Out, damn’d spot!

28Lady Macbeth says this line in Act 5, scene 1. The line has made for ironic jokes and marketing schemes. The Bard’s lady, where the blood spot becomes dyed into her conscience and where the king and queen persist in imagining that physical actions can root out psychological demons, Shakespeare’s Macbeth is an exposition of how wrong they are.

This all came back to me when I read about former CBS Radio President Dan Mason speaking at Radio Ink’s Hispanic Radio Conference in March about how many radio spots should run in a typical hour of radio programming; his answer was 8 to 10 units. Whereas the typical radio station these days is running 14, 16, 17 (or more) units every hour and Mason says that’s probably too much.

On Twitter Radio Ink tweeted “Is Dan Mason correct? You should be playing 8-10 units per hour.” I tweeted back “YES.” To which Dan Mason tweeted back “@DickTaylor @RadioInk not easy to execute in today’s environment but this is the goal we have to work toward!” And to which I then responded, “@radiodanmason @RadioInk Agreed. No one ever said it would be easy. But moving in this direction needs to be the industry goal.”

Then the next day Radio Ink printed this headline as their lead story “We Would Pay More For Shorter Stopsets,” from ad agency executives Blair Overesch and Jeff Chase of Walz Tetrick Advertising in Kansas City. Their clients include the World Champion Kansas City Royals and Dairy Queen. They bemoan how their clients become lost in long horrible-sounding commercial clusters.

The Birth of the Radio Ad

When the commercial radio was born in 1920 the only way operators of radio stations could figure out to support the expenses that came with running a radio station was by the sale of radio advertising. They copied the model of newspapers and magazines of that time. And here we are almost a hundred years later and nothing has really changed in this business model, except the birth of the Internet. The Internet of Things (IoT) has been the big disruptor of just about every business model.

Look Outside Your Industry for New Ideas

It’s said that Henry Ford came up with the idea of the automobile assembly line when he visited the meat packing plants of Chicago. There he witnessed how cows were disassembled. It was done on a disassembly line. And so the story goes that Ford had an “Ah hah moment.”

Radio needs an “Ah hah moment” when it comes to its business model. But what could it possibly be? Where would we go, as an industry, to find this new business model? Not in the world of ad supported media, that’s for certain.

Casino Gambling & Changing Business Models

Casinos in America started in Nevada in 1931. New Jersey would be the second state in America to legalize casino gambling in 1978. So for almost half a decade, Nevada – Reno & Las Vegas – had a monopoly on this type of gambling activity. New Jersey would also enjoy a boom from casino gambling during the 80s and early 90s as the seaside resort saw a new casino opening up every year. Casinos made money on gambling. Period.

What changed was the wave of states legalizing casino gaming all across America in their search for new revenue sources. Vegas and Atlantic City would find that trying to live off of just gambling handles was quickly eroding. Their business model was being disrupted.

The Most Profitable Resort in Las Vegas

Can you guess which Las Vegas casino makes the most money? It’s not located in the heart of the “The Strip” where thousands of visitors walk by every day. It’s actually Wynn Resorts.

Billions of dollars move through Las Vegas every year. Casino operators do everything they can think of to have visitors gamble away as much of their money as possible while they are in Vegas. But Wynn changed the casino business model for his properties. Steve Wynn decided that with the explosion of casinos across America, he needed to move in a new direction. He needed to become less dependent on high rollers sitting at gaming tables for the bulk of his revenue. Non-gaming activities at Wynn’s Wynn & Encore Casinos account for 67% of the company’s revenues.

Focused On the User Experience

Steve Wynn is totally focused on the visitor or user experience when he builds a casino. He gives his full attention to every detail. This type of focus can be seen in the Bellagio, a casino Steve Wynn built over 16 years ago and has since sold. It’s number two in revenues in Vegas.

Becoming Less Dependent on Advertising

The smart radio operator will take a chapter from Steve Wynn’s playbook and move their stations off of full dependency on the ad supported business model. Steve Price at Townsquare Media appears to be doing just that with ad supported radio at the hub of their strategy. Price said he wants Townsquare to be the largest local digital content business, the largest live event business, and the largest digital marketing services business in their radio markets. Chairman and CEO Steven Price says, “We believe our diversified strategy remains sound, demonstrated by the stability of our local advertising business and the outsized growth in our other businesses.  In addition, we further diversified our business, with approximately half of revenue now derived from sources other than the sale of terrestrial radio advertising.”

