The Wal-Martization of Radio

How's this for radio's recession strategy?

Cut spot costs and make long-term deals.

Turn radio into the Wal-Mart of the media industry. Always open. Always the low price.

That's some of the advice that consultant Jack Myers wrote recently in an interesting piece called Seven Strategies for Rebuilding the Radio Industry.

Myers is calling on the two largest consolidators, CBS and Clear Channel, to immediately announce dramatic cost reductions for 30-second commercials while maintaining prices for 60. Start with the pitch that stations are open to two and three-year deals so that marketers can lock in the low rates.

Gee, I thought they were doing that already?

In fact, if there was a knock on radio even back in the glory days, it was -- to use the colorful language of sales -- that they dropped their pants on rates too much.

In 2002, right at the peak of consolidation greed when Mel was stuffing Infinity stations with more commercials than a human could consume, Clear Channel was also out selling by fax -- cheap spots if you fax us back.

I don't know Myers, but I like to hear all kinds of ideas when it comes to media. He wasn't always a believer in radio running its business for advertisers. In fact, five years ago Myers said it was the other way around -- when he gave the advice to run radio for listeners.

I like that better.

Perhaps it would be useful to explore the other side of Myers' proposal.

For years, I have been saying raise prices, cut inventory, run commercials alone (out of long sets) and employ the use of live read spots.

In fact, the answers that this group of bandidos running radio groups wants to hear is simplistic thinking like -- more spots, fewer spots, whatever.

So, let me make it more complicated.

Radio listening will never return to previous levels -- at least not without the next generation tuning and they have abandoned ship. The radio industry needs to deal with that reality and find a new place in the marketing mix. The days of jamming spots into a hot clock will no longer work -- for the station or the advertiser.

So, how about a different idea -- getting results for advertisers -- not selling cheap spots.

Radio has become a routine boring commercial machine -- using its least talented air staff to record spots, written by its least talented writers (usually sales folks) 0r worse yet generic copy. Music and sound effects that mean nothing. Critical ideas that don't connect, motivate or inform. There are exceptions but too few of them.

And we wonder why radio advertising is down?

Look, if radio did what I am going to outline, the world would be having a recession and radio would be getting rich helping marketers get out of theirs.

Some of what I am going to recommend comes from my work with the next generation -- a distracted, attention deprived group of great people who are not influenced by radio in any way from music discovery to advertising.

Here's the Radio Gets Results approach for which, as you'll see, you won't have to sell cheap ads:

1. Put the best possible, preferably local programming on the air.

Local talent can sell local products. The majority of radio revenue will come from local -- as it always has.

2. Run no more than 12 units per hour -- a unit is any length up to 60 seconds that the client wants -- not what you want.

If they want a 60 -- same price. If they want a 10 -- same price. If they want 23 and a half seconds -- you get the idea. Listeners don't run a stop watch on commercials. One unit per stop set -- did I say that? Young attention spans like the interruption of music to a commercial and back to music.

3. Raise the rates.

Start from scratch. How many units per hour, per daypart, per day do you need to have a profitable month, a profitable year. That is your price. If your ratings are higher, factor that in, obviously. If you have no competition, factor that in. Different rates for different parts of the day based on advertiser desirability.

Years ago when I started Inside Radio as a faxed publication, there were no faxed publications. I had no idea what to charge for a little ad on the bottom of the page. So, I figured -- what would make this venture more than worthwhile. I said, "$1,000 an ad per day" and three ads a day, that's $15,000 per week. Do the rest of the math.

The prices went up as the popularity went up. The front page eventually sold for between $2,500-$3,000 many days. Now you see one of the things Clear Channel paid for when they bought it. (My subsequent competitors sold the same ads for a few hundred dollars or as an add-on to their print publications -- which strategy was the best?). Same for radio. Price the hour and then chop it up in 12 units max (less is less) and go sell it for what you need to make it worthwhile.

4. Triple your sales staff.

I lost you at #1 , didn't I?

Better to lose you at #1 than at #4 because this is a must. Look around. Everyone in radio has cut its sales staffs -- and Myers, by the way, is suggesting that strategy and more spending cutbacks as the road to recovery. Well, it hasn't worked so far and the analysts on Wall Street say radio may never come back from its decline.

Ready to try this idea?

your sales staff. Oh, pay them. And don't take their accounts away. Train them -- constantly. And, even give them paid vacation if you value them.

Oops, I lost Farid.

5. Get those dirty thoughts out of your mind -- I know you have them, Farid -- that you can cut your sales staff further (remember when you said that) because half your business comes to you.

No -- you go and get business. You make people believers. You show them how you can solve their problems so they can sell products and services.

6. Don't run spots.

7. Run testimonials and campaigns using your local talent.

Myers points out that some of the best local personalities have a long history of being the commercial spokesmen of significant local accounts. One mentioned was Howard Eskin at CBS' WIP in Philadelphia, a market with which I am familiar.

Myers points out Eskin is the only radio endorser of Rolex watches through Bernie Robbins Jewelers -- meaning WIP gets the only buy on that product. And Eskin is a long time spokesman for Lexus of Cherry Hill. I lived and worked in that market for a long time and I will confirm that when I think of Lexus of Cherry Hill, I think of the controversial sports talk host Eskin.

8. Map a second stage plan -- once you've done 1-7 and are making lots of money -- to do campaigns for clients based on actual audited responses.

If radio did this, it would have gone belly up a long time ago because frankly, they don't care about responses -- just running spots. You don't have to be a dj sitting through a six minute commercial set to know these ads ain't working because nobody is hearing them and if they are, they're not buying what's in them because -- they all sound the same.

Offer the bank on Main Street a deal where they pay a retainer on future success and then if you bring them x number of leads to open a new account between this date and that, the bank pays the station an additional $x for each lead.

Who could turn this down? It's money in the bank for the client.

(We haven't done a lot of this because, radio doesn't do a good job of selling -- it does a good job of bombarding listeners with mindless commercial clutter that has no tie-in to their programs or talent).

9. Pre-test elements of the campaign for your clients.

Look to the things that WBEB-FM in Philadelphia does online to accomplish helping the advertiser. Research stuff. Myers, by the way, wants you to end research and pocket the savings.

10. Don't drop your rates.

Myers also wants you to stop competing station-to-station and band together to sell the medium's strengths.

Isn't that what consolidation allowed owners to do -- take five or six stations and show advertisers how potent they can be together as a medium?

Of course.

And, it didn't work! You don't need five stations to move product or sell services, you need one good one.

Myers also wants you to merge your multiple station sales staffs into one -- my God, that's awful.

Guess I just got Farid's attention back?

Myers' solution is lots of same-old, same-old as far as I am concerned. Similar strategies have failed for radio.

Stop with the fantasy about Google being able to sell your ads without having to pay live people and automating commercials the way Google runs online search.

There's something at the end of this rainbow that makes trying this ten-step strategy worthwhile -- although I'm not holding my breath waiting for takers.

If radio can move product and sell services at a favorable rate to the advertiser and the station, it never has to go away -- providing that it prove tangible results. Then there will always be a future for commercial radio -- online, on-the-air, on the mobile phone -- wherever.

That's why you've got to develop local content, employ smart local sales people and think in terms of the advertisers' interests not yours.

I'm not trying to sound like the Dalai Lama of Radio but...

Think about your advertisers' recession not yours -- and all your work and effort for them will come back to you as financial nirvana.

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