What killed Smooth Jazz?

wsbzjazzkat · Dec 5, 2015

TheBigA said:
You want what you want, the way you want it, and you want it for free. That simply not possible today. You complain about commercials, but the advertisers are the real reason smooth jazz is gone. The advertisers don't want to reach that audience. At least not with radio. They'll reach your crowd someplace else. That's really the end of the discussion. It has nothing to do with radio ownership, nothing to do with FCC laws, nothing to do with the smooth jazz lifestyle. If you have complaints, take it to the people who pay your bill: The advertisers. If you don't like what they pay for, pay for it yourself. Lots of options available to you, but they cost money, which shouldn't be a problem if what you say is true.

My comments were focused on the over-abundance of commercials on many stations with no disregard to the issue of listener fatigue and tune out. How can any sales person go in and ask for the order with an honest face, knowing that their client may air in the end of one of these 8 minute commercial breaks (with many of these units being 30's in the 8 minutes)? I counted 12 units in one break in our local market here in Florida.

Why not create the most attractive (and effective) listening environment for both listeners and advertisers? All research shows that listeners dislike commercials. They see all of them as clutter and interruptions. And many admit when a commercial break begins on most stations, they hit the scan button or move to another preset....or go to Pandora or satellite.

Back to the problems with smooth jazz in particular: what really hurt many of the smooth jazz stations ran by the Big Box Broadcasters was the use of cluster selling. The idea was to pitch every client to all stations in the cluster --whether it fit or not. A downsized sales department was selling "soap to nuts" to all the clients with no focus or concentration on cherry-picking the best suited advertisers for the smooth jazz station. This is why you heard commercials for strip clubs, tattoo parlors, rock-driven car commercials, and other advertisers that either didn't fit the smooth jazz demo --or the production was crafted to run smooth jazz listeners away (screaming car dealers, rap music bed under the voice, and such). It's like driving through the fast food drive-thru and being asked "Do you want fries with that?". Instead...advertisers were asked "Do you want the lousy smooth jazz station with that radio buy? We can add it for $5 more per spot". When you sell radio like Fuller Brush Salesmen -- there is no thought on targeting the right advertiser and the most effective message to the right audience and format. These advertisers saw no results with smooth jazz --so they didn't come back. This practice was indeed due to the down sizing of sales staffs, the lack of real sales training and understanding of the psycho-graphics of these high discretionary income listeners that make up the smooth jazz niche. Plue...the deregulation of the FCC Ownership Rules further perpetuated these market monopolies--eliminating ANY outside competition. These operators (who once ran a smooth jazz radio station in their group) were very much a part of the reason the smooth jazz audience went away.

landtuna · Dec 6, 2015

TheBigA said:
You want what you want, the way you want it, and you want it for free. That simply not possible today. You complain about commercials, ...

I complain about commercials that irritate me. The shouting car dealer. The ad that runs 6-8 times per hour. The infomercial. The commercial block that contains 6-8 spots.

I used to listen to Jack Benny and if you have ever listened to his show you know he had at least 3 commercials per half-hour and they tended to be several minutes long (the last two anyway). But they fit in with the show generally and Don Wilson's segue was such that you were inside the commercial before you realized it. They did not interrupt the show more than necessary and didn't piss you off when they did run. Same with Paul Harvey.

We used to have a car dealer here in Phoenix who refused to employ screamers to advertise on radio and TV. He was both owner and most times also the commercial voice. He spoke to you and gave you information you could use if you were in the market to buy. He didn't BS the listener or rile him up with loud nonsense. Unfortunately he got old and sold out to a national firm which does use the obnoxious commercial formats. Guess who I won't do business with now? Fortunately there are still two more kind of like him. Not quite as folksy but just as considerate. One is the biggest Ford dealer in AZ so it is no secret what might drive customers to his store. Commercials can pull customers in or drive them away. Smart business owners know the difference. So do listeners.

DavidEduardo · Dec 6, 2015

wsbzjazzkat said:
My comments were focused on the over-abundance of commercials on many stations with no disregard to the issue of listener fatigue and tune out. How can any sales person go in and ask for the order with an honest face, knowing that their client may air in the end of one of these 8 minute commercial breaks (with many of these units being 30's in the 8 minutes)? I counted 12 units in one break in our local market here in Florida.

