Page 1 of 2 12 LastLast
Results 1 to 10 of 18

Thread: Is there money to be made in small market radio?

  1. #1

    Join Date
    Oct 2004
    Location
    Armadale, Victoria, Australia
    Posts
    833

    Is there money to be made in small market radio?

    A discussion on a Facebook page about small market radio, in the wake of iHeart's chapter 11 filing. I argued that going forward, it would be hard for small market stations to turn a profit. A fellow poster says that it profits were rising. I think they are confusing profit with revenue. So, is there money in small markets?

  2. #2

    Join Date
    Jul 2003
    Location
    Knoxville, TN
    Posts
    11,098
    It depends. Being far enough away from bigger cities is a plus. The big problem is the big-boxification of retail. You don't gave those local appliance stores that used to have all of that co-op.

  3. #3
    I provide contract engineering services in several small, relatively isolated markets, where the local station(s) support their staffs and ownerships with a combination of live-full service and satellite-delivered formats. They're up-to-date (enough) with automated technologies to fill in around the programming that sounds best live... meaning nights and weekends are largely automated, while there are actual people at the boards during major listening hours.

    These stations have a long-term connection to their communities, some for over 60 years. They're plugged into everything. In those markets, local radio is doing very well.

    On the other hand, I live in the shadow of Seattle. Years back, Seattle stations had their hands full, just keeping track of their own city. You rarely heard them mention even nearby communities. That created opportunities for local radio, even where the big blowtorches could be heard. Everyone outside your town was a long distance call away. No more. Technology has brought everyone much closer together, and now Seattle stations can serve outlying areas with the kind of programming the small, community stations can't afford to produce. In those areas, such as mine, the once-dominant local outlets are now mostly ethnic or religious repeaters, fed over the internet from distant studios. It's about the only way they survive, because you can't attract enough local listeners and advertisers to keep the lights on in an area like this, and can't show up on agencies' radars.

    For local radio, I'm not sure how iHeart fits in to their success, or failure. In the areas where local radio still works, why would iHeart's fortunes matter?

  4. #4
    Money can be made, but you must have the right conditions. If the town is dying, the demand for advertising will probably be too low to make a go of it.
    Even in a healthy town, you probably won't make lots of money. Ideally you have 2-3+ stations in one town or adjacent towns so you can get economies of scale.

    What this will look like in 5-10 years is anybody's guess. It could happen that social media takes a big piece of the advertising pie in these towns, crippling local radio. On the other hand, in places where there is no daily newspaper and not much media competition, radio could continue to win as a local information source.
    "Its music what makes a radio station, and at Live FM, we play the last music around."
    After receiving that copy, I quit the VO industry.

  5. #5
    Quote Originally Posted by leethalweapon View Post
    A discussion on a Facebook page about small market radio, in the wake of iHeart's chapter 11 filing.
    There's a lot of misinformation about the iHeart filing. The debt was caused by the company going private and buying back its stock just before the recession hit ten years ago. Unless there are over-leveraged small market stations, I doubt there's any correlation. But as pointed out in post #2, there are fewer advertising options as national chains invade small markets, causing local businesses to suffer. If the station focuses on building relationships with local businesses, there shouldn't be a problem.

  6. #6
    I would agree to the "economies of scale". I've been a small businessman in the position of buying ads on small-market stations. A 4-station group would present me with a dizzying array of options. The deepest pockets seem to be car dealers; one locally has basically owned a morning show for years now. I used to do some work with the guys in that dealership's service department & one of their job requirements was to record the radio presets for every car that came through there.

