Stanton on AM Radio

[CarAgencyGuy]

This months's Marketing NW featured a column from ad guy Rick Stanton and his take on the 'death' of AM radio. Given some of the comments from the KRKO thread, I thought this was an appropriate post. I did write a response which they may or may not publish, but I'll post that after some discussion so as not to influence the conversation. Here is Rick's article:

"Stanton On…AM Radio
By Larry Coffman - May 31, 2018082
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By Rick Stanton

As you access the links at the end of this column, there are any number of pundits who believe that, with the onslaught of streaming and other music and information delivery options, AM-FM radio is under assault and the future is dim. But AM radio, in particular, is not helping its own cause.

On Monday morning, June 25, I asked Alexa (Who needs a radio any more anyway?) to tune to 710 ESPN. I then took careful notes on what I was listening to, and the results are pretty telling. (One caveat: the timing on my end is likely different from the station’s. My 7:58 could be their 7:57 or 7:59, but the end result is the same.)

At 7:58 the station broke for commercials:

M’s ticket-giveaway promo
Mike Salk ad for his friends at Brennan Heating & Air
Marijuana talk ad
Key Bank ad
Dave Sims ad for CHI Franciscan prostate-cancer checkup
Zoom Video ad
Tom Wassell ad for RTIC Coolers
Comcast Business ad
710 ESPN promo, followed by its Seattle Sports Snapshot (which is essentially old news framed as something important)
Back to programming six minutes later at 8:04. The next break came at approximately 8:25:

M’s ticket-giveaway promo
30-10 Weight Loss for Life ad
Washington Gold Casinos ad
Divorce Lawyers for Men ad
Danny O’Neil ad for Carter Volkswagen
Shane Co. ad
Hotels.com ad
Progressive Insurance ad
Fast Water Heater ad
Universal Men’s Clinic ad
1-800-Got-Junk ad
Pepsi ad
Back to programming at 8:31. There was another commercial break at 8:42 that included a Brock Huard ad for his friends at XFINITY, a Mike Salk ad for his friends at Brennan Heating & Air and two Tom Wassell ads for RTIC Coolers and My Pillow. Back to programming at 8:48.

In the 50 minutes of on-air time I monitored, 36% of that time was advertising and, in general, forgettable advertising at that. In fairness to 710 ESPN, this is what AM stations sound like today: too many ads in conflict with content—content that can be dubious at times, depending on the day part and the on-air “personalities.”

With all the on-air-spokespeople ads, it’s difficult, if not impossible, to tell one advertiser from the other. And does anyone really believe they’re “good friends” with the companies that are paying them to do the ads?

If it wasn’t for bad traffic, bad weather, bad news and local sports, there would be no other reasons to tune in to AM radio anymore—unless you enjoy bad copywriting.

Good radio people used to understand how radio advertising works best and had a commitment to long-term strategies, a consistent presence and creative that was memorable. Today, the large media conglomerates, which own the great majority of stations, seem only to understand short-term profitability and jamming as much billable airtime into an hour as possible.

Even the last bastion for traditional radio, the dashboard, is failing the media. Vehicle manufacturers have been marginalizing AM-FM radio still further by installing plenty of alternative delivery systems.

I had lunch a while back with local radio icon Shannon Sweatte, and part of our conversation was lamenting the state of Seattle radio in general and AM radio in particular.

I asked Shannon what he’d do if he were running a local station today, and his response was that he’d cut the commercial pods in half and charge more for the ads. He also mentioned that he’d limit the amount of on-air-personality-driven spots.

What a concept. Too bad the right people aren’t listening.

http://www.electronicdesign.com/blog/future-am-radio

https://variety.com/2017/music/news/traditional-radio-faces-a-grim-future-new-study-says-1202542681/

https://www.digitalmusicnews.com/2017/08/31/radio-dead-musonomics-study/

P.S. I guess someone still knows how to write radio: http://creativity-online.com/work/amnesty-international-children-in-detention-camps-radio-ad/54884"

 

[TheBigA]

Even the last bastion for traditional radio, the dashboard, is failing the media. Vehicle manufacturers have been marginalizing AM-FM radio still further by installing plenty of alternative delivery systems.