Let me ask you a question:

How many FMs were there in your market before Docket 80-90 and the upgrade rulings that were the result of the Bonita Springs case?

In some markets, like Tallahassee, the number of FMs more than doubled. But market revenue stayed the same. Shares were fragmented, and stations in general could not increase rates and had to compete with double the competitors. Often rates had to be adjusted down, and sometimes that meant increasing spot loads.

That, not consolidation, was the cause of longer stopsets and more units.

Why not create the most attractive (and effective) listening environment for both listeners and advertisers?

My first FM was immensely profitable on just six 20" spots an hour. It outsold all my AM operations, nearly 50 years ago. But at the time it was the only FM on the dial, and advertisers paid a premium for an unduplicated format. I'd love to imagine that today, but we have too many stations and market revenues have not grown. Thus more and cheaper inventory.

All research shows that listeners dislike commercials.

But the same research shows they know that commercials are the "cost" of free radio.

And many admit when a commercial break begins on most stations, they hit the scan button or move to another preset....or go to Pandora or satellite.

Actually, the research shows that in excess of 90% stay through the stopsets. More people tune out for a bad song than for the start of a stopset; they understand commercials but they don't understand a song they dislike.

Back to the problems with smooth jazz in particular: what really hurt many of the smooth jazz stations ran by the Big Box Broadcasters was the use of cluster selling. The idea was to pitch every client to all stations in the cluster --whether it fit or not.

That may have happened in the very small markets like yours, but the larger market clusters would target their sales at the customers who would most benefit from each station. Naturally, for some clients several or even all stations might be a good buy and they would offer them to clients.

And many clusters had dedicated sellers for individual stations, as well as cluster sellers for the group. Often the cluster sellers called on agencies (who disliked having separate calls from each station) or very large clients who bought several stations deep.

Personally, I started doing cluster selling just about 50 years ago with a portfolio of a half dozen stations. I don't recall ever offering all of them to one client on direct calls, but when I sold agency business, I'd offer everything in the basket just as a department store offers many departments but does not force you to buy in all of them.

Plue...the deregulation of the FCC Ownership Rules further perpetuated these market monopolies--eliminating ANY outside competition. These operators (who once ran a smooth jazz radio station in their group) were very much a part of the reason the smooth jazz audience went away.

Deregulation came as a consequence of Docket 80-90 and the changes in the rules to allow moves and upgrades without putting the license in danger. In any case, there are no monopolies as nobody has, alone, a dominant market position in excess of 50%. We may have an oligopoly, but that is the same we have in the manufacture of jet planes or LCD TV sets, too.

The smooth jazz audience did not go away. It aged out. Some of it died. Some of it gave up as stations tried to keep a younger appeal. In that sense, it is no different than Beautiful Music. Time passed it by.

TheBigA · Dec 6, 2015

wsbzjazzkat said:
My comments were focused on the over-abundance of commercials on many stations with no disregard to the issue of listener fatigue and tune out. How can any sales person go in and ask for the order with an honest face, knowing that their client may air in the end of one of these 8 minute commercial breaks (with many of these units being 30's in the 8 minutes)? I counted 12 units in one break in our local market here in Florida.

I always love it when amateurs with no knowledge of something try to hypothesize how things work. It ends up being a series of myths and fairy tales. The number of commercials is a function of the advertisers, not the broadcasters. The advertisers are asked if they'd like to sponsor entire hours, and they prefer multiple spots rather than one spot an hour. They're the ones spending the money, so it's really their decision. But the fact is that the vast majority of the audience (one survey counted 92%) stays through the break regardless of how long it is.

You say listeners are escaping commercials by going to Pandora, but their commercial load has quadrupled in the last three years, and is likely to quadruple again in the next two years. Pandora, Apple, and a lot of the digital broadcasters are even bigger than the companies you call "big box," and the debt load that Pandora is building is pretty intense. So if people want to escape commercials by going to Pandora, they'll soon be disappointed.

