RDR Blog Zone

The economy is unstable. New technology nips at radio’s audience share and siphons off revenue. The future of HD and Satellite Radio remains in question. With countless choices and solutions available at the crossroads of creativity and practicality, radio’s future has never been so exciting and so uncertain.

Despite a dozen entertainment alternatives hyped to hasten the death of radio over the past several decades, the medium still remains an important part of the weekly media mix consumed by more than 90% of all adults. And even in today’s troubled economy, radio continues to deliver results for marketers who understand how to use the medium and its inherent strengths.

For a clearer picture of radio’s future, Radio Direct Response (RDR), one of America’s few “radio only” advertising agencies, gathered 11 of the industry’s movers and shakers to share their thoughts on what the medium needs to do to remain relevant and solvent into 2009 and beyond.

Sam Benrubi: SVP of Advertising Sales, SIRIUS/XM Satellite Radio
Richard S. Block: VP of Marketing, Haier America
John Dimick: VP of Programming, Lincoln Financial Media Group
Bill Figenshu: President & CEO, FigMedia1
Steve Fisher: CFO, Entercom
Dave Lange: VP/Rock, McVay Media
Michael McVay: President, McVay Media
Peter Smyth: Chairman & CEO, Greater Media
Jimmy Steal VP of Programming, Emmis Communications
Jim Taszarek: President, TazMedia, Inc
Dan Vallie: President, Vallie Richards Donovan Consulting

RDR: How has the current state of the economy impacted your business?  What steps have you taken to survive the storm?

Smyth: Like any business, we have had to tighten our belts, take a very hard look at our overall expense structure and find ways to take out another layer of expense. However, we have also continued to invest in those areas where we see need to support our current efforts and to invest in new efforts to generate revenue. We have challenged our local managers to rethink job descriptions and repurpose employees to get maximum focused effort in the areas that count the most. I don’t want to hear that “we always did it.” We need to examine our structures, manpower allocations and daily job priorities to make sure we are all focused on the important, not just the urgent.

Fisher: Radio and advertising expenditures are down reflecting the overall economy. Entercom (and our peers) has taken steps where appropriate including staff reductions, trimming of other expenses, and we are considering a wage freeze for 2009.

Taz: Unfortunately I’m having the best year I’ve ever had – not because I wanted it that way. Stations are looking for answers – because their clients are looking for answers. This isn’t Your Grandfather’s Recession.

RDR: Despite the revenue downturn, is radio still an undervalued cash flow generator?

Steal: Absolutely, radio remains a positive cash generator, and an extremely effective customer conduit; it’s just not realistic for growth multiples of old to be applied in the current economic environment.

Block: No.

Fisher: Radio does produce significant free cash flow, even in a stressed revenue scenario.

Lange: YES, most stations I’ve worked with turn in over 35% cash flow and I bet you could go to 90% of the companies on the stock markets and not even get close to that level year after year.  Our problem is that we can’t grow it – when you are at that level it’s very hard to get a meaningful percentage in growth.

Taz: Taking radio public and taking on enormous debt was a self-defeating fantasy. While it returned embarrassing short-term gains to some, it has resulted in irreparable harm to the industry. Why? In doing so, it turned radio over to the markets. The markets want eternal, never-ending, quarter-after-quarter earnings growth – growth – growth. In spite of being an extraordinary cash generator, we couldn’t supply the necessary growth. Financial people only know one way to increase earnings – cut costs. The idea of product improvement or new revenue models isn’t in their DNA. Therefore we have a product that has become homogenous from coast to coast, is losing its relevance and lacks significant entertainment or information value.

Smyth: YES.

Dimick: Yes.

RDR: How would you define radio’s accountability to its advertisers?

Block: Non-existent.

Fisher: Surveys over the years indicate buyer’s perception that Radio lags other media in accountability.