Monetizing a Media Company Beyond Advertising

It’s not about throwing the baby out with the bath water. Steve Wynn didn’t abandon gambling. In fact, Steve Wynn makes more money than every other casino operator in Vegas by doing everything just a little bit better than his competitors – both in Vegas as well as elsewhere. He just unhitched his properties from total dependence on gambling revenues. I believe Steve Price is pursuing a similar path as Wynn with his media company. I believe that Townsquare can run 8 to 10 radio ads in an hour and make money. Moreover, make money for his advertisers by putting them in a radio spotlight and increase TSL and audience ratings by making his listeners happy with the proper balance of advertising and entertainment. Done in this way it is a win-win-win.

What’s your plan?

19 Comments

Filed under Education, Mentor, Radio, Sales, Uncategorized

19 responses to “Out, damn’d spot!

  1. The long stop sets ARE an issue. And some companies know that. They’ve done the research. They KNOW listeners perception of a long cluster is based upon number of units not minute length. And yet, because they don’t want to seem “out of step” with what everybody else is doing… (and perhaps because they are afraid to tell the client no and lose a buy), they’re willing to potentially alienate the listener. Radio…wake up! My mother told me decades ago, “If someone told you everyone was jumping off a cliff, it doesn’t mean you should do it, too!”

    Liked by 1 person

  2. One of my readers sent me this audio clip of a commercial break on an Irish radio station that ran 14 units of spots in a single 4 minute break.

    https://audioboom.com/boos/2616318-ad-break-overload

    I don’t know about you, but not only did I not remember any of them, just listening to this commercial break stressed me out. And I don’t listen to the radio to get stressed out, do you?

    Like

  3. Hal Widsten

    Six two-unit breaks per hour. Rate card with a sliding scale based on percentage of sell-out. Win the programming battle and make a bunch of money. That’s how we did it.

    Liked by 1 person

  4. James Heckel

    I remember when Howard Stern’s broadcasts would have stopsets of 12-14 minutes. I thought, “Who would stay tuned that long? And pity the poor advertisers who weren’t the first two or three in the cue.” Two units x six per hour sounds about right to minimize tuneouts.

    Liked by 1 person

    • Howard Stern was probably the exception – in many ways.

      I remember asking the Director of Sales at WNBC when Howard Stern did afternoon drive what was the fewest number of commercials they would sell to an advertiser. Her answer: ONE.

      One? Yes, if it ran in Howard Stern and he read the commercial LIVE. Howard was that powerful.

      But as they usually say in disclaimers … your mileage may vary.

      Like

  5. I love radio. I loved being in the radio business. I do not love the business or radio which is what the industry became long ago. 12 minute stop sets (!) and running 20+ commercial minutes an hour remain examples of radio’s abject greed which has forced listeners to other avenues to get news, talk and music. And there’s no shortage of avenues to choose from in 2016. Still radio does not change or even consider adapting with the times. Insanity is doing the same thing over and over but expecting a different result. And radio went insane long ago. Agencies – like mine for 38 years in Northern California – pursue effective, efficient marketing avenues for their clients. And radio wonders aloud why its market share of ad dollars continue to dwindle. Reality is people are out of the habit of radio. They were forced out from radio, by radio. And that insanity continues on all days ending in ‘y’ …

    Like

    • Kevin Fodor

      Bob: I hope you’re aware that back in the 1960’s and even the early 70’s AM radio stations routinely aired 18 minutes of commercials per hour. During political season, that was often pushed to 21…even 24 minutes per hour. Don’t get me wrong. I’m not a big fan of what’s going on right now, though I understand it’s because the guys in YOUR industry are demanding shorter and cheaper ads. Radio is complying to YOUR wishes. And you are totally wrong that “people are out of the habit of radio”. I work for a top rated station that has about 200,000 people a week who would disagree with you. I would love to see the business go back to shorter sets of longer ads. But as long as advertisers demand 30’s, 15’s and even shorter ads, you’re going to get clutter sets. I admit, though, if radio would put more time and effort into creative, it might sound better.

      Like

      • Ah, Kevin, would that these were the 60’s and 70’s when AM radio was the only choice with its 18-minute stop sets. Now 55+ years later, there are a plethora of options to terrestrial radio which – I don’t see an argument here – has not only affected listening habits of radio audiences but also diluted them. Radio’s business model hasn’t progressed from the 60’s and 70’s but the world has. There were only some 6 TV stations back in the day, too, while viewers today choose from 100+ with basic cable. I believe you missed my point about what an advertising agency wants. Agencies are paid to achieve results for our clients and spots buried in 5-minutes+ stop sets with 10+ units or more are not – can not – be effective for the client. Pick whatever study you like, people don’t have the patience or the time today that they likely had 5 decades, even 5 years ago. That’s why 60-second spots evolved to 30-seconds, then 15’s, 10’s and 5’s. Radio’s answer has been to throw all those spots together and pile them on. Bottom-line – clutter sets, cluster sets, etc. – were created to enhance radio station quarter-hour ratings. We both know this game. I was in radio for 20 years both on-the-air and as a National PD. But ratings have no relevance to the advertising effectiveness. If you believe that my client’s spot that’s jammed in the middle of a 5-minute, 10-unit stop set is going to be remembered and effective … then you and I are miles apart. Agencies demand cheaper prices from radio because the industry today is a commodity with sound-alike stations and formats across the dial, differences between them discerned only by those IN radio; not the people listening TO radio. Digital advertising has impacted radio budgets because radio does not source well – it never has – and digital does. So from an agency and client perspective, which appears to be the better buy? Today is a brave new world for every one living in it, except the radio industry. Reach isn’t the issue but radio radio continues to pitch it. Audio commercials as an effective selling medium is center-stage and cluster commercial sets are killing the proposition. Station values, stock prices and billings confirm the world has changed but radio is still not listening …