I read this all the time, yet I just bought a brand new car a few months ago and the one "alternate delivery system" it didn't include was a CD player. AM/FM/Sirius/ and USB port are all available in the same place, with equal stature. However, I need to pay $15 a month to receive Sirius, and the car company gets a kickback from that fee. The thing that's being hurt by new technology isn't radio, but the music business, because people aren't buying CDs any more, and they're looking for ways to hear their favorite music for free. If that includes a bunch of ads, that's just fine.

Radio is paid for by advertising. If you hear a lot of ads, that either means the station is very healthy, or the cost per spot is too low. So sure, they can raise the rates, but that could mean the advertisers will look for cheaper "delivery systems." Also one of the main values to having local personalities is their ability to do personality-driven spots. Otherwise, it's easier to carry a national host. In a world where there are so many options, raising rates isn't always as easy as it sounds. If I was one of those alternate delivery systems, I'd offer my time for less money. How is that good for radio?

Let me add that I ask my clients every day if they'd rather pay more for fewer spots, and have less clutter on the radio, smaller spot clusters, and every one of them wants "maximum impressions." That's what the advertisers want. They see the data. They know people need to hear a spot many times. They know AQH for all media sources is down. It's about 15 minutes a day for Pandora. So they know if they buy an ad package, they need their spot to air as many times as possible to reach their desired consumers. From my experience, the advertisers are the reason why you hear so many ads. Not the radio stations.

 

[AQH]

From my experience, the advertisers are the reason why you hear so many ads. Not the radio stations.

To date that has got to be the stupidest reasoning I have ever read.

 

[AQH]

I asked Shannon what he’d do if he were running a local station today, and his response was that he’d cut the commercial pods in half and charge more for the ads. He also mentioned that he’d limit the amount of on-air-personality-driven spots.

Both of those solutions are correct. The testimonials saturation has killed any semblance of added value and does much more harm than monetary benefit.

 

[TheBigA]

To date that has got to be the stupidest reasoning I have ever read.

If you have different experience, let me know. I get paid the same if one advertiser buys up all my time, or if a lot of different advertisers pay for thousand of spots. Advertisers pay for impressions. Would you pay more for less?

 

[bobdavcav]

Big A is right. I use Uber and Lyft a lot, both of those platforms require drivers to have cars 10 years old or newer. Every one has had a radio, and many drivers use it. The option that seems to be the least popular of all is satellite, and even so I've had a number of drivers use it. I would prefer it sometimes, because the formats run there are unique takes on existing formats. For instance, The Pulse isn't anything like the terrestrial Hot AC in this market, or very many stations of the same format I've heard across the country. That tangent aside, I don't understand the popularity of LPFM. I would think that a station programming a nitch format or trying to serve a particular community would be better off promoting the heck out of an internet stream. My advice to anyone wanting to start an LPFM in 2018 is this, establish a product that you'd like to get on an analog signal one day. Then take that opportunity when it comes up. We've seen this happen with a few stations, so there's no reason why it couldn't become semi-regular.

 

[TheBigA]

The testimonials saturation has killed any semblance of added value and does much more harm than monetary benefit.

The problem is it's the main thing the advertiser wants. This isn't "added value," at least it isn't for me. My advertisers pay premium price for it, and they don't question how much. You guys want us to raise the rates? This is the only way we're going to do it. You have to give something in exchange for more money. No one will pay more for less. It just ain't gonna happen. Especially on an AM talk station.

One more thing: KIRO is a Top 10 radio station, and the most listened to AM station in town. If the ads are driving away listeners, it's not showing up in the ratings.

 

[davideduardo]

Both of those solutions are correct. The testimonials saturation has killed any semblance of added value and does much more harm than monetary benefit.

Agency ad campaigns, for the most part, are based on CPP, an acronym for Cost Per Point. That means that stations of different audience size can be evaluated based on a standard metric of how much it costs to reach 1% of the target universe.

