Question for Roddy (and any other ad buyers)

[Kilbasa123]

#1 - Does this format consolidation help you by giving you more options to reach the same audience or hurt you by really fragmenting your audience across so many stations?

#2 - Now that we have only two 'rock' stations with any real signal, does that mean if you want to reach a male audience you'll have to include them as well as the sport-talk station of choice? Or are there other real options?

Thanks for any insight.

 

[ccinsider]

As someone who has both sold ads and worked on air, I know that there ate many answers to your questions.

#1- I say both answers. It helps, because you don't have to look to other willing advertisers to fill ad space for other market/owner clusters. Take CC for example. You have 5 stations to get ads for. WiLD and Power's audience might be similar, so you are not having to deal with multiple advertisers per station. This can pose as a problem, though. If you are ad buying, and dealing with multiple companies, some either want to charge a higher rate for the same company or want the ad all to themselves.

#2- Not sure I understand how you stated this question. I'll take a guess at what you said. The same men listening to 97.1 The River while at work might also listen to Rust Humphries (WGST) on the ride home. If you were buying ads, then distributing them indirectly, through a package deal with the advertiser, you could have a RIVER/WSB/929SPORTS package. I hope that answers that question.

 

[kal30005]

If you are a local advertiser with a highly-defined demographic target market, and limited budget, I think it hurts, because they eliminated stations that offered fairly well defined demographics, and replaced them with more broad-based audience. So advertisers who are looking for a specific demographic probably have to pay for a lot of waste. And some pretty valuable listeners have probably been eliminated completely from the market as they will be pushed to online to hear the music they like.

In addition, if you're a local advertiser going after a demographic that listens to pop music, now you have to advertise on more stations to cover the same group, which increases costs. So again, for advertisers, it's probably not good.

From the radio station's point of view, it's probably a somewhat good thing because it's an easier sell, at least in their mind, because you have formats that advertisers understand and you don't have to try to explain - like what a Dave FM or Project 961 is.

And for national advertisers, it will ultimately probably be a good thing, if I am right about the future of terrestrial radio. I have said before and I will say again that I believe the radio companies are moving toward creating superstations and eliminating niche stations may be an effort in that direction. Basically, Cumulus, Clear Channel, CBS and other larger conglomerates will put together one master station for each format and feed those signals, talent, advertising and all, to stations in their markets.

It's a lot easier for the radio conglomerates to sell national radio spots and it's easier for them to sell those spots on well known formats. And for national advertisers, it's also good because their cost per exposure is far less for national ads than buying local airtime. That's my opinion.

 

[jabba17]

It's a lot easier for the radio conglomerates to sell national radio spots and it's easier for them to sell those spots on well known formats. And for national advertisers, it's also good because their cost per exposure is far less for national ads than buying local airtime. That's my opinion.

One reason Federated Dept. Stores (now Macy's Inc) dumped their regional department store names like Rich's and Marshall Fields in favor of Macy's as a national brand was to save a lot of money by making national advertising buys on TV and in magazines instead of local buys in dozens of newspapers and radio stations.

 

[TheBigA]

Basically, Cumulus, Clear Channel, CBS and other larger conglomerates will put together one master station for each format and feed those signals, talent, advertising and all, to stations in their markets.

That's not what they seem to be doing. CBS especially is doing mainly local radio. More than any other company, they have refrained from carrying syndication in place of local talent. They'd rather VT a local staffer in overnight than give up the avails to someone else. Clear Channel has Premium Choice, but it's very decentralized, with multiple talents available for formats and dayparts, rather than "one master station." Cumulus owns its own syndication company that markets 24/7 formats from Dallas, yet few if none of their owned stations use those formats. However, Cumulus does support a lot of syndicated shows for its stations in fringe dayparts.

It's a lot easier for the radio conglomerates to sell national radio spots and it's easier for them to sell those spots on well known formats.

It's been my experience that the national radio business rises and falls, just like the local radio business. So putting all your eggs in one basket probably isn't a good idea. National radio is probably the future for AM and fringe time. But there's still a lot of local money out there, and no one is anxious to give it up.

 

[kal30005]

That's not what they seem to be doing. CBS especially is doing mainly local radio. More than any other company, they have refrained from carrying syndication in place of local talent. They'd rather VT a local staffer in overnight than give up the avails to someone else. Clear Channel has Premium Choice, but it's very decentralized, with multiple talents available for formats and dayparts, rather than "one master station." Cumulus owns its own syndication company that markets 24/7 formats from Dallas, yet few if none of their owned stations use those formats. However, Cumulus does support a lot of syndicated shows for its stations in fringe dayparts.

It's been my experience that the national radio business rises and falls, just like the local radio business. So putting all your eggs in one basket probably isn't a good idea. National radio is probably the future for AM and fringe time. But there's still a lot of local money out there, and no one is anxious to give it up.

I think you may be missing my point.

First of all, I'm not saying they are currently doing this, but you can see the pieces starting to come together for it to happen. It's really the only option.