        Like

      • Lots of meat on those bones Bob Ray. Thank you for contributing to the discussion.

        Like

      • I totally agree the current commercial clusters are a major issue. I’ve said that all along. What I believe is funny…is that I know for a fact many of the major broadcasting companies have already done the research. They know 20 “units” in a stop set are the wrong way to go. (And they would be right). But they are either a.) afraid of “telling the client no” or b.) have not developed any better ideas. Which is sad, because there are guys like me out here wanting to come up with solutions, but no one will ask.

        Liked by 1 person

  6. Hey Dick,
    I can remember trying to program around 20-23 minutes per hour in the summertime! I came up with a ‘Hot Clock’ that dumped the bulk of the spots at the :50 break, figuring that I could sacrifice 1 quarter hour to gain three.

    I noticed the past couple of years that TV stations are doing the same.
    I’ve always been for fewer, more expensive spots, and used to always fight the sales dept. about that.
    I like your blogs, keep them coming!

    Liked by 1 person

  7. Aaron Read

    Wait…the Wynn & Encore casinos ARE on the Strip. They’re south of where the Sahara (now SLS) and Riviera (demolished) were.

    Like

    • The borders of “The Strip” have been defined differently by different publications/organizations. Some put the northern border all the way out to the Stratosphere.

      I would say that the Wynn Resorts currently mark the northern end of The Strip and you only walk to them if you want to go to them. It’s a hike.

      When I’m in Las Vegas, walking past the Wynn Resorts is not part of my stroll of The Strip.

      Like

      • Ok, fair enough. I usually considered The Riviera the northern end because it’s parallel to the LVCC, and the only reason I’m ever in Vegas is for NAB at the LVCC.

        You are definitely correct that it’s a hike, although anything in Vegas is a hike. It always amazes me how big their “blocks” are. You can look on a map and think something is only a block or two away and yet in reality it’s like a twenty minute walk! 🙂

        FWIW, I often stay at the Stratosphere and even I would consider that “off the Strip”. I think they even tout that in their own promotional literature as the hotel is priced as being “off Strip”.

        Liked by 1 person

  8. aaronread1

    Actually the gold standard would technically be public radio, which typically has about 2:30 of total break time, of which perhaps 1:00 to 1:30 could be spots (and that’d be a lot, since they’re all 10-15 seconds, with the occasional 30 second).

    Liked by 1 person

  9. jay

    I don’t know that I’d be pointing to Townsquare as the model to follow when looking for revenue outside of the core of broadcasting. I work for Townsquare, and can tell you that today, broadcast is an afterthought. A total afterthought. The radio stations stop sets are loaded down with all this promotion for Townsquare digital-this, collective-that and event-this and that.

    And worse, so are the people. In the cluster I work for, there is only ONE person handling digital operations. Everything else gets loaded onto the radio people. Promotions also handles events. Talent handles content (and god forbid you don’t meet your content/video quota). Sales handles selling digital services, events, etc. My PD is so overloaded having to handle two big stations, plus supervising, plus an air shift, plus having his own content quota (the same amount as anyone else), plus event appearances that he literally has no time to program. He spends 30 minutes a week on music. Everyday, he hits the log button on Selector without even a couple of minutes to look over the logs (for two stations) to massage and make sure all is good. He has a morning guy who can help sometimes, but he’s loaded down with his own work. There are no other live persons on his stations. There’s another PD in the cluster that does the same, with two more stations. And the production guy oversees a station, with everything that entails, as well as dealing with his own content quota, as well as an FM air shift.

    Nope, Townsquare just isn’t the model you really want to look at, unless you want to do it right. Have a digital department, with people who handle just that. Have an event department, with event people running it. And let the radio people handle the broadcast department. But that’s expensive. And since cutting costs and low-expense operation is the name of the game, we’ve lost.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s