Campaigns set a desired cost per point in their target. Stations present their spot rate and if it meets the client's goal, the station will likely get bought. If the CPP is too high compared to the rest of the market, the stations with the out of range rates don't get bought.

So if you have one station that cuts spot loads in half, and doubles the rate, their CPP will be about double that of other stations. They will nearly never get bought.

I've seen some cases of stations severely limiting spot loads and raising rates and cost per listener delivered, but the last time I saw that work was in the mid 60's in a market that only had 10% TV penetration, over 50% illiteracy and radio took about 70% of advertising revenue. In other words, not here, not today.

 

[davideduardo]

One more thing: KIRO is a Top 10 radio station, and the most listened to AM station in town. If the ads are driving away listeners, it's not showing up in the ratings.

Not including translators or LPFM stations, there are 84 stations licensed to the Seattle MSA. KIRO is 8th in total billing. They are obviously doing something right, and will continue to do as long as the station, the format and the band are still viable.

 

[AQH]

If you have different experience, let me know. I get paid the same if one advertiser buys up all my time, or if a lot of different advertisers pay for thousand of spots. Advertisers pay for impressions. Would you pay more for less?

Your completely misguided viewpoints disregard one simple and very basic truth: without the listeners, there is no audience for advertisers.

 

[AQH]

Agency ad campaigns, for the most part, are based on CPP, an acronym for Cost Per Point. That means that stations of different audience size can be evaluated based on a standard metric of how much it costs to reach 1% of the target universe.

Really?! Wow CPP tell me more about this BRAND NEW thing I have never heard of! Why didn't I hear about this before?! Wonder what the CPP is in Buenos Aires?

 

[AQH]

One more thing: KIRO is a Top 10 radio station, and the most listened to AM station in town. If the ads are driving away listeners, it's not showing up in the ratings.

There's a reason that station is in the top 10, something people in Seattle can explain but people who don't live in the market can't.

 

[TheBigA]

Your completely misguided viewpoints disregard one simple and very basic truth: without the listeners, there is no audience for advertisers.

Your viewpoint misses the one simple fact that ESPN 710 is the MOST LISTENED TO AM STATION IN SEATTLE.

As I said, if the commercial load is driving away listeners, it isn't showing up in the ratings. Understand?

There's a reason that station is in the top 10, something people in Seattle can explain but people who don't live in the market can't.

You don't have to live in Seattle to know it's the Mariners station. If people don't like all the ads on 710, they can buy a subscription to MLB. But they don't. They listen for free on 710, even though there are lots of ads, some of which are from the team and MLB.

How would you justify to advertisers that they should pay more for fewer impressions?

 

[CarAgencyGuy]

Agency ad campaigns, for the most part, are based on CPP, an acronym for Cost Per Point. That means that stations of different audience size can be evaluated based on a standard metric of how much it costs to reach 1% of the target universe.

Campaigns set a desired cost per point in their target. Stations present their spot rate and if it meets the client's goal, the station will likely get bought. If the CPP is too high compared to the rest of the market, the stations with the out of range rates don't get bought.

So if you have one station that cuts spot loads in half, and doubles the rate, their CPP will be about double that of other stations. They will nearly never get bought.

I've seen some cases of stations severely limiting spot loads and raising rates and cost per listener delivered, but the last time I saw that work was in the mid 60's in a market that only had 10% TV penetration, over 50% illiteracy and radio took about 70% of advertising revenue. In other words, not here, not today.

David, sir. Here is Seattle kndd 107.7 runs the 2 minute promise - it promises listeners no more than 2 minute breaks and they did limit the spot loads and pitched it to advertisers as a reason to buy the station and pay more. It has been successful enough that they have done it for a number of years. I don't know how whether they do it only when they're not sold out and have avails or all year long. It's Entercom and I think they do it for the Alt station in Portland, Or and possibly elsewhere.
I hear it pitched on air at times, https://1077theend.radio.com/2-minute-promise.

 

[davideduardo]

Really?! Wow CPP tell me more about this BRAND NEW thing I have never heard of! Why didn't I hear about this before?! Wonder what the CPP is in Buenos Aires?