You talk about "market monopolies," but who competes with Sirius? The Congress created a satellite monopoly. It's a monopoly because there's only one. There are thousands of broadcasters. Who is competing with these digital companies? They are becoming far bigger monopolies than any broadcaster you can name. When it comes to serving niches, the best way is with a monopoly, because there's no competition. In a competitive environment, niche formats like smooth jazz and Americana lose because their audiences are too small, and advertisers don't care. You should demand monopolies in broadcasting, because it's the only way you'll get what you want. But let's face it. You've talked yourself into believing you're right. And there's nothing I can say that will change it.

b-turner · Dec 6, 2015

This is another case of listeners thinking we in radio set the price for the commercial. We don't. The market sets the rate. We can walk out with whatever rate we want but if we want the buy, it has to be what the agencies and clients are willing to pay.

Think of it this way: will you fill up your vehicle's gas tank at the gas station charging $3 or $4 a gallon or the place changing $2? You'd likely seek out the $2 a gallon gas station. That's just what the advertiser does although I am making the example a bit too simple.

The point is I cannot get away with a premium because the advertisers can buy at non-premium prices everywhere else, even if I have a more upper income and better educated audience. They could care less, they figure they will reach those people anyway.

Surprisingly musical tastes have less to do with income and education than perhaps in the past. The classical music listener might also listen to classic rock or country or hot adult contemporary. Thus, you can reach that listener buying a non-premium station.

I read recently the average radio listener splits their time among about 5 stations. Can't recall where I saw that, so chime in if I might be off on that.

And for selling, guess what, it has much more to do about being liked, being trusted and having integrity. Even so, that would not matter if you don't have the audience the advertiser wants or feels is too costly for what they get.

I also might add, the owners of radio stations, whether the small town Mom and Pop or Big Boy Major Market Player, are running businesses. Consider the frequency like a shopping mall or strip center. If you take tenants (formats) that don't maximize the dollars you can get to successfully run your business, you are greatly undervaluing your space (frequency). Would you rent a home you owned for half the price of 'the going rate' or would you charge the going rate? I bet you'd want the going rate and that makes you exactly like the radio station owner. Considering the fight for those ad dollars, you had better be trying to maximize what you do so you can stay in business. And those operational costs are going up just like your bills.

DavidEduardo · Dec 6, 2015

b-turner said:
I read recently the average radio listener splits their time among about 5 stations. Can't recall where I saw that, so chime in if I might be off on that..

Yes. It is 5 to 6 stations in the average week in PPM, with up to 8 stations if the time is pushed out to two weeks or more.

And the sharing can be very broad. I looked at KTWV in LA when it was a smooth jazz station and in the top 5 back in 1999. There were 8 stations that shared at least 15% of the KTWV cume, and they ranged from all news to classic rock and included AC and oldies and talk too.

A buyer, faced with a high CPP on one station, will buy the needed reach in their target by buying around it on other stations.

landtuna · Dec 6, 2015

TheBigA said:
The number of commercials is a function of the advertisers, not the broadcasters.

I am anticipating you will shoot what I am about to say down in flames but I will toss it out there anyway.

If I were the owner/sales manager of a station the impression it makes upon my market would be of primary interest to me. Therefore, I would strongly object to an advertiser insisting on a spot load or frequency or commercial format that makes my listeners angry and might force them to jump ship. Just the same as I would not play a song that does the same. I understand that there is a fine line between accepting the advertiser's business and doing what I think is right for my station and it is a line, unfortunately, that too many radio people apparently don't observe. Obviously, this line is easier to observe when you have a high performing station and advertisers are in competition to buy spots but it seems to be important to any business in the entertainment business.

The bottom line is the broadcaster has the ultimate say in what is sent out over the air and what you have been hearing are listeners who are trying to tell you what they like and dislike.

landtuna · Dec 6, 2015

b-turner said:
The point is I cannot get away with a premium because the advertisers can buy at non-premium prices everywhere else, even if I have a more upper income and better educated audience. They could care less, they figure they will reach those people anyway.

