Ratings or Revenue?....

[bucwhyl]

Looking at some of the comments that I see posted on this board at times, I would like to read your opinions on this one:

Say you are a station owner and you made a decision to flip your station's format. What would your decision be based upon? Now you only have two choices: Good ratings/bad revenue, or Bad ratings/good revenue. Just curious to know your opinions....

 

[little1]

I'm a capitalist. I work to make money so I can buy stuff I want, I would think that if I were to own a station that I'd run it the same way. Which means I could live with poor ratings if I was making money doing it.

So to answer your question, if I've got bad ratings, but I'm making money, I'm not flipping...


Now, to a tangent-
I've been thinking about starting a thread that asks what people think are the most successful
stations in the market are. Because I do believe that most of the top 5 stations ratings wise are NOT in the top 5 or top 10 revenue wise.

I don't think WBAP is top 5 ratings wise, but I've been told they're one of the top billers in the market. Are they 'succesful'? Would you flip formats based on not being 'succesful' ratings wise? And how then do you define 'good' ratings?

Good enough to make money? Ratings good enough to make top 10? top 20?

I bet there are a number of stations out there (Jack springs to mind) where while the ratings might not be great, the revenue makes up for it.

I firmly believe that you've got to find a middle ground. I wouldn't whore "my" station out 24-7 to paid programming 'just' to make good revenue, but I also couldn't accept great ratings if I couldn't make money from them...

For example, when I was going to college, a classmate was working at 100.3 Back when they were hip-hop, rap, whatever it was way back when (that was 100.3 wasn't it?) They were doing great ratings wise, and couldn't give spots away. Too many 12-18's and 12-24's to make 'real' money...

 

[salemjedi54]

Its hard to find that perfect middle ground. There is a certain amount of prestige of saying "Were No. 1", but what are you Number One in...12+ or your target Demo. But in the overal scheme of things, you are in business to make money. You can't operate at a loss forever. You can't have great ratings, but you are cutting your overhead because your AE's are not making budget. So something has to give. Honestly, I feel you are doing great radio if your advertisers are happy, your core P1 listeners are happy and all your workers are happy.

 

[salemjedi54]

I'm a capitalist. I work to make money so I can buy stuff I want, I would think that if I were to own a station that I'd run it the same way. Which means I could live with poor ratings if I was making money doing it.

So to answer your question, if I've got bad ratings, but I'm making money, I'm not flipping...


Now, to a tangent-
I've been thinking about starting a thread that asks what people think are the most successful
stations in the market are. Because I do believe that most of the top 5 stations ratings wise are NOT in the top 5 or top 10 revenue wise.

I don't think WBAP is top 5 ratings wise, but I've been told they're one of the top billers in the market. Are they 'succesful'? Would you flip formats based on not being 'succesful' ratings wise? And how then do you define 'good' ratings?

Good enough to make money? Ratings good enough to make top 10? top 20?

I bet there are a number of stations out there (Jack springs to mind) where while the ratings might not be great, the revenue makes up for it.

I firmly believe that you've got to find a middle ground. I wouldn't whore "my" station out 24-7 to paid programming 'just' to make good revenue, but I also couldn't accept great ratings if I couldn't make money from them...

For example, when I was going to college, a classmate was working at 100.3 Back when they were hip-hop, rap, whatever it was way back when (that was 100.3 wasn't it?) They were doing great ratings wise, and couldn't give spots away. Too many 12-18's and 12-24's to make 'real' money...

Just to add to that Little 1...I know K104 and The Beat are in the top 7 every book 12+ but I can imagine they are not making nearly the money that The Ticket or even hell KLIF. All you have to do is listen to the spots. You hear payday loans spots, car assesories(sp) spots on the Urban stations. Would you even think to hear those type of spots on KLIF. Hardly.

 

[little1]

I've long had a theory that I can listen to a couple of hours of a stations spots and tell you who their target market is. I don't need to hear the content, or the imaging, just the spots tell you who the station is targeting. Of course, you've got to know who the target markets of some advertisers are, but sometimes it's a no brainer.