Lange: Right now it’s pretty bad.  The Diary system of data collection is antique at best and still makes up 95% of the markets measured.  Even when we have the top 50 markets on PPM we’ll only have 20% of the markets using PPM.  With 2 systems out there and now a 3^rd in some markets from Nielsen it’s turning into confusion.   We also need better sales teams that understand the product, the other options (new media/web/TV/boards/print) and can truly help marketing teams and clients make the most of the message.

Taz: Working with a client and discovering EXACTLY what they’re trying to accomplish. That becomes the reason for the relationship – it’s what both parties talk about. We usually have little idea of their goal. Our DNA is to Sell Those Spots, not Help Clients. The irony is that the clients are now disappearing and we don’t know what to do about it. If we knew more about “advertising” per se and client business models – we could sell more.

Dimick: Local direct advertisers have always known when a radio campaign has worked because they sell products.  I believe we have always felt a sense of accountability to our advertisers because that’s the way we get them to come back to us.  However other mediums have done better jobs of installing new audience measurement techniques that have called our accountability in to question.  That’s why I believe that PPM ratings, while still not perfect, offer us the best solution to ease our advertisers concerns about radio.  We know this medium works for our clients so any device that provides information to raise our accountability level with advertisers is a good thing for us.

Smyth: Accountability starts with doing what you say. Accountability is strengthened when you under promise and over deliver. Our industry has gotten a bad reputation with many advertisers, because we’ve abused their schedules in the past. So it starts with everything running as ordered; no excuses.

(Part Two of this article will appear on Thursday, January 8th.)

Vince Raimondo, Vice President of Marketing

Other than St. Patricks Day, the month of March has no other real holidays. However, if you are a fun brand with an open mind, there are at least 10 great anniversaries or themed days that you can play off of to get yourself some attention.

A seamless fit for any restaurant on most radio stations occurs during Middays (usually 10:00AM 3:00PM). To drive traffic all through March, celebrate Employee Spirit Month by asking co-workers to nominate the most spirited or deserving employees each week who will win lunch delivered to the office or an office party at one of your locations.

Not to sound too sappy, but March 11th is Dream 2009 day. It was created in hopes that everyone would strive to be better people, achieve more and that everyone on Earth would just get along. We can dream up a promotion that rewards people in the community who help others, are positive role models for kids, etc. Simply give them cash to put towards their efforts or maybe something that they have been neglecting to buy for themselves.

March 18th is Awkward Moments Day. I think this day occurs at least a few times a year for most of us. Have radio stations ask listeners for their most awkward moments, only to be rewarded with something that will help them forget it, i.e., a trip to an island, skiing in Vail, a big shiny piece of jewelry or even a new iPod to drown out the memories with loud music.

Other fun days to note include:

• 21: Memory Day
• 22: As Young As You Feel Day
• 26: Make Up Your Own Holiday Day
• 27: Quirky Country Music Song Titles Day

Start planning now. Call us with a goal and well take care of the rest.
Barbra Tabnick, Senior Account Manager

Whimsical and practical, entertaining and informative – here’s a compilation of lists that define and detail the year that was 2008.

There’s a Top 10 list of Top 10 lists, from New York Times buzzwords to great “foot in mouth” quotations.

Last.fm present their lists of top Albums, Artists and Tracks.

The Retail DNA Test. The invisibility cloak. The Chevy Volt. The 50 best inventions of 2008 are here.

Roger Ebert from the Chicago Sun Times shares his picks for best motions pictures of 2008.

Now compare that list to the top choices from the American Film Institute.

Relive the thrills of Wall Street ‘08 with these lists of the Best and Worst Performing Stocks from Fortune Magaine.

Tune in to TV’s top shows as selected by AFI.

Changing jobs? Peruse Fortune Magazine’s list of best companies to work for.

Time Magazine lists the 50 best websites of 2008, featuring something for everyone.

Wondering what new game to buy? Check out Gamasutra’s Top 5 PC Games of 2008.

And they’re off! Place your bet on ESPN’s 2008 list of top horses.

Catch up on missed music with the Top 10 Albums of 2008 from the New York Post.

Review the best places to live, work and play with Outside Online’s list of Top Towns 2008.

