September 2008 - Channel Crossings: Radio

It’s a Great Time to Jump Into DR Radio!

By Buck Robinson

As many of us in the direct marketing community already know, the gloom and doom in the economy that has general market advertisers reining in their media budgets offers a “silver lining” for those who treat advertising as a profit center and not merely as a cost. That is particularly true in radio, so if you’ve been wondering whether radio is an appropriate medium for you to test, the time to jump into the fray is now!

When I first became interested in DR radio about 15 years ago, I found myself in the midst of an industry undergoing a tectonic shift. Changes in regulations regarding ownership transformed the medium virtually overnight from an industry dominated by small owners to mega-ownership groups that dealt in “clusters” and “cross marketing platforms” between multiple O&O properties in the top markets. The infomercial industry was hitting its stride on television, similarly transforming from an industry dominated by entrepreneurs to one dominated by multi-product powerhouses like Guthy-Renker and Kent & Spiegel, among others. Imagine my surprise when I found that radio treated many of the DR practices that we took for granted on TV as persona non grata for their medium. That close-mindedness has slowly changed, but in the last two years, radio has finally seen the light!

Why? Not by choice, but by necessity. During those boon times of the late ’90s and early 2000s, radio groups fueled their buying frenzy by going public and doing “roll-ups”-they didn’t need to think about new ways of generating revenue, because they were buoyed by Wall Street’s cash. Today, however, even the mega-groups like Clear Channel and Citadel are opting to return to private ownership status in an effort to eliminate the glare of Wall Street’s spotlight. With their publicly funded coffers depleted, the need for new sources of revenue has never been more pressing-especially with the increased flight of media dollars away from traditional broadcast radio to the Internet, mobile marketing and other new media outlets. Where have the radio groups started to look for relief? You guessed it-direct response!

Don’t get me wrong-DR spots have been a mainstay of commercial radio for decades, so it’s not as if radio has been completely averse to DR dollars up until now. But whereas TV has always been flexible in offering 30-, 60-, 90- and even 120-second length spots, radio has been either 30 or 60. Even on the short-form side of the equation, radio has been less than entirely accommodating. Aside from Clear Channel’s “less is more” policy that tried to push all advertisers toward a 30-second standard, other groups have started to embrace the idea of two-minute spot breaks. As we all know, the more time you have to tell your compelling story, the more likely you will generate response from highly qualified leads.

Traditionally, radio has been far less accommodating of the long-form vehicles. Most program directors see “infomercials” as a scourge that only drives listeners away and ruins their weekday ratings. When I first got into radio, only about 200 to 300 commercial radio stations offered block time for sale. Fifteen years later, that number has grown to about 2,000 stations. However, considering there are 12,000 commercial radio stations in the U.S., the participating outlets only cover a fraction of the national radio audience. But again, times are changing and once again the catalyst is necessity: stations have long regarded their overnight and weekend programming only worthy of barter or low-cost, locally produced shows. Although, as better-quality radio infomercials are produced and more program directors are swayed to consider them, not only are more stations making 30-minute time available to the DR community, but that time is on better stations and in better dayparts-which translates to stronger response and a better ROI for all parties.

On the web, radio stations are realizing that the best way to monetize their sites is through CPC and CPA programs with top affiliate marketing companies and DR outlets. They have also grown to appreciate the power (and profitability) of backend marketing, continuity programs and database farming. In fact, one of the largest national syndication companies has told me that their best source of new revenue and profits comes from their website-driven “insider” programs and e-mail pushes.

One of the great buzzwords heard around radio is “NTR,” or non-traditional revenue. Increasingly, that NTR is coming from direct marketing or DR-related programs that tap into previously non-monetized interactions with listeners-such as phone call-ins-and turn them into quick and easy sources of “found money,” thanks to savvy DR marketing partners.

All of this underscores the massive shift in attitude and acceptance. Change is being embraced more aggressively thanks to the downturn in the economy, competition for media dollars and appreciation that the stations have started to develop toward direct response. So what are you waiting for? There has never been a better time to get involved with DR radio than right now.

Buck Robinson is president of Robinson Radio Inc. in Glen Allen, Va. He can be reached at (804) 726-6400.

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