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Radio without ratings

> How do you think radio could make money without utilizing
> Arbitron?
>

Revenues would drop significantly.

Ratings are the currency of radio. For advertisers to justify costs, they must have a yardstick. Othewise, it will be sold as a commodity.

I was in a top 15 market in the early 70-s that found itself for 2 years with no ratings. In that time, the average rates went down by nearly half. And our collective guess is that market revenuse went down by at least 30% (stations sold more spots to make up for low rates, increasing clutter, too). As soon as we got a ratings service, rates recuperated and grew very fast for several years.
 
> How do you think radio could make money without utilizing
> Arbitron?
>
They appear to be doing it by brokering the time out. Many of these
AM stations are getting so bad I don't even believe the owners/employees
themselves listen. I worked for a little while at a station like this.
The owner wouldn't even listen when he came into town.<P ID="signature">______________
..broadcasting from the land of bent towers, flooded studios and wind...Florida!!</P>
 
> How do you think radio could make money without utilizing
> Arbitron?
>

The devil is knocking on our door, so please give generously to support the vital work of this Christian missionary. We can not go on without your precious love gifts. For just pennies a day, you can keep this radio broadcast coming to you each and every week at this time and we will send you this absolutely free gift, free of charge, we will even pay for the shipping with your paid love gift of just $666 or more.<P ID="signature">______________
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Radio without ratings....

Would be an improvement and give us much more diverse programming since stations would no longer have to pander to the masses.
 
> Radio without ratings....
>
> Would be an improvement and give us much more diverse
> programming since stations would no longer have to pander to
> the masses.

Probably the reverse would happen. At least, that was my experience during two years I lived without ratings. Stations would gravitate to safe and highly popular formats. You would end up with far fewer formats and far less risk taking as there would be no metric to justify to advertisers a new format or derivative.

The real issue is that advertisers would have no way of measuring delivery cost, so the big ones would drop radio and the advertisers left would be smaller local businesses who would grind for low rates. In that situation, average income for stations would drop dramtically, reducing the ability to hire talent and provide good programming.

What I saw with no ratings was revenues dropping by over half in 18 months, and, considering the margins of most stations then were less than 50%, that meant that everybody was losing money, and stations were sold left and right.
 
> > How do you think radio could make money without utilizing
> > Arbitron?
> >
>
> Revenues would drop significantly.
>
> Ratings are the currency of radio. For advertisers to
> justify costs, they must have a yardstick. Othewise, it will
> be sold as a commodity.
>
> I was in a top 15 market in the early 70-s that found itself
> for 2 years with no ratings. In that time, the average rates
> went down by nearly half. And our collective guess is that
> market revenuse went down by at least 30% (stations sold
> more spots to make up for low rates, increasing clutter,
> too). As soon as we got a ratings service, rates recuperated
> and grew very fast for several years.
>
You're right revenue would drop significantly at most stations. Right now it is being sold as a commodity...cost per point...same as a bushel really.

The real reason the revenue would drop at most stations is; lack of sales effort. Most AE's go after the low hanging fruit...they have no idea how to sell. In a world where everyone is basically tied for third place...look in most markets; there is a statistical tie in 25-54 between #3 and #12. May as well not have quantitative numbers. It is no longer about how many, it is a question of who is listening. THat relates back to sales effort, and finding a decision maker who can say yes, and presenting a solution to a marketing objective. Too many radio stations are ill equipped to handle this. Many major markets could learn a thing or two from their very small market brethren.

Answer me this; why does a pool salesman show a prospective customer a picture of a finished pool they have installed vs. radio rep shows ranker? We have forgotten what we are here to do; sell someone's product or service. We concentrate too much of our time futhering the commoditization of the industry. Radio should be showing a picture of a happy customer who sold some stuff because he advertised on radio. Showing rankers is akin to the pool salesman showing a picture of the backhoe they use to dig the hole. Prospect says "why you showing me that, I assumed you had something to dig a hole." "I assumed you had an audience". Nuff said.
 
> >
> You're right revenue would drop significantly at most
> stations. Right now it is being sold as a commodity...cost
> per point...same as a bushel really.

Some mearkets and the principal stations therein are mostly transactional markets where advertising on specific stations is part of a campaign that is measured on cost of audience delivery and the relative efficiency of not just indivisual stations but the different media.
>
> The real reason the revenue would drop at most stations is;
> lack of sales effort. Most AE's go after the low hanging
> fruit...they have no idea how to sell.