Now get away, with Outside Online’s lists of best vacations and travel tips.

Not feeling well? Here’s a list of the best hospitals in America.

Wondering what to feed your new Wii? Here are the top Wii games from Wired Magazine.

Want to copy music from your iPod onto your computer? Learn how – and lots more – with this tech “How to” feature from Lifehacker.

Get better results from Google with these Top 10 Google search tricks.

Feeling prankish? Find out how to create the “blue screen of death” or turn web pages upside with this Top 10 list of harmless geek pranks.

There are times it’s good to curse. You might actually bypass a long series of annoying interactive phone prompts to get a real human! That’s just one of 10 cool telephone tricks.

Choosing a college? Choose wisely with these lists of top colleges and universities from Forbes.

“I’m shooting a commercial for safe sex. How ironic. Because I don’t have that.” That’s just one of the best/worst celebrity quotes of 2008.

Explore the Top 10 Restaurant Cities and other categories from Food & Wine.

From Olympic Moments to Late Night Jokes, explore Time Magazine’s voluminous list of lists, just in case you haven’t yet found what you’re looking for.

Tracy Parker, Account Manager

LOCAL RADIO – Local stations will continue to feel the sting of our troubled economy. Discretionary consumer spending will remain light, resulting in fewer high-ticket advertisers lavishly spending on radio. Local stations will fight for audience share, as alternative means of entertainment continue to siphon off a bit more weekly listening time, while New Media learns how to better target local ad dollars. For some stations, this could mean additional layoffs, more consolidation and/or replacing more local programming with national syndication. Some local stations will buck the trend by monetizing all of their resources (on-air, Internet, sponsorships, street presence) and being accountable to deliver results to their advertisers, beyond just rating points.

MORE DIRECT RESPONSE – According to the Direct Marketing Association Power of Direct Marketing, marketers in 2008 spent 52.1% of their total advertising expenditures on direct response. That number is expected to increase in 2009, as more and more brands turn their focus to return on investment. And while it may seem that more and more radio ads are direct response driven, radio still lags behind the other media in percentage of dollars spent in direct response:

• 91.5% Direct Mail
• 72.5% New Media and other
• 49.1% Telephone
• 49.0% Magazine
• 33.5% Newspaper
• 30.1% Television
• 24.6% Radio

WiFi – Wireless transmission of Internet radio could change everything in the business of radio. Radio receivers that tap into home DSL connections deliver now over 10,000 channels of audio to those who’ve become early adopters. Sanyo recently became the first major electronics company to enter the WiFi radio arena. Chrysler upped the stakes by announcing that WiFi access will become part of its new models, bringing access to thousands of “radio stations” for in-car listening. (Of course, that assumes Chrysler will still be around to build the cars.) How will terrestrial radio compete with web channels that deliver local traffic and weather on demand? How will satellite fare against thousands of specialized music formats that go beyond its capabilities to offer diverse and eclectic programming? Broadcasters will have a short time horizon to solve this large and looming challenge.

ACCOUNTABILITY – As Internet advertising revenues surpassed those of radio in 2008, broadcasters will need to steal a page from the web to stay competitive. The days of brand advertising that just make consumers “feel good” have been supplanted by accountable, measurable direct response campaigns that achieve branding by justifying their expense and using sales revenues to fund the next campaign. CPMs and CPPs make a great starting point, but ROI is the alphabet triplet of tomorrow. Those who wave a ratings book and shout, “We’re #1” will find themselves outflanked and outbilled by stations who work to deliver and guarantee results. Welcome to the future of radio.

SPONSOR EVERYTHING – Beyond traditional spot advertising, we now have radio stations offering title sponsorship their broadcasting studios, in much the same way that sporting arenas sell their names to the highest bidders. “Blinks” insert two-to-five second messages reminiscent of the old “Loingine watch time” announcements of the 1940s. Look for more and more stations to find more and more ways to add clients’ names to everything from their web site to their station van. It’s all incremental revenue and it’s all not about to end anytime soon.