This would seem to me to be part of the salespersons job. To convince the advertiser that this buy is worth the difference because this station can reach an audience which has (pick one): more disposable income, is interested in your specific product(s), responds to previous like ads etc. If your sales staff are not doing this then they are overpaid clerks and not salespeople at all.

TheBigA · Dec 6, 2015

landtuna said:
If I were the owner/sales manager of a station the impression it makes upon my market would be of primary interest to me. Therefore, I would strongly object to an advertiser insisting on a spot load or frequency or commercial format that makes my listeners angry and might force them to jump ship.

Do you have trouble with reading comprehension? We have posted documented surveys that show listeners DON'T jump ship. Commercials are a necessary evil. Nobody likes them, including broadcasters. If we could count on subscription money from listeners, or any other source of revenue, we'd jump on it. But we don't have any other choice. The COSTS of running a radio station increase every year. Personnel costs, engineering costs, insurance costs, utility costs, royalty costs, new technology, and on and on. Competition from other media has forced us to keep our spot prices stable. So what would YOU do, Mr. Smarty Pants? There is no argument you can make to an advertiser that will get them to pay more for the same thing, especially in a competitive marketplace where other radio companies will cut their prices to make a deal. So just do the math. Take the costs of running a station, and divide it by the amount the marketplace sets as a rate, and you get the number of spots you have to run to make your station profitable. Get the picture?

You mentioned Jack Benny. The reason that kind of radio died, and single sponsorship of shows ended was because advertisers didn't want to put all their eggs in one basket any more. More radio stations meant a dilution of the audience. At one time, 70% of the public listened to Jack Benny. That number declined. Today, it's hard to find a radio station that gets more than 10% of their market's audience. So if an advertiser everyone in a market, he has to buy several radio stations. That dilutes the price. That makes it unlikely that any sponsor will spend enough on one station to reach a majority of the population. People don't sit by their radios in their living rooms as they did with Jack Benny. They're driving in their cars, listening in short bursts, maybe not catching every commercial break a station runs. So what chance do you as an advertiser have to reach the largest number of people? Repetition. Let me say that again: Repetition. That means lots of commercials, spread over a broadcast day, appearing at different points in the cluster, in an attempt to possibly reach the moving target, which is the listener. Understand?

So let's review. We have lots of spots because the advertiser doesn't want to pay the cost of sponsoring an hour alone, and he also wants his commercial to air multiple times in a given hour. Combine that advertiser with a dozen others who feel the same way, and you end up with 14 minutes of commercials an hour. That's what I've seen as an average. We've done numerous studies using numerous resources, and we agree that spot breaks are an interruption. So our research says that the fewer breaks we have per hour the better. So we're taking into account the feelings of the listener. That's why stations don't do even more spots an hour. But we also have bills to pay. It's simple mathematics. And most of the numbers aren't moving. It's not getting cheaper to do radio, and advertisers aren't increasing their ad budget. And listeners are getting cheaper, and less interested in spending money for radio. If they want to escape commercials, all they have to do is pay $15 a month for Sirius. But less than 10% are willing. That number is even smaller for online radio. So what does that tell you about the listeners?

DavidEduardo · Dec 6, 2015

landtuna said:
If I were the owner/sales manager of a station the impression it makes upon my market would be of primary interest to me. Therefore, I would strongly object to an advertiser insisting on a spot load or frequency or commercial format that makes my listeners angry and might force them to jump ship. Just the same as I would not play a song that does the same. I understand that there is a fine line between accepting the advertiser's business and doing what I think is right for my station and it is a line, unfortunately, that too many radio people apparently don't observe. Obviously, this line is easier to observe when you have a high performing station and advertisers are in competition to buy spots but it seems to be important to any business in the entertainment business.

I do not know of any major market stations that have waiting lists or, other than at peak sales times of the year like Christmas, Mothers' Day and Back to School, total sell-outs in all dayparts. There is certainly no line forming outside any stations to buy ads.

In the big markets, and in proportion to their size, the business is highly dependent on agency buys. Those are done based on a target demographic and a per-established rate goal based on ratings delivery (Called "Cost per Point") Either a station meets the CPP against the target or the are not on the buy. And to be considered, the station has to be high up on ratings rankers. Any station that does not deliver the right CPP is skipped and other stations are bought.

