October 2007 - Don’t Touch That Dial!

Radio media experts share sound advice such as the best quarters and product categories for those who are exploring this marketing channel.

By David Lustig

In every aspect of every business, it’s all about change. Or more precisely, it’s about watching the way business is evolving and keeping up with it, if not trying to stay on top of it. It goes for radio media buying, as well.

The “this is the way we’ve always done it, so this is the way we’re always going to do it,” model is not the way to go. Not if you expect to survive in something like radio media buying.

“Media buying has changed greatly over the last 15 years or so, and each passing year seems to bring a little more of the same,” says Adrien Ito, vice president of broadcast media at Media Partners Worldwide in Long Beach, Calif.

“Television audiences are extremely fragmented and concepts such as reach, frequency and efficiency have all but lost their meaning,” she says. “Cable has subverted the process with fragmentation, while the Internet has eroded primetime HUTS (homes using television) and PUTS (people using television). Television advertising costs continue to rise, while audience levels continue to erode. The result is that only the biggest corporations can afford to purchase a sufficient quantity of media to serve their needs. Yet, they are getting less and less return for their investment. There has to be a point of apostasy with this.”

Mickey Silverman, president and CEO of More Media Direct Inc. in Miami Beach, Fla., also believes radio buying definitely has changed in 2007.

“It’s been an easier year due in part to the change in listenership and their habits,” he says. “It has, in some respects, been a buyer’s market and stations have been aggressive in making deals that work for clients.”

Jeff Small, CEO of Strategic Media in Portland, Maine, contends that while the industry as a whole is not changing much, it is different for his company.

“We are changing in that we are getting more and more sophisticated with our approach to buying and managing campaigns,” he explains. “Success rates are increasing.”

Buck Robinson, president and CEO of Robinson Radio in Glen Allen, Va., says that media buying is in a counter-cycle.

“When demand from the general rate advertising community is depressed, that provides greater opportunity for DR agencies to not only get their hands on more inventory, but to get better pricing from the stations,” he notes, adding that it is because they are more “hungry” for business.

“Our experience in 2007 is only a continuation of the improved opportunity and performance for DR media since 2004,” he continues. “As radio has received greater and greater competition from other media (TV, Internet, print, etc.), that environment has opened up more opportunities for DR agencies and greater appreciation for our business from the stations and networks.”

Determining the most active quarters depends on who you listen to and what part of the country you’re in.

According to Keith J. McKinnon, media operations manager at MediaPower Inc. of Portland, Maine, the first and fourth quarters currently have the most sales activity, the first due to an increase in response rate and the fourth as a result of several clients ramping up their campaigns.

Robinson also believes the first quarter can present terrific opportunities for DR agencies, because the stations and networks are stuck with a glut of time and waning demand in the wake of the holiday retail buying frenzy.

“However,” warns Robinson, “while first quarter offers great inventory and pricing, it is also a tough time of the year to make certain categories work, so it is not always the most profitable time of the year.

“We’ve found that the first quarter starts the ball rolling, but we really ‘hit our stride’ from June through November. The inventory is still relatively available and affordable, radio listening time is up, and the consumer is ready to start responding to DR offers again.”

Yet, Mike Horne, president of RMG Marketing in Phoenix, says that the fourth, second and third quarters-in that order-are normally the most active quarters.

“The first quarter is still the softest quarter,” he adds, “but definitely not the red-headed stepchild it used to be.”

Media Partners’ Ito notes that the second quarter seems to have been the tightest so far and she’s waiting to see how the fourth quarter shapes up.

“With the mortgage industry in trouble and the stock market experiencing instability,” she says, “odds are that the fourth quarter will see cancellations and cutbacks, leaving stations with lots of last-minute bargains.”

What products or product categories are enjoying the most success in 2007?

Bill Sullivan, president of William Sullivan Advertising in Millburn, N.J., believes that the biggest movers include acne products, stress relief products, hair restoration products, invention kits and weight loss.

“There is a lot of stress in the world,” says Sullivan. “It takes a toll on people and they know it. When someone comes up and says we can help you be a better you, many people are inclined to make that telephone call.”

Horne also includes healthcare, but adds wireless communications, financial categories, insurance and professional services.

“Like all other DR outlets, radio tends to work in cycles,” says Robinson. “Unlike TV, however, our cycles on radio tend to last longer because they aren’t burned out as quickly by hyper-competition.