These companies continue to cut staff and try to do things cheaper, largely because there just isn't enough listenership or local ad revenues to support operating 20+ FM radio stations in Atlanta. They are going to need to change the model and get that number down to a handful of truly local stations that focus on local information. And I think what we're already seeing that happen with the news and sports stations migrating to FM. I definitely think there is a continued need for local news, sports and information. And I think you could also see more local music show up on local stations. And more than likely there will be a small handful of legacy music stations and locally owned stations that can continue to be profitable.

The problem is there's just no way for a local market to support 20+ stations anymore.

Second, what I am talking about is not voice tracking or syndication. I'm talking 24-hour music programming with live talent. But even then, they would probably still have local commercials mixed in.

A couple of things to note is that somebody posted that Cumulus plans to move all their local stations into the same building. Could it be that all the Cumulus music superstations would be broadcast out of Atlanta?

 

[TheBigA]

First of all, I'm not saying they are currently doing this, but you can see the pieces starting to come together for it to happen. It's really the only option.

I think you're looking way way way into the future, beyond any plans made by companies like CBS, Cox, or Entercom.

And as I said, there is still a huge local advertising market. It's so huge that other national media like Pandora and Sirius are trying to get a piece of it. And to attract local advertising, you need some form of local presence. Even if it's only morning drive.

A couple of things to note is that somebody posted that Cumulus plans to move all their local stations into the same building. Could it be that all the Cumulus music superstations would be broadcast out of Atlanta?

I really doubt it. Not with their VP of programming in Chicago. Plus as I said they already have the infrastructure built in Dallas. They may base a daypart or two of a format in Atlanta, maybe even build a national newsroom. But these companies are looking for ways to get better value out of ALL their facilities, especially those in NYC and LA. Even SiriusXM, which has a huge broadcast center in DC, still operates multiple facilities around the country for its so-called centralized programming.

 

[kal30005]

TheBigA:

I think it might be closer than you realize. Maybe not in Atlanta yet, but in smaller markets I think it could happen within a year or two.

It's important to understand that this isn't a totally black and white thing. It's not like one day a switch will be flipped and all local radio stations will disappear. And you could still conceivably have a local morning show but carry the feed the rest of the day. And it's also very conceivable that some stations could come out of other existing stations around the country.

 

[TheBigA]

I think it might be closer than you realize. Maybe not in Atlanta yet, but in smaller markets I think it could happen within a year or two.

CBS, Entercom, and Cox aren't in small markets, and I think that's part of why they're not there. Even Denver is too small for CBS. Only Clear Channel and Cumulus are still in small markets. And it's possible that both of them prefer to do a lot of national radio sales. But between the two of them, that's less than 10% of all OTA radio. And the real cash cows are still the Top 25.

By the same token, when you go into medium and small markets, most of the stores are national chains that do advertising by national agencies, not local. If all the stores are chains, who buys local ads? So while I agree that there are too many radio stations today, there's also a smaller number of local advertisers. That combination isn't good for the future of local radio.

 

[RoddyFreeman]

#1 - Does this format consolidation help you by giving you more options to reach the same audience or hurt you by really fragmenting your audience across so many stations?

#2 - Now that we have only two 'rock' stations with any real signal, does that mean if you want to reach a male audience you'll have to include them as well as the sport-talk station of choice? Or are there other real options?

Thanks for any insight.

What the Power thing does in my judgment is introduce some uncertainty. For example, do I continue to spend as much on Q100 when some of their audience might have left? If Power offers me some really low rates to take a chance on them, do I do it without having any real evidence of their audience? Could I use the threat of Power to get lower rates from Q100?

As far as the rock and sports stations, I guess you mean if I had a male target audience. Once again, all the changes have brought some uncertainty into the decision-making process. I guess in estimating, I'd increase the ratings of the remaining rock stations slightly but not to the extent where I would be taking a risk. As far as sports, I might take a chance on 92.9 if the rates were low enough, and I might decrease my ratings estimates slightly for the AM sports stations.

But to answer your question, what the changes do is bring uncertainly into the buying process until things settle down and we see some ratings.

 

[jabba17]

CBS, Entercom, and Cox aren't in small markets, and I think that's part of why they're not there. Even Denver is too small for CBS. Only Clear Channel and Cumulus are still in small markets.

Cumulus got where it is today on the Walmart/Carmike/Hardee's strategy of going into small towns, taking over, and becoming the only game in town.

 

[Kilbasa123]

Thanks Roddy and ccinsider; I appreciate the insight. Not having dealt with this in any way, I certainly was thinking too small (per station), versus per owning entity or market 'carpet bombing' by genre.

Regarding the other posters, I certainly wasn't considering the scale you guys are discussing, though the points made on a national level were good ones.

 

[ccinsider]

Thanks Roddy and ccinsider; I appreciate the insight. Not having dealt with this in any way, I certainly was thinking too small (per station), versus per owning entity or market 'carpet bombing' by genre.

Regarding the other posters, I certainly wasn't considering the scale you guys are discussing, though the points made on a national level were good ones.

Stations change, demos change, and the conditions to sell ads change. Saw one guy on twitter who said that ATL radio has changed more this weekend than the weather. This is true.