So the market sets the price. And within the general range of prices set by the market, stations have to sell enough spots to be profitable. The number of spots per hour is going to be a direct result of the market's demand and price goals for advertising. The number of stopsets per hour is going to be set by whatever gets the best PPM results in the 48 largest markets.

DavidEduardo · Dec 6, 2015

landtuna said:
This would seem to me to be part of the salespersons job. To convince the advertiser that this buy is worth the difference because this station can reach an audience which has (pick one): more disposable income, is interested in your specific product(s), responds to previous like ads etc. If your sales staff are not doing this then they are overpaid clerks and not salespeople at all.

The average listener hears 6 different stations over the course of a week, and as many as 8 to 9 over a two week period. So no station has an exclusivity on reaching whatever group of listeners an advertiser wants. If one station is too expensive, the advertiser buys other stations that reach the same listeners.

frankberry · Dec 6, 2015

Everyone please calm down. Remember what they say about opinions ... and everybody has one.
Thanks for your understanding.

Frank

b-turner · Dec 6, 2015

I see what you are saying landtuna. You are correct the radio station has the ultimate say. It is simply very difficult to run a business that doesn't operate as their competitors do. That operation sets up an expectation, sort of like finding burgers at McDonald's. It can be done but the station would tend to be pretty much commercial-free and likely not paying all their monthly obligations from the income. There are exceptions that pull this off and make it. They simply take the hard road.

To do so, you have to sell business to business. In some markets you can pull that off. Normally these are small town stations. I worked a station where my competitor charged $6 while the station I worked for charged $14. We walked circles around our competitor and ironically we had a higher commercial load.

On the other hand, I knew a sales manager in a smaller city of about 250,000. His station filled a void in the market, an adult urban contemporary in a market that was more than 50% African American. His rates varied from $45 to a low of $41. The station was #4 overall in the market and #1 in the 25 to 44 demographic. Another friend at an agency that handled a major advertiser that bought the station I was working for refused to buy my friend's station. I learned this after we talked about my vacation and I mentioned visiting the station. She said their per spot rate was so high she could get more bang for her advertising dollar on the competitors, simply they were too expensive to make the 'buy sheet'.

This station centered on selling direct to businesses forcing them to accept 10 second spots from most of these local businesses and where they could, forging a relationship with companies in order to convince them to 'direct a buy' for their station. They managed to get a couple of businesses to do that. They managed to get billing up to about $10,000 a week on better weeks. It wasn't enough income and they lasted 14 months before switching formats and hiring a new skeletal staff for a satellite delivered format to ease the bleeding. They were still #1 in adults 25 to 44 when the format change happened. Later I learned the top station in the market was billing about 2 million a year. I never 'got' what happened until the sales manager told me that station spot rates vary quite a bit depending on the region of the country. This station was in a region where spot rates were traditionally low, at least for business to business sales. The sales manager had come in from a region where spot rates tended to be much higher. As for that station's spot load...maybe 2 or 6 units an hour, many being 10 second spots. Today the station is Sports Talk and charging, dollar for dollar, about 1/3rd of what my friend was charging (adjusting for inflation).

There is some truth that a top radio station earns the right to have more control over their rates when they hit the negotiating table. The fact is they are a 'must buy'. With only so many dollars for the market, the buyer might give the top station a bone but it costs the secondary stations in the 'buy' who pay for that 'bone' the must have station is given. But you can price yourself right off that buy sheet even if you are number one. My point is your rate still has to fit through that window.

Yes, there are several ways the stations get those buys. A station might command a specific rate for desired hours then offer a percentage of avails on weekends or nights to get the per impression or unit price down to easily fit the cost per thousand formula for that market.

In this respect, this might be like buying a car where the car dealer might be selling a car at a below market price but offer you peanuts for the trade in and earn profit off the car loan and then convince you to buy the extended protection plan with zero deductible because you'll have repair and maybe maintenance done on your car at the dealership. You add it all up and you pay the full price. The exact opposite is true in radio advertising in that the higher rate is offset by the freebies and reduced rate for the night and weekend units to 'get more than your fair share' of the available advertising dollars. There is that competitive side of sales, identical to programming, where the more dollars you get, the fewer the dollars go to competitors. When a campaign works, you get more of the 'glory' and are assured somewhat of getting more dollars on the next buy.