  7. #7
    Moderator/Co-Administrator
    Join Date
    Jul 2003
    Location
    SoCal
    Posts
    38,549
    Quote Originally Posted by DelmarvaDX View Post
    I would agree to the "economies of scale". I've been a small businessman in the position of buying ads on small-market stations. A 4-station group would present me with a dizzying array of options. The deepest pockets seem to be car dealers; one locally has basically owned a morning show for years now. I used to do some work with the guys in that dealership's service department & one of their job requirements was to record the radio presets for every car that came through there.
    When I was training sellers in Florida and doing four-legged calls, I just loved it when a dealer would take us to the service area and show us how few radios were tuned to our station. My response was, "well, if they are listening to us, you aren't inviting them to come here. We have a whole new market for you!"
    www.americanradiohistory.com
    Broadcasting Magazine and Yearbooks, Billboard, Cash Box, R&R, Record World, Music & Media, Audio, Television/Radio Age, R&R, Duncan's American Radio, Popular Electronics, Studio Sound, Broadcast Engineering, db, and more.

  8. #8

    Join Date
    Dec 2014
    Location
    Houston, Texas
    Posts
    1,766
    Yes, there is money to be made but it depends on the market. The more isolated the better. The further from a Walmart and whether Family Dollar or Dollar General have set up in town has something to do with it. The community has to want their town to survive and choose to support it. If they make every purchase they can on Amazon, you have a problem. Also, the mentality of the merchant is key. Some say they only have a Facebook page. Some are swayed by the big reach of a multi-county shopper mailed to every address. You have to educate them and really center on sales. Naturally, hooking up a satellite and doing virtually nothing will never pay off. You need to provide unique product and sell like your life depends on it. You might not get rich but I know several stations in small towns doing north of a million a year. The people exceeding about $100,000 a month are an audio reflection of the community and they sell direct with custom proposals and such. Their employees make decent pay and get benefits normally.

  9. #9
    Quote Originally Posted by leethalweapon View Post
    So, is there money in small markets?
    Answer: No, it is increasingly tougher to make money with small market radio. One of the things my business partner (who manages sales) discovered, was that among other things, Amazon is killing off local and regional advertising. What used to be a consistent, reliable source of income; the local tire shops, auto dealers, local feed and farm, tractor and implement dealers, etc., have either closed up shop, or spend more time using digital and social media platforms for advertising. What's left are the unreliable scraps (clients) like: restaurants, used car stores, independent health clubs. All notorious for being slow, or not paying.

    Eventually things might shift the other direction, but that's assuming brick and mortar businesses in smaller communities tough it out. In the meantime, would I recommend someone getting into small market radio these days? Not unless you want to struggle.

  10. #10
    Quote Originally Posted by Kelly A View Post
    Answer: No, it is increasingly tougher to make money with small market radio. One of the things my business partner (who manages sales) discovered, was that among other things, Amazon is killing off local and regional advertising. What used to be a consistent, reliable source of income; the local tire shops, auto dealers, local feed and farm, tractor and implement dealers, etc., have either closed up shop, or spend more time using digital and social media platforms for advertising.
    Some of this is due to consolidation. The first station I worked at had seven GM dealers within 30 minutes of the COL back in the 90s, and at least two of them regularly used us for advertising. But in GM's bankruptcy, most of them lost their franchises. There are now three, and they are all owned by the same family. And the local Chrysler and Ford dealers are closed too. The TV is plastered with ads for auto dealers, but not much on local radio anymore.

    Ditto in farm implements. One company bought up all the John Deere dealers for a hundred miles, and they target their customers directly. Not a lot of people need an 8 row soybean combine head, and the dealership probably knows exactly who their market is.

    And tires. A chain tire place opened in the 90s and, together with a Wal-Mart tire center, put everyone else out of business.

    Another factor: fewer franchises offering co-op advertising deals. It used to be that chains with local franchises (Ace Hardware and Trane Heating & Air come to mind) would supply produced ads to their dealer network with a space for tag by the dealer. I rarely notice these any more.
    "Its music what makes a radio station, and at Live FM, we play the last music around."
    After receiving that copy, I quit the VO industry.

Page 1 of 2 12 LastLast

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •  

     
Useful Contacts
Community


123