PANDORA’S BOX – Pandora Internet radio service, the free software program that lets users enter their favorite recording artists and create their own radio stations, is the #1 iPhone download application at the iTunes App Store. With 15,000 new downloads a day, an iPhone linked to Pandora and played through a car radio system may pose the next big threat to terrestrial radio. Another year, another potential giant killer.

THE NEXT GREAT PERSONALITIES – Anyone can spin the latest hits and craft an entertaining audio jukebox. But the local stations, satellite stations and streaming stations that will survive and thrive will be built on the strengths of top talent that can command attention and loyalty. For local music stations, this will require plenty of community exposure, making their air personalities hometown heroes on par with the local ball club’s home run hitter. For spoken word programming, the next great masters will break through the pack with an original spin on their genre. Look at how Jim Kramer changed the way we look at Wall Street compared to PBS’ Louis Rukeyser - or how Howard Stern blew away the Morning Zoo concept. Compelling, engaging air talent creates appointment listening. And that brand of excellence is the best deterrent to the wows of new technology.

IT’S THE ECONOMY, STUPID – The Fall of 2008 brought news that America has officially been in a recession since the Fall of 2007. The end of the Bush Administration, plummeting stocks on Wall Street and a half-dozen other factors took its toll on radio and just about every other advertising medium. BIA Advisory Services forecasted a 7% radio revenue decline for 2008, with little hope for bounce back in 2009.

SIRIUS/XM MERGER APPROVED – Reluctant approval by the FCC, following the lead of the DOJ, gave permission for the former satellite radio rivals to join as one. But with subscriber growth slowing and cash reserves dwindling, the question remains whether this cost-saving move will be enough to save the future of Sirius/XM Satellite.

OBAMA SPENDS RECORD AMOUNT ON RADIO – Pundits were awed at how Barack Obama masterfully worked the Internet to seed his war chest. But much of that money was spent on radio! Clear Channel claims that Obama outspent McCain 5-to-1 in the medium. In the Philadelphia alone, Obama ran 650 radio ads during election week, compared to 540 local TV and 120 cable TV commercials.

NIELSEN ENTERS THE RADIO RATINGS ARENA – The reigning king of television ratings entered into a limited arrangement with Cumulus and Clear Channel to provide audience measurement in 50 US markets, once annually. It’s unlikely that Nielsen would enter the space without plans to expand, creating competition for Arbitron and offering a choice to broadcasters.

COMBINED INTERNET AD REVENUES SURPASS RADIO – Radio’s role as the “seven percent solution” dwindled down closer to six, as total online advertising eclipsed the total dollars spent on radio. Newspapers suffered a steeper decline, but radio will need to paddle faster and use all of its resources to stay solvent and grow in 2009.

HD SPUTTERS; WiFi LOOMS – Radio’s future in High Definition took, at best, a step sideways as a promotional campaign trashing “the old AM and FM” was shelved for a new theme and direction. Still, most consumers don’t understand HD Radio or why they should invest hundreds in a new HD receiver. Meanwhile, automakers are exploring ways to deliver WiFi connectivity to automobiles, bringing the threat of 10,000 streaming audio signals a bit closer to dashboards everywhere.

RADIO GETS CREATIVE TO BOOST REVENUES – More and more stations learned and launched programs to generate revenues using their online presence. Driven by “free” air time, stations directed listeners to exclusive online content and built promising, profitable platforms to help make up the shortfall in a year where spot sales were sunk by recession.

PPM BLUES - Arbitron Personal People Meter (PPM) drew sharp criticism from minority station owners who argued that Arbitron’s under sampling of minority audiences have caused Urban and Hispanic radio audiences to partially disappear overnight. Threatened legal action from the NY Attorney General’s office, while invalid, drew more attention to the bugs in the PPM system at a time when Nielsen announced its foray into the radio ratings business.

INTEREP AND TRIBUNE DECLARE BANKRUPTCY – National radio rep firm Interep closed its doors, sending clients scampering to former rival Katz Radio. And multimedia company Tribune Broadcasting (primarily a newspaper and television owner) filed for Chapter 11 protection. Tribune’s assets include the Chicago Cubs and legendary Chicago radio station WLS-AM.