Radio stations can control the commercial content. It was customary for beautiful music stations back in the day, to refuse any content the listener might find jarring compared to the music format. A few formats today can get away with this today but most are more concerned with getting the dollars in to the station and figure the ad they hear is the same they'll hear on other stations and might be basically the same on the TV show that watch that evening. So, overall, it is less important to the station now than in the past.

A station that chooses to strike out on a different path has a hard road and knows what they are getting in to with both eyes open. The truth be told, most are looking for a more simplified path and choose to make life easier by following the herd versus blazing a new trail. Many times, the different path is not an option with investors demanding better (if you get a bank loan you can expect them to watch what you are doing because they want that money back). Anyway, with the high cost of entry, you are many times forced to go for the money to pay the bills.

b-turner · Dec 6, 2015

landtuna you are indicating that a salesperson that cannot sell a premium priced ad is an order taker. Nothing could be further from the truth in radio advertising sales. You are forgetting people are people. Everybody wants a deal. WalMart is what it is because people want more for less money. In advertiser's minds, advertising is advertising. Just as an oil change is an oil change. I suspect you'd pass up that oil change for $40 to get one for $29.95 elsewhere. So would advertisers. They don't care about your format. That means nothing to them. If you have a carpet and flooring store and you are buying advertising, which would you choose? Station one is charging $30 a spot and reaches 100,000 a week. Station two charges $40 and reaches 100,000 a week. That is the choice. Better income? Better educated? Exclusive format? Nope, what is my cost per thousand and where do I get my best deal?

The first rule I was taught in radio advertising sales was to speak the language of the buyer. They are buying advertising to gain more customers and increase the frequency the customer visits. When you start talking format and the perks you offer the listener, that's like saying 'nice weather we're having'. You sell numbers, expertise in getting customers to respond and ideas that make the advertiser stand out. The best way to lose the buy is to say no. The second best way is to cost too much for the return they get. Ironically, the advertiser is much less concerned with how many commercials you play and if it is a good number, in their mind, they are on the station that generates results because everybody and their dog is advertising there. Sure, they may think that you run too many spots but they figure you know what you are doing and if the campaign fails, you lose them forever, so the number of spots usually never comes up. Yes I worked a small market station that sold at the highest rate and from time to time, I lost big sales to competitors simply because they could get 2+ impressions on the competitor for every impression on my station for the same dollars.

TheBigA · Dec 6, 2015

The thing people don't understand is they're being hit with advertising everywhere they go. And all that advertising is competition for radio sellers. I'm watching football, and everywhere I look is advertising. The stadium has advertising banners, the NFL has its own advertising, if you're at the game, you're being hit by ads on the screen, and at game stoppages, there are sponsored activities on the field. Meanwhile, those game stoppages are commercial breaks for TV & radio. The length and frequency of those breaks are set by the NFL, not the radio or TV station. Radio and TV get the same number of minutes to sell. And it's about the same number of minutes per hour I mentioned in my previous post. Plus verbal sponsorship mentions. Plus promotions the stations have to run for the NFL and the local team. So you have to put all of this in context with the radio salesman going to the local car dealer trying to get him to buy spots in music programming. That same car dealer can get sponsorship at the local arena, or with the local high school football team. Or with the city's Christmas parade. Get the picture? There was a time when radio had no other competition except maybe the local newspaper. Not any more. Everybody is selling advertising, and they're all competing for the exact same money. Radio advertising doesn't exist in a vacuum. It is part of the overall advertising world, and truthfully, it's a very small part. The people with the money hear pitches from a lot of people, selling a lot of platforms. And the smart advertiser is trying to spread his grass seed over a wide area trying to grow something. That's the marketplace in which radio exists.

b-turner · Dec 6, 2015

Very good point, TheBigA. A friend ran an AM small market station. It was 60 miles from anywhere and was the only station on the dial in his town of 2,500. He had one weekly newspaper to compete with. 88 of the 90 businesses in town bought advertising on his station. He wasn't getting rich but wasn't on the financial edge of the cliff either. The local paper has virtually the same success he did.