I find that at no time in the years that I ave been in radio has more effort been put on selling skills. Much of the training is about looking at client needs and showing how a specific buy, once past the hurdle of rate efficiency, delivers prospects to the customer.

> In a world where
> everyone is basically tied for third place...look in most
> markets; there is a statistical tie in 25-54 between #3 and
> #12. May as well not have quantitative numbers.

I see little evidence of this, since there are really not all that many buys that are as broad as 25-54. Most are for more specific objectives, like Men 25-44, etc. In each of these, it is easy to pick the significan deliverers. And in thise cases of tighter demos, pricing is based on the efficiency of delivery as advertisers do not pay for spillage they do not want.

The largest markets do see a number of stations clustered in a range of a few points, but in such markets the advertisers generally buy more than one station deep as well as buying multiple media.

> It is no
> longer about how many, it is a question of who is listening.

This is only a criteria if the advertiser, for example, targets Hispanics. A buy for rice will not be interested in much else besides Hispanic and, in many markets, Black, as the consumption of rice is strongest there (America's biggest selling rice, Mahatma, targets only those two groups).

This is why stations have tools that go beyond Arbitron such as scarborough, Map Maker, R.L. Polk, etc., to determine specific characteristics of a station audience or consumer patterns that show the value of an audience group vs. purchases in a specific product area.

> THat relates back to sales effort, and finding a decision
> maker who can say yes, and presenting a solution to a
> marketing objective.

There are markets where the decision maker is in the media department of an ad agency. I have worked in a market, in the top 15, where non-agency prospecting and sales was so unproductive as to not warrant the waste of money on a direct sales staff.

> Too many radio stations are ill
> equipped to handle this. Many major markets could learn a
> thing or two from their very small market brethren.

Certainly there are areas where different markets can teach lessons to other kinds of markets. But the fact remains that being able to apply a metric to a buy is critical in the larger markets.
>
> Answer me this; why does a pool salesman show a prospective
> customer a picture of a finished pool they have installed
> vs. radio rep shows ranker?

This is an old stereotype. It goes with the old joke of, "what is the difference between a radio salesman and a used car salesman?" Answer: the used car salesman knows when he is lying.

That may have been true when such techniques worked. Today, it takes more than a ranker to sell. It takes qualitative, service, value added discussions, promotions, copy, etc. (not necessarily all at once, though)

> We have forgotten what we are
> here to do; sell someone's product or service. We
> concentrate too much of our time futhering the
> commoditization of the industry. Radio should be showing a
> picture of a happy customer who sold some stuff because he
> advertised on radio.

In a small market, the old addage abut hte best rating being the cash register rings true today. But, how does Coke determine which of 1000 stations they buy is selling soft drinks, especially when Coke is also in print,TV, Cable and new media? Such a client needs to buy based on efficient delivery... and make thienr job the preparation of the best creative that will capitalize on the exposure they get.

> Showing rankers is akin to the pool
> salesman showing a picture of the backhoe they use to dig
> the hole.

Not really. showing a ranker is the eqluivalent of showing that yor price is competitive. Nobody installs 16 pools from 16 suppliers, so the pool analogy is inapropriate. In fact, a pool is a lifestyle purchase with no return on investment. Radio is an investment for a client, just a product design is an investment. It is part of getting goods or service to the consumer.

> Prospect says "why you showing me that, I assumed
> you had something to dig a hole." "I assumed you had an
> audience". Nuff said.

Again, when there is no way of proving audience size, advertisers quickly realize there is no way of putting anything but a minimum value on radio advertising, pitting station against station to sell the cheapest. There is no way to hold or grwo rates, as there is no underlying value that can be perceived except in small markets where an advertiser makes one radio buy at a time. Anywhere else, we like to know what we are paying for and whether it is the best possible deal.
 
I realize I'm probably beating a dead horse here but WFTL when I worked there a long time ago back when Joe Amaturo owned it made a ton of money agressively selling to locals. Sales approach was increasing store traffic not dwelling on our ratings. The only thing the ratings were used for were agency buys. I can only assume this worked, the station had a much larger staff than you see at stations today.

If you know the Chief Engineer at WRMA he will confirm this. He was there.

Mr. A made enough money from WFTL/WGLO to buy a TV station in St Joe Missouri, an FM in Saint Louis and an FM in Houston.