RUSH LIMBAUGH – And just in time for the Obama Years, Rush Limbaugh re-signed with Clear Channel and Premiere Radio for a multi-year deal in excess of $400 Million. El Rushbo now reaps the rewards of hosting America’s most listened talk radio program, celebrating his 20^th anniversary in radio with a new deal that extends his run through 2016.

I could try make a great sports analogy about how the one-two punch of a traditional radio buy layered with a radio promotional campaign is like the current heavyweight boxing champion knocking out his opponent with a pair of nunchuks.  However, I don’t know much about sports (obviously).

What I do know, however, is that when your media buyers and your promotions agency work together, your target consumer cannot possibly miss your messaging.

Think about it.  Your 30- or 60-second spots run for a week or two.  Then, just as frequency begins to build, on-air personalities launch a promotion where your brand is immersed in programming and they are reading live 10-second promotional mentions that are like mini-DR spots!  On top of that, the stations air recorded promotional announcements and provide website exposure, oftentimes including a dedicated contest page with copy, logos, video (if applicable) and link to your site.  These promotional elements are perfect for those who may have been channel surfing during some of your paid commercials.

For the right brand, promotions can work great as a stand alone, but, whenever there is a budget for both, you might as well hit the ball out of the park, or into the basket, or something like that!

Barbra Tabnick, Senior Account Manager

The most fun I ever had in radio was back in college, calling play-by-play for the Villanova Ice Cats hockey team. I was 20 years old, standing on a rickety metal milk carton at the far end of the Radnor Rink, separated from the players by a sheet of Plexiglas. I also had an on-air DJ shift (where I played my favorite music) and produced a weekly 15-minute showcase of original comedy sketches written and performed by a few like-minded crazies at WKVU, Villanova’s campus radio station.

And while I was having the time of my life flexing creativity in the medium I’d loved since childhood, deep down, I knew I didn’t have the pipes to make it as an on-air announcer in the real world – not unless I wanted to spend my career hopping across small markets, hoping I could pay the rent.

The right voice, I learned, would get the job and get the job done. The right voice can inspire confidence and sell product. This year, the even tones and articulate delivery of Barack Obama played a major role in getting the Junior Senator from Illinois elected to the highest office in these United States.

In advertising, a familiar voice – or an authoritative voice – can build brand and compel response to shorten radio’s marketing curve to profitability. James Earl Jones brought heavenly thunder to messages for AT&T and Verizon. William Shatner’s plucky delivery gave instant credibility to an unknown dot-com called priceline. Tom Bodett’s back porch crackle filled motel rooms and built the Motel 6 brand on radio.

Today, the rich timbre of Dennis Haysbert resonates to lend brand equity to Allstate, while Gilbert Gottfried’s quacky “AFLAC” have caused everyone to attempt their own “AFLAC” impersonation out loud, at least once. In every radio market, local on-air personalities trade on their “friendship” with listeners, lending their voices and endorsements on everything from weight loss products to online meeting solutions.

For years, I’ve been telling my nine-year old daughter that if she can master the English language, clearly convey her thoughts on paper and verbally articulate her thoughts with crisp elocution, she can open just about any door in this great big world. She tells me I tell her too many grown-up things, but that doesn’t stop me. Radio Dad knows the value of frequency and repetition.

All year long, I watched with rapt admiration as Barack Obama outclassed and outcooled his Democratic rivals and then diffused concerns over his inexperience by sounding downright presidential at the lectern opposite John McCain.

So the next time you’re casting voice talent to deliver your message, don’t underestimate the value of matching the right voice, tone and timbre to your message. Whether silky-smooth or gruff and unpolished, your voice talent is your brand representative, every bit as much as the medium is the message.
Mark Lipsky, President & CEO

Every year millions of Americans watch the last seconds of the old year tick away to reveal a brand new year. Resolutions are made. Some are kept. Some are not. Weight loss is among the top resolutions every year for many Americans as the first day of a new year gives people a reason to mark their calendars to begin their resolution.