Cable TV came in and they started selling ads. In a couple of years a Shopper appeared. Another company began publishing (from a distant city) publications for hunting season and such. All of this took some dollars away from him. He was forced to go satellite delivered because he could no longer pay staff a living wage. Then someone applied for a station and built it. That took more money. The owner took a part time job and put the station up for sale. By the time he sold there was a third radio station and another regional shopper was selling in town.

Simply put, in this tiny market he saw his billing go from about $16,000 to $6,000 a month in a few years. The newspaper went from about 16 pages to 8 in the same time frame. It was simply the advertising choices that left everyone struggling to make ends meet. And this guy was a smart radio station operator that had been super serving his small market.

Today he is a minority partner about 100 miles away in a bigger town at an AM/FM combo. He says he's seeing the same thing happen there. His 40,000 population county is now 60,000 and what had been a 3 radio station/2 newspaper county was now a 12 station market with 5 papers and shoppers. There's even a TV station although all the programming comes from the big city, they have a local sales staff and do local news at 6 and 10. His stations had been doing about $100,000 a month but today barely crack $60,000. He's still the top stations in the county but the investors decided it is time to cash the thing out before it gets worse.

Simply put, for advertisers, it is a field day with choices and venues. To get the buy you have to be competitive in price and be the better value for the price paid. Being #1 means little these days compared to being the best value for the dollar. Even with inflation his per unit price is less than it was a decade ago...probably half of what the stations commanded back then. Every day the newer competitors gain a little more ground in acceptance and consideration for the buy. With every bit of ground, he loses a little bit more. It isn't that he has an inferior operation, it is the plentiful choices that keep slicing the advertising pie in more and more pieces.

And I might add, the newer entries are acting smart. As a new entry has financial trouble, one of the newer entry stations buys them to add more choices to their portfolio. One new entry now has 3 stations and does pretty well, selling a nice cross-section of the county. His company might have bought these stations but chose not to. Maybe that was a mistake.

The new stations many times are not new at all but rather one time Class A local stations that saw the writing on the wall and were able to upgrade to full class C FMs and become regional stations selling in a bunch of communities.

landtuna · Dec 6, 2015

b-turner said:
Radio stations can control the commercial content. It was customary for beautiful music stations back in the day, to refuse any content the listener might find jarring compared to the music format. A few formats today can get away with this today but most are more concerned with getting the dollars in to the station and figure the ad they hear is the same they'll hear on other stations and might be basically the same on the TV show that watch that evening. So, overall, it is less important to the station now than in the past.

This was the answer I was looking for. I guess me, being an old fart, was used to the "back in the day" and found it difficult when that unwritten rule went away.

b-turner · Dec 6, 2015

I have to agree. I appreciated the station that made sure the commercial flowed with programming versus not. I noticed that on a commercial classical station years ago that ran a car dealer spot that was identical to the high energy spot that ran on the classic rock station. In fact, in Houston we have Gallery Furniture that for years did spots that simply were designed to irritate. It worked extremely well but such stations would cringe in taking the buy, something the owner admitted, adding some refused to air his spots except late at night. Still everybody knows Mattress Mack and his lines like 'no, no, no back order slips' and 'buy today, it's delivered today' and the closing "Gallery Furniture saves you MONEY!". I understand he was the highest volume single location furniture store in the world even beating some chain furniture stores in overall sales. Now he has another location or two.

landtuna · Dec 6, 2015

b-turner said:
landtuna you are indicating that a salesperson that cannot sell a premium priced ad is an order taker.