There's a reason payday loans and car acessories are on K104 and the Wachovia/Citibank/whoever stock market report runs on KLIF and WBAP...

 

[oaktree]

Good posts, here. I would say that it's not just a thing of "bad/good ratings" OR "poor/good revenue."

The problem I see, particularly with many AMs in all market sizes, is "laziness" of management to make a decision on "flipping" (and the same applies to many FMs as well.) "Let's go jockless!" some say. "Let's save expenses!" "or "Let's cut the local news!" How about "We can't 'flip' - I HATE/don't know/my dog wouldn't listen to that!" "Rap & Hip Hop to make money? What will my church friends say?"

And it's "indecision." "Sure, I agree, I've read the consultant's reports, I hear what you're saying...." and we have the same talk three months, six months later and nothing's happened. Meanwhile, listen to the "quality" of spots across the dial, across town.

I believe in the "capitalist" way, as well. You can take billing/revenues to the bank ... you take "ratings" to the bank and it won't make the payroll or power bill, though you may get an "atta boy," but you're likely to hear, "Incidentally, are you paying that stuff with McDonald's coupons this week?"

Remember the addage (an old one,) that says, "You live by the numbers, you die by the numbers."

Indecision is no match for reliable, knowledgeable in-market research and lots of people don't do it, or do it properly.

So are "unrealistic expectations." The "Format of the Month Club" doesn't work, either.

It's not easy for management to make that "local" decision on something they aren't familiar with, or the "lip service" they get from only those they know. Out-of-town "corporate" can often be (an is,) even worse.

It may look good in the book to be at or near the top, but if a station is out of the agency buy cycle and, yet, cleaning up with local revenue by being relevant in programming to its local market, I'd say the ratings will follow the revenues with the billing being the ultimate "rating" no matter what.

That and "knowing when" and "how" -- not "if" the time has come to "flip."

I'd say that the 50kw flamethrower blowtorch at 820, WBAP, is "quite successful" even as a top ten station overall. KRLD should be so fortunate...

 

[grantchester]

Oaktree made many of the points I wanted to bring up.
Ratings are nice, but billing counts.
Billing is great, but does it cover expenses?
I remember a couple of stations I worked at... they had good numbers, but the sales people didn't get it. They told the manager they could sell more if it was more "commercial". The format was changed, the ratings fell, and the sales people complained they couldn't sell without ratings...
A station like KGSR in Austin has a high 'power ratio' because their sales department 'gets it'.
At one 'heavy metal station, the ratings were good, and they got the agency buys for the 18-35 men. Then the ratings went down a bit, the agency buys went elsewhere, and the local merchants wouldn't touch it because they KNEW who the listeners were, and didn't want them. It went oldies.
It's really tragic when expenses get out of hand, and people who have enjoyed long and lasting success are kicked to the curb, to cut costs.
Bottom line, I'd rather have strong net revenues than billing or ratings. But I'd also like to be involved in something I am proud of.
g

 

[KPLEXCOMPLEX]

I gota concur with Grant. You have have both,if you COMMUNICATE ;sales and programming rather than sales vs. Programming. It worked once,Mclendon- KLIF and KILT.

 

[snoman]

Normally Good Ratings leads to more revenue. But in a perfect world, we know that is not always the case. The landscape has really changed since the Telecom Act of '96 that allowed the excessive ownership of Radio Stations. Normally the companies that own mulitiple stations, can package a sales deal together. Let's say you're Service, if you buy so many spots in Skip Murphy's Morning Show, we'll also give you so many on KKDA and KRNB. Your basically selling your spots on your best performing station. In Service's case it would be K104, Radio One would be KBFB. Now if you have a few stations doing nicely, like ABC (or Citadel) with KSCS and WBAP, you could really package up a nice sales deal, that would include 96.7, amongst others. If you own just one station, it is important for you to get ratings first and foremost. Those ratings will lead to a little revenue. If you have enough to buy a radio station, you better have some operating capital to go with it. Ratings and establishing yourself at first is most important. Once you have that accomplished, you work on the revenue. It used to be the case that a Great Station sold itself, it's no longer that easy. There is just too many stations and mediums competing for those advertisers.