Radio has long been an effective marketing medium to promote services that can “help people” and this broad category certainly includes weight loss. But when you hear a commercial about a weight loss program that sounds like it’s too good to be true, it usually is.

Broadcasters and marketers engaging in weight loss advertising are encouraged to visit this web site: www.ftc.gov/redflag/. Red Flag offers comprehensive information designed to help identify what false claims are and how to spot them.

Here are a few excerpts to help you avoid being taken for a ride. Use common sense. Always take time to review the content of the ads before airing. It protects your company from being known as one that promotes rip-offs. It prevents your listeners from being cheated plus there is also a good chance that if they are promoting bogus claims, they won’t pay their bills. Finally, ask yourself what will our audience take from this ad?

Be wary of ads that include mention of losing weight exceeding 1-3 pounds a week for more than 4 weeks. Or total weight loss of more than 15 pounds in any given time period. Question ads that refer to substantial weight loss with references to dropping dress sizes, losing inches and reducing body fat.

The Red Flag guidelines caution against claims that include the promise of substantial weight loss even after users stop using the product and products that will cause substantial weight loss for all users. No product works for everyone.

Website visitors can get information on organizations that help evaluate the validity of questionable advertising campaigns. Visitors can also learn how to file a complaint should they become a victim of a false claim.

All members of the media have a responsibility to their listeners and their advertisers to broadcast the truth. Avoid false advertising. If you think you have a questionable spot visit the site, there is a good chance your suspicion is on point.
Danny Ocean, Vice President/Director of Operations

Format Description:
Hot Talk is a format that has evolved as an alternative to traditional Talk Radio for men with an appetite for edgy content. Presented in a “bar/locker room” type atmosphere, its modest success has come mostly in morning drive and has been identified as “Real Radio” or “Free FM” by some. Available both via terrestrial and satellite radio, personalities like Howard Stern, Opie & Anthony and Adam Carolla while away the hours talking about girls, gambling, sex, beer, chicks, current events, babes, celebrities, sports, entertainment and women.

Audience:
18-49 Men

Key Radio Stations:
WJFK/Washington DC,KLSX/Los Angeles, XM/Sirius Satellite Radio, as well as internet stations like The Live Test Show, which showcases many diverse programs featuring Hot Talk.

DR Factor:
“Hot Talk” is a great place to reach men with very little spillover
to the female audience. As a foreground format, its programming content conditions listeners to pay attention to the spoken word, making this format a solid choice for products and services that match well to this format’s demographic.

For more information, visit:
Wikipedia
All Access
FMQB
KLSX
WJFK

In addition to the usual February holidays, there are plenty of anniversaries around which your brand can build an ear-catching radio promotion in 2009.

If your brand has anything to do with beauty or spa products, or anything that makes women feel or look more beautiful, celebrate the February 2^nd birthdays of two beautiful women – Christie Brinkley and Farah Fawcett. Ask listeners to submit then-and-now photos of themselves or someone they love that have proven beauty can be timeless. Winners get a day or week at a spa with a fellow beautiful soul, depending on your budget.

Many radio stations are obsessed with gossip surrounding our favorite Friends cast members. Why not celebrate Jennifer Aniston’s 40^th birthday on February 11^th by giving listeners a night out with their “friends” courtesy of your brand.

For brands targeting men, allow Rock stations to take advantage of the trashy and dramatic stories they like their listeners to tell when, during the week of February 13^th, we celebrate Jerry Springer’s 65^th birthday. Rock stations love to sprinkle their morning shows with manly men sharing the best fight stories, the best who-slept-with-whose-mom stories and other Springer-esque topics.

Then again, there is always the beloved Valentine’s Day promotion. It may not compare to Jerry! Jerry! Jerry!, but any brand can “show some love” and help a station’s listeners out in some way.

Send me an e-mail to brainstorm other ideas for your brand.

Barbra Tabnick, Senior Account Manager