I think I said a sales person that doesn't make the effort might as well be just an order taker. It seems to me that buying radio time has many more components than shopping for Cheerios so it stands to reason the sales staff would attempt to highlight the station's advantages, if any, to make a sale. What I am hearing everyone saying is "it doesn't matter, buyers are looking primarily for cost-per-thousand (assuming the target demo). It seems a lot like buying straight out of a catalog.

b-turner said:
Nothing could be further from the truth in radio advertising sales. You are forgetting people are people. Everybody wants a deal. WalMart is what it is because people want more for less money. In advertiser's minds, advertising is advertising. Just as an oil change is an oil change. I suspect you'd pass up that oil change for $40 to get one for $29.95 elsewhere. So would advertisers. They don't care about your format. That means nothing to them. If you have a carpet and flooring store and you are buying advertising, which would you choose? Station one is charging $30 a spot and reaches 100,000 a week. Station two charges $40 and reaches 100,000 a week. That is the choice. Better income? Better educated? Exclusive format? Nope, what is my cost per thousand and where do I get my best deal?

It depends. If I owned a high-end business that caters to the well-heeled I would want some assurance that I am reaching primarily those people. It would do me no good to try to sell premium carpeting to a bunch of apartment renters. The reverse is also true.

b-turner said:
Yes I worked a small market station that sold at the highest rate and from time to time, I lost big sales to competitors simply because they could get 2+ impressions on the competitor for every impression on my station for the same dollars.

And your advertisers used pre-sale impressions to measure the cost/revenue effectiveness instead of post-sale? That seems like a very poor way to run a business.

There used to be a sign in all the Baskin-Robbins stores in my state that was directly to the point and I wish I could find it now. Paraphrasing, it said something like the best customer is the one that can tell the difference between just a lower price and a quality product. What it means, of course, is that there is usually a direct relationship between price and quality and it is important to know the difference. It was in justification of B-R's higher price for their ice cream relative to lower priced and lower quality competitors.

In your example of oil changes at different prices I would determine which service was provided by the better seller. A cheaper oil change is not worth it if the guy leaves your oil filter leaking or uses lessor quality oil. So, price alone does not always determine the better buy and is usually only effective if one is comparing commodities.

It seems that all agencies, as well as some other local advertisers, would have some means of measuring their real cost per sale to determine whether an ad campaign is successful or not. Smaller businesses probably not but then they tend to be much more "hands on" so a pulse is probably enough. I cannot imagine any business buying advertising with only cost per thousand being the primary criteria. Perhaps I have read the replies in error but that same message seems to be coming from several different sources.

landtuna · Dec 6, 2015

TheBigA said:
The thing people don't understand is they're being hit with advertising everywhere they go. And all that advertising is competition for radio sellers. I'm watching football, and everywhere I look is advertising. The stadium has advertising banners, the NFL has its own advertising, if you're at the game, you're being hit by ads on the screen, and at game stoppages, there are sponsored activities on the field. Meanwhile, those game stoppages are commercial breaks for TV & radio. The length and frequency of those breaks are set by the NFL, not the radio or TV station. Radio and TV get the same number of minutes to sell. And it's about the same number of minutes per hour I mentioned in my previous post. Plus verbal sponsorship mentions. Plus promotions the stations have to run for the NFL and the local team. So you have to put all of this in context with the radio salesman going to the local car dealer trying to get him to buy spots in music programming. That same car dealer can get sponsorship at the local arena, or with the local high school football team. Or with the city's Christmas parade. Get the picture? There was a time when radio had no other competition except maybe the local newspaper. Not any more. Everybody is selling advertising, and they're all competing for the exact same money. Radio advertising doesn't exist in a vacuum. It is part of the overall advertising world, and truthfully, it's a very small part. The people with the money hear pitches from a lot of people, selling a lot of platforms. And the smart advertiser is trying to spread his grass seed over a wide area trying to grow something. That's the marketplace in which radio exists.

I understand your point exactly and it is precisely that overexposure to advertising that makes each individual ad that more invisible. I remember arguing this point with a friend in the ad biz back in the days when NHL (and local) teams were putting advertising banners on their dasher boards. After his rather lengthy dissertation about creating customer loyalty with hockey fans etc., I asked him a simple question. Could he remember any of the ads on his home rink. He managed three out of about 20. And that is my point. If I am already a customer of Bank A and they are advertising and supporting my local team then I am likely to remember. If not they are invisible to me. And as you have said correctly, the advertising is everywhere. And like background noise is easy to ignore.

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