Small market eye openers
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Thread: Small market eye openers

  1. #1

    Join Date
    Dec 2014
    Location
    Houston, Texas
    Posts
    1,518

    Small market eye openers

    If you have ever glanced at the frequencies auctioned by the FCC, the list has become almost entirely small market, or better yet, really small town stations.

    I've been in radio for decades, so I have had an idea of how stations did versus the retail market in a coverage area. At one point there were many touting figures of $2.90 to $5.20 going to radio per $1,000 in retail sales. I suspect these averages did not have much meaning once even the rural radio dial became flush with signals ranging from upgrades to new stations and translators.

    I also get any such figure was just a 'norm' but not realistic on a market by market basis.

    Recently I have been looking at this to determine how stations are doing. Here's what I have found:

    Small town stations doing good jobs in serving their communities and working hard are managing about $0.90 to $1.35 per $1,000 in retail sales these days. Most say they need double that and look for non-traditional revenue.

    The formula used: Total retail and service businesses that traditionally use radio in the 60 dbu to arrive at total. That is the $0.90 to $1.35 figure. This gives a total market revenue. Now you divide by local stations. I consider a station with 10% listening doing okay with 10% of the market's available dollars.

    What I am being told is national chain stores from Family Dollar, Dollar General, Walmart, Duckworth and so forth are siphoning off revenue from the mom and pop that buys on the local station. When you add online sales from the likes of Amazon and such, that line between profit and loss for so many local mom and pop stores has come so close together it is very difficult for them to afford a meaningful radio schedule and even a meaningful advertising campaign in print. Also, most banks that were locally owned and big spenders now are owned by non-local institutions that have little if any local budget.

    I'm finding newspapers are suffering in the same way as small town radio. In fact, print has always done about $5 to $7 per $1,000 as late as 2000. Now their ration is almost always less than $1.80 (better than radio as you can buy a business directory ad in a weekly for about $5 to $25 a week...something radio cannot offer).

    More and more stations are having to look beyond the business community for revenue. Some are actively selling local churches. Some are requiring paid PSAs of non-profit groups doing fundraisers (usually a buy one-get one free). For stations that opt for this, it can account for about 25% of station billing. Some are charging for Swap Shop/Tradio style ads. Some are encouraging the purchase of Day Sponsors for birthdays, anniversaries, life events and memorials. Some are even thinking of charging to announce engagements and weddings (they already charge the funeral home).

    Now more than ever, stations are offering fast cheap 'mention' style packages for everything under the sun. It's the 4-H annual show, any town event, holiday and the usual graduation and back to school. One station sold playing the national anthem on the hour on the 4th of July! The idea is a cheap package each month that even the little business can buy and be acknowledged with the business name and address or phone number attached with other businesses calling attention to the campaign flavor of the month.

    As you might suspect, getting details is not easy. I did have a friend with a pair of stations in separate markets (without overlap) share in great detail with ample history to fill in my many questions. He said it was getting really tough and being creative was essential. He said many dollars he once got go to building and maintaining websites or paying fees to be listed on directory websites. He said he is amazed how radio seems not to offer much to advertisers as far as online options go. He was not rosy about small town radio's future saying the trend was continuing. He thinks many more mom and pop stores will close in the next decade leaving downtown a virtual ghost town in many places. And he is the optimistic type. His stations are doing fine, replacing the monies that dried up over the year. I got less complete information from 6 other stations mostly in the Midwest and South that were the only local station (usually in the county).

    What I'd like to know is if any of you with small town FMs are experiencing this and just how you're doing and what you think the future holds. PM me if you don't want to say here. I promise confidentiality. No, I'm not working for some company. I'm just a radio guy that sees my next jump being ownership.

    By the way, the worst I found was an AM daytime only, the only station in a county of 14,000, getting 50 cents per $1,000 in retail sales. How they managed to be local and live is beyond me but they are! And, by the way, the programming was quite good...just what a good broadcaster would want on their station.

  2. #2
    We have some locally-owned multi-station operators around here, all small market, and they can be pretty aggressive & creative. One morning drive show devolved into a 2 hour chat fest each day with various salesmen & service personnel from a large local car dealer. Tedious to listen to but they kept it up for years. One local businessman buys his own show each week where he talks current events while also plugging his product. (Guy likes to talk!) A small town business directory seems to go over well, with 4 businesses sharing a 30 second spot. (One is a dog grooming place-their building is the size of my bathroom! They've been running that ad for 15 years.) When they advertise live remotes one group always mention that they'll have with them the "Acme Pizza Prize Wheel", even if the live remote is at "Joe's Rib Shack". Salesman of the year is whoever has been selling ads to what I would call a "head shop/adult book store" which is on the fringe of the coverage area for the 4 station group. Ok, I can see them running ads on the oldies station & maybe the Hot Country station; but classic country? An AM'er playing America's Best Music? Yep, stay tuned for more Sinatra right after this ad for handcuffs & glass pipes (really!)

    One of the stations I listen to often is from a small town an hour away that I rarely visit. I was down that way recently & laughed when I noticed that 2/3 of the stations advertisers are within walking distance of their studios. One of their jocks has a day job as a propane salesman and he voices their ads. Interestingly, some of their other major advertisers are the 2 other big gas companies in town, with ads voiced by their sales staff.

    Now, I've not worked in radio, I admit. I've been on the other side a lot, though, and have talked to plenty of radio sales staff. The best could offer me a dizzying array of options, something for every budget. If I had $10/week to spend, they'd find a way to take that $10 from me.

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