 

[Steve Eberhart]

You can have all the ratings in the world but if it isn't resulting in revenue, it doesn't matter.
There have been stations that have pulled some decent numbers but the sales staff, for whatever reason, were not able to convert that to revenue.

If one looks at the situation and realizes that scenario is not about to change, or if a change in personnel on the sales staff might not change the scenario, then about the only option one would have is change the format and do something that has a better chance at bringing in revenue.

It's the age-old discussion: Without programming you can't sell. Without sales you can't afford programming. There has to be a marraige of the two typically to make it work.

 

[davideduardo]

I've been thinking about starting a thread that asks what people think are the most successful
stations in the market are. Because I do believe that most of the top 5 stations ratings wise are NOT in the top 5 or top 10 revenue wise.

I don't think WBAP is top 5 ratings wise, but I've been told they're one of the top billers in the market.

Just to add to that Little 1...I know K104 and The Beat are in the top 7 every book 12+ but I can imagine they are not making nearly the money that The Ticket or even hell KLIF. All you have to do is listen to the spots. You hear payday loans spots, car assesories(sp) spots on the Urban stations. Would you even think to hear those type of spots on KLIF. Hardly.

WBAP is the 2006 #1 biller, follwoed by KKDA. KTCK, due ot the sports marketing money, is #4, but KLIF does about 20% of what WBAP dies and is 22nd in billing rank.

It's about audience int he sales demos plus a competent sales staff and good management.

 

[VERITAS DE VOCE]

Right on, Eberhart. As this thick coat of malaise has been oozed on this market, DFW has become largely about compromise (with due respect and no offense to Bass). This "Seeing it from both sides" is regretfully what it takes, but it's a gradual process. We have all had the PD (that Salem and I shared at one time... props to Tom Casey) that shares this sentiment, "We are here to play one thing... commercials. We only get to play music in between."

If the sales team doesn't understand that proper sponsors for their audience (much as to the right example with KLIF), no one buys a thing, sponsors go elsewhere and those stop sets get longer, and longer, and longer. DriversSelect only works certain places, and hats off to the Fizzo team that gets it. Ratings can increase and have an umbrella effect, but woe to the PD or GM that opens that dang thing indoors. Superstition is a pain in this biz... it usually impacts that trend dorks coolin' out in the cubes down the hall. Keep them happy, keep your audience happy and you stay happy...oh yeah, and employed.

 

[redneckriviera]

Looking at some of the comments that I see posted on this board at times, I would like to read your opinions on this one:

Say you are a station owner and you made a decision to flip your station's format. What would your decision be based upon? Now you only have two choices: Good ratings/bad revenue, or Bad ratings/good revenue. Just curious to know your opinions....

The scenario you describe is most likely to surface if one owned a small station--FM or AM--that served only a portion of the market. There are a bunch of those in DFW. In those instances, an owner is best to ignore the enire ratings world and create a unique position (All-Korean, All-Farmers Branch Local News & Sports, All-Gardening), operate very frugally, and sell local direct advertisers just like it's done in small-town radio. Make friends, be involved in the community, sell cheap spots and a lot of them. Did I mention operating frugally?

If, instead, one owns a full-signal Class C FM or an AM blowtorch like BAP, you can set your expectations much higher. You can expect to compete for the big dollars available in the overall market. But your choice of programming and promotional budgeting still require realistic expectations. It's no secret, for instance, that ethnic programming is not always given proportionate (ratings-based) consideration by many, many agency buyers. Good salespeople who have the support of their company management can overcome that bias, but it does require a longer timeline. Same goes for programming geared to the youth market (12-24/18-34) and--as someone mentioned--programming targeting young men. It's not that these formats are unsellable; it just takes more time. Much more time. And, depending on how large the targeted niche actually is--and how attractive it is or isn't--will help determine the revenue "ceiling." So station owners must not only have more patience; they also must budget for it.