CPP needed to be presented here as not everyone is aware of the metrics of time buying, yet that is the critical part of the determination of commercial loads... anywhere in the world where there is commercial radio.

Since a rating point in Seattle is about 40,000 and one in Buenos Aires is around 190,000 persons, all you have done with your snarky remark is point out how CPP is a useful tool for local market evaluation, as the actual cost per point is totally market based..

 

[TheBigA]

I don't know how whether they do it only when they're not sold out and have avails or all year long.

The fact that this is the only station in their Seattle cluster that does this should tell you something.

 

[davideduardo]

The fact that this is the only station in their Seattle cluster that does this should tell you something.

And the fact that the practice has not been emulated in some form across the country speaks even louder.

 

[davideduardo]

David, sir. Here is Seattle kndd 107.7 runs the 2 minute promise - it promises listeners no more than 2 minute breaks and they did limit the spot loads and pitched it to advertisers as a reason to buy the station and pay more. It has been successful enough that they have done it for a number of years. I don't know how whether they do it only when they're not sold out and have avails or all year long. It's Entercom and I think they do it for the Alt station in Portland, Or and possibly elsewhere.
I hear it pitched on air at times, https://1077theend.radio.com/2-minute-promise.

Well, the facts don't point to this approach being overwhelmingly successful.

In 2107, the station had a power ratio of 0.9, and was 13th in billings.

Looking over the 6 books so far this year, they are averaging between 3rd and 4th in 18-34, 18-49 and 25-54, yet billings have been essentially flat over the last 8 years.

It's a good positioning statement for listeners, but whether agency accounts will pay higher than their CPP target is a different matter. On the other hand, for local direct business, the less congested environment may be seen as quite desirable and worth a bit more.

With the first half of 2018 ratings a bit higher than the average of previous several years, perhaps they can combine their top 5 sales demo performance with a perception that it's worth a bit more to be in a low commercial zone. But if we don't see Entercom doing this at more stations (as BigA observed) we have to conclude that this was not a very successful strategy.

 

[davideduardo]

There's a reason that station is in the top 10, something people in Seattle can explain but people who don't live in the market can't.

I think that the first thing most of us do when we "look at" a sports station is to ask "what teams do they carry"?

KLAC in LA is around 30th in ratings, but is 10th in billing. You have to ask that question to understand.

 

[TheBigA]

The thing that I don't understand is the article in the OP is written by "ad guy Rick Stanton." I looked him up and he's a UW grad who started a major agency in Seattle. He obviously knows advertising. Why doesn't he discuss this from an advertising point of view. Would he, as an account exec, advise his clients to pay more for fewer ads? Does he have any facts that substantiate the view that advertising is killing AM radio? If so, what does that say about his field of expertise? Certainly I have no problem when he says certain ads were not well written. I wonder if they were station ads or agency ads. He should know that. Unless he's embarrassed about his chosen career.

As I've said several time, the amount of advertising obviously isn't killing this particular station. I suspect that if we were to do a similar analysis of KNBR in San Francisco, we'd hear the same thing. BTST, if we did a similar analysis of any local TV station, we'd see that commercials tend to make up about 25-30% of their air time. Then at the end of his article, he posts links that prove his point. One is the biased RIAA music study. What does that have to do with ESPN710?

In Chicago, WFMT, the heritage commercial classical station there has lots of rules about advertising. They don't run any produced spots. All spots must be host-read scripts, and there are limits to how many ads they run. Their demo is old rich men. If you want to sell Jaguars and Rolex watches, this is your station. But it's a very different audience from ESPN710.

Yes, AM radio is in trouble, but not because a handful of successful stations have too much advertising. Those particular stations are the exception. If you want to use a station to prove that AM radio is in trouble, I'd recommend KVI or KJR. Those are failing AM stations. I would bet they have a lot of ads too. They probably run infomercials on the weekend. They're not failing because of their advertising. And changing the number of ads they run won't help their ratings. But once again, as an ad agency guy, he should understand why this is.