The sales staff at WFTL/WGLO were probably some of the most professional people I have ever had the pleasure to know.

Mike

> > Radio without ratings....
> >
> > Would be an improvement and give us much more diverse
> > programming since stations would no longer have to pander
> to
> > the masses.
>
> Probably the reverse would happen. At least, that was my
> experience during two years I lived without ratings.
> Stations would gravitate to safe and highly popular formats.
> You would end up with far fewer formats and far less risk
> taking as there would be no metric to justify to advertisers
> a new format or derivative.
>
> The real issue is that advertisers would have no way of
> measuring delivery cost, so the big ones would drop radio
> and the advertisers left would be smaller local businesses
> who would grind for low rates. In that situation, average
> income for stations would drop dramtically, reducing the
> ability to hire talent and provide good programming.
>
> What I saw with no ratings was revenues dropping by over
> half in 18 months, and, considering the margins of most
> stations then were less than 50%, that meant that everybody
> was losing money, and stations were sold left and right.
>
 
> I realize I'm probably beating a dead horse here but WFTL
> when I worked there a long time ago back when Joe Amaturo
> owned it made a ton of money agressively selling to locals.
> Sales approach was increasing store traffic not dwelling on
> our ratings. The only thing the ratings were used for were
> agency buys. I can only assume this worked, the station had
> a much larger staff than you see at stations today.

WFTL did well only into the early 80's when Arbitron consolidated Dade with Broward County to create the Miami MSA. Back when Michael McShea was at WFTL it was a good station and did well in the Ft. Lauderdale ratings... when the market could still be covered by a 1 kw AM at 1400.

Ft. Lauderdale was a much smaller market then, but 'FTL did lots of agency business before the FMs pretty much took over in all demos.

> Mr. A made enough money from WFTL/WGLO to buy a TV station
> in St Joe Missouri, an FM in Saint Louis and an FM in
> Houston.

Actually, his big money machine was WPOP in Hartford... and he had properties in St. Louis and elsewhere. Ft. Lauderdale was his smallest market.

And, that was 25 years ago. I know. i voted for the consolidation of the Arbitron markets as a GM at Metroplex... radio today is a lot different from those days.
 
David,

I must agree with most of your post.

> WFTL did well only into the early 80's when Arbitron
> consolidated Dade with Broward County to create the Miami
> MSA. Back when Michael McShea was at WFTL it was a good
> station and did well in the Ft. Lauderdale ratings... when
> the market could still be covered by a 1 kw AM at 1400.

True, we had quite a loyal audience considering we didn't even cover the entire county well at night. Remember in those days it was 1kw day 250w at night. Now days the Class IV stations can run 1kw 24 hours in most cases.

> Ft. Lauderdale was a much smaller market then, but 'FTL did
> lots of agency business before the FMs pretty much took over
> in all demos.

Agreed!

> > Mr. A made enough money from WFTL/WGLO to buy a TV station
>
> > in St Joe Missouri, an FM in Saint Louis and an FM in
> > Houston.
>
> Actually, his big money machine was WPOP in Hartford... and
> he had properties in St. Louis and elsewhere. Ft. Lauderdale
> was his smallest market.

He sold WPOP in the very early '70's and for a time WFTL and the TV station were the cash pumps that kept St. Louis and Houston going till they came up with urban formats for both stations which really caught on big.. or so I was told at the time.

> And, that was 25 years ago. I know. i voted for the
> consolidation of the Arbitron markets as a GM at
> Metroplex... radio today is a lot different from those days.

Great for the stations that covered both counties bad for the rest.

WFTL was the dream station. A huge staff for even a large station. Full service format, music and other programming with lots of variety, topical relevant promotions, warm relatable personalities, and a killer news and sports department. I should also mention Michael O'Shea's positive, warm and skilled programming style. He took time to explain why he was doing something and it all made sense!

I thought all radio was like WFTL sadly it wasn't and isn't. I'm proud to have been a small part of the success of the station and happy to have been there at a very exciting time.

We had a reunion of the management and staff just prior to 9/11 and I started it all. It was a great weekend and even though we hadn't seen each other in many years we could relate like we had just worked together the day before.

I'll never forget the first time I saw the station on Fedaral Highway across from Y-100's first studios. I had been working at WAXY and the first time I saw WFTL I thought what a dump! Well I'd give anything to be back there.

Sorry for the rambling it was just a very good time for me, ancient history...unfortunately.
 
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