a solution is possible but I think it's worthy of discussion.