“For instance, three years ago, debt relief was all the rage. But a few ‘bad apples’-and some damaging press coverage-popped the bubble. Debt relief is still a viable category on radio, but there are far fewer players left standing. Similarly, diet and pain relief are perennial categories, but some years there are more players in each category, usually dictated by the appearance of some new ‘miracle’ ingredient or spin to revive the category.”

Robinson adds that household products like mattresses and financial products-such as home loans, business opportunities and investments-as well as automotive products are always effective on radio.

“Financial, automotive and gaming are the stars this year,” says More Media’s Silverman. “Financial because of interest rates, automotive is always good and gaming [is booming].”

Radio has both short form and long form (block programming), says Small of Strategic Media.

“The standard length is 60 seconds for radio. However, 30s are used quite frequently,” he says, adding that most successful DR ads are 60s.

According to Robinson, radio does not offer the DR advertiser as many “vehicles” as TV.

“Long form, or ‘block programming,’ while it is becoming more acceptable by a large number of program directors, is still only offered by less than 20 percent of all commercial radio stations, and at that, it is mostly relegated to overnights and weekends,” he explains.

“As far as short form is concerned,” says Robinson, “two-minute spots are almost unheard of on radio. Instead, the 60-second spot is the dominant vehicle across all radio stations and networks and remains the most viable DR option.

“Clear Channel made a huge push toward 30- and even 15-second spots and that took a number of stations in the same direction in 2006 and 2007. But the fact remains that 60-second spots are still the most widely offered and DR-friendly option available.”

Many people believe that accurately predicting what challenges a radio media buyer will face in 2008 is difficult at best.

“As audience sizes erode, rates typically go down,” says Silverman. “But stations cannot continue to lower rates until they are unprofitable. Therefore, the basic challenge will be to help stations offer good deals to clients while maintaining their own profitability. Also, websites are becoming revenue streams and will be offered as added value less often.”

Ito brings up the point that this will be the first election period in eight years without a presidential incumbent.

“Political spending will likely beat all previous records,” she says. “Additionally, many states have now crowded into February for their primaries. This will heavily impact what is traditionally the media giveaway zone between Christmas and New Year’s, which now falls squarely in the political protection period in the majority of states. In radio, the news/talk format is likely to become revoltingly overpriced.”

So the question becomes: what role will direct marketers play in overcoming these challenges?

“In general,” says Robinson, “DR companies help radio stations and networks understand what the true value of their time is. In some cases, that information acts like an epiphany and leads the media to price their time differently for DR vs. image or general rate advertising. But in most cases, the stations and networks don’t want to hear that their time is overpriced or that the results aren’t sufficient. They live in a bubble where they imagine that millions of potential listeners equate to responses by the thousands.

“Then, when you show them that a $1,000 spot that ran in front of 500,000 listeners only yielded 20 calls and $600 worth of revenue, they balk and blame the creative, the product or the inbound, etc. In other words, DR companies hold a mirror up to their media outlets to show them an alternate reality to what their time is really worth and how responsive their audience really is.”

Changes in the radio industry also have affected media buys.

“Radio stations are no longer just competing with other stations for listeners,” says RMG Marketing’s Horne. “They’re competing with iPods, satellite radio and computers, among other things. To counter this, they have had to clean up their product (programming).

“This has come, primarily, in the form of spot inventory reduction. Since radio is a supply-and-demand business, this has the net effect of increasing rates. Our buyers are pushing advanced buying with our clients as much as possible to help compensate for this. We’re also spending more time on developing creative ideas that add value and additional exposure to our buys.”

So what might be the best advice to those interested in radio?

“Deal with someone who understands the industry,” suggests Horne. “Radio buying is not a job for amateurs. Also, successful radio campaigns are based on much more than a bunch of cheap spots. Focus on cost per order, not cost per spot. Make sure your target matches the radio station or network target and then explore all options to maximize your ROI.”

Robinson recommends that marketers take the time to understand radio and its particulars, or else hire an agency that truly knows radio, not someone who only dabbles in it.

“Be willing and ready to test,” advises Small, “which will yield important insights-and then test some more. Radio does work and is extremely profitable for those who are patient and diligent with their testing process.”

David Lustig is a contributing writer to Electronic Retailer magazine.


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