Most cases involving highly-rated stations that go bust are those whose owners/stockholders/executives had unrealistic expectations and/or unrealistic timelines & budgets.

 

[KPLEXCOMPLEX]

As one pointed out, it all changed in 1996. Owners got greedy ,wanted more stations, and dominate the landscape. To pay for the stations,more sales were needed, thus programming started to lose its edge,and became for lack of a better word,mundane. High priced talent that were successful were only looked at as being paid too much,and more profit could be made by cutting them. The virus spread,the ratings took a tumble,the quality of the programming started its free fall. The listener looked for alternatives,and found some,the ratings share dropped. The sales folks look at commission mainly not the who the advertiser is,thus you have the birth of informercials,which infected the programming. Then "spinning numbers" came into vogue to justify this new sales dominated landscape. The listener is not stupid,and cried out against this 10 min spot sweep,and shorten playlist they have heard heard 4 times a day already,so they started leaving terrestrial radio. The compelling allure of radio started to die on the vine. Stations panicked,cuts were needed to show a profit,Voice tracking is born,syndication is the salvation.,eliminate the news department,cut down on the amount of news,buy another station so its revenue can be spread out to help others in the chain. The cancer spreads..and so it goes.

 

[salemjedi54]

Right on, Eberhart. As this thick coat of malaise has been oozed on this market, DFW has become largely about compromise (with due respect and no offense to Bass). This "Seeing it from both sides" is regretfully what it takes, but it's a gradual process. We have all had the PD (that Salem and I shared at one time... props to Tom Casey) that shares this sentiment, "We are here to play one thing... commercials. We only get to play music in between."

If the sales team doesn't understand that proper sponsors for their audience (much as to the right example with KLIF), no one buys a thing, sponsors go elsewhere and those stop sets get longer, and longer, and longer. DriversSelect only works certain places, and hats off to the Fizzo team that gets it. Ratings can increase and have an umbrella effect, but woe to the PD or GM that opens that dang thing indoors. Superstition is a pain in this biz... it usually impacts that trend dorks coolin' out in the cubes down the hall. Keep them happy, keep your audience happy and you stay happy...oh yeah, and employed.

HOW DOES THE NON URBAN DICTATE COME TO PLAY IN TO THIS? I THINK IM THE ONLY BLACK PERSON WHO ACTUALLY AGREES WITH IT. ITS A STUPID BUSINESS PRACTICE, BUT I TOTALLY UNDERSTAND WHY ITS THERE.
IF YOU REALLY LISTEN TO K104 OR THE BEAT...WOULD CARL SEWELL WANT HIS DEALERSHIPS ASSOCIATED WITH THE "IMAGE" THAT IS PRESENTED ON MAINSTREAM URBAN RADIO.

 

[VERITAS DE VOCE]

You are correct as usual.

As radio becomes more TV-ish (dance parties, FLAVA TV, etc.), their image becomes more important. This facade of "keeping it real" is only going to kill urban radio in the long run, but at least they have embraced it with sponsorship. They need to lighten up to attract the other sponsors that appeal to their audience, but that is where leadership (sales and programming) blows... not the sales associate.

 

[Bill Cherry]

The trick is to figure out how to get the most listeners to buy your advertisers' products/services. If you have a 10 share and Troy Aikman can't sell a car after running a zillion spots on your station, you ain't got anything and you ain't gonna have old Troy's bidnez very long.

If you have a .5 share and your listeners are every loyal to your advertisers, the station has every opportunity to make a bunch of money.

I never cease to be amazed at the stations that mix in informertials with their regular format. Listeners want to know that whenever they punch a station's button they're going to hear that station's format.

So as soon as they get the informertial, they punch the button to another station. How long is it before they give the first station another try? Maybe never. And I don't believe those informertials are paying anywhere near what the rate card is demanding of its local advertisers.

Station owners should study the old Arthur Godfrey method and incorporate it. But then most station owners probably wern't alive when Arthur was around, so what do they know?