55 People

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Almost every advertiser I’ve known possessed little to no idea of how to measure the success of his ad investment. If you were to ask most advertisers how many responses are required to make their ad campaign profitable, the answer would most likely be: “A lot!”

Yet, there are a few analytically-minded retailers who think they have a good idea how many responses are needed to achieve their sales goals. Unfortunately, the number they come up with is usually off by at least an order of magnitude.

One car dealer we worked with described a successful ad campaign as pulling in “400 to 500 people” per week. When those numbers did not materialize, he determined the campaign a failure and chalked up the deficiency as being the fault of…you guessed it: Radio!

Yet a little work with the Return On Investment Calculator demonstrated that not only were his expectations too high, but the message he was conveying was not worthy of a response.

For the purposes of this post, we’ll say our car dealer was willing to spend $8,000 per week. He would like a 7% return on his investment — in other words, he would like enough sales to recover his $8,000 plus make an additional $560 to boot. His profit margin was 5% and his average sale for a new vehicle was $15,500. He also closed 1 out of every 5 prospects.

With all this information, and the cume of our small station (49,500 people per week), the calculator determined that only 55.2 people needed to respond to his message in order for him to close 11.05 of them. This would let him garner gross sales of $171,200 and recover all his investment plus make the extra $560. The 55.2 people worked out to be 0.111616 percent of the cume (slightly over a tenth of a percent).

So the station’s question to him was: “When our 49,500 listeners hear your message, will 56 of them find it compelling enough to respond?”

To his credit, the auto dealer recognized his message fell short of being compelling. We were able to work with him to devise a message the stood out, and actually exceeded the response he needed to hit his goal. After this, he became one of the best clients on our station.

The bottom line: it does not take thousands or even hundreds of listeners to respond to an advertiser’s message. It only requires a schedule sufficient to reach the cume and a message worthy of generating a response. The actual numbers needed might surprise even you.

Becoming Pandora

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My apologies for the lack of blog posts over the past couple of years. Both a change at the personal level and at the business level have claimed much of my time. Hopefully, the activity on this blog will increase substantially in the days to come.

The Pandora music service has developed into somewhat of a bugaboo for Radio since its inception. I confess I was an early adopter of Pandora, but I have not logged in to it for over two years. Over time, Pandora lost its appeal, and I’m somewhat puzzled why some Radio execs fret over the service’s inroads on traditional broadcast.

You see, Pandora is not Radio, and it never can be. Not because of what Pandora is — but because of what Pandora is not.

Pandora is not one of your air personalities riding an elephant in the circus parade. Pandora is not your morning news man giving blood at a Red Cross blood drive. Pandora is not your station broadcasting live from a business grand opening. Pandora is not providing updates on local weather conditions. Pandora is not giving the current time and temperature.

These things make Radio what Pandora can never be: live, local, and relevant.

Now, it’s true. Many stations have become little more than a jukebox with commercials. And if your stations fall into that category, Pandora is probably breathing down your neck. Why should someone tune in to your station when they can get what they need via the web? But if your station excels in local involvement, you’ve staked out territory that Pandora can never enter.

Radio’s problem with Pandora has been that for too long and in too many markets Radio has become Pandora. The solution is simple: it’s time to become Radio again.

Years

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Delena Kelley, October 2, 1950 – November 22, 2011

“Years of hanging on
To dreams already gone,
Dreams of wishing you were here.
After all this time you`d think I wouldn’t cry
It`s just that I still love you after all these years.”

                     — Barbara Mandrell, “Years”

One Year

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“And now, I’m glad I didn’t know
the way it all would end, the way it all would go.
Our lives are better left to chance;
I could have missed the pain,
but I’d have had to miss the dance.”

                      — Garth Brooks, “The Dance”

Goodbye, Delena

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My wife, partner, and friend of 40 years, Delena “Dee” Kelley, was laid to rest today.

We met 41 years ago — November 25, 1970 — and I have cherished every moment of our time together, even when we occasionally disagreed on topics large and small. When Delena was diagnosed with liver disease in early October, we had no idea of the severity of her affliction. By the end of October, both of us understood that her remaining time was short. She passed away Tuesday morning, November 22nd. And the world will never be quite the same without her.

For over 20 years, we worked side-by-side in a series of Radio stations, from small FM’s to multi-station markets. Thanks to Delena’s skill at organizing and training sales staffs, as well as creating exceptional promotions, our stations blossomed. Along the way, we worked with scores of very talented Radio people. Unfortunately, Delena did not get a chance to realize how profound was her influence on those she helped train. Many of those she mentored have gone on to successful careers both in and out of Radio. I consider their achievements to be the greatest tribute to Delena’s training and motivational skills.

One of those who benefited most from Delena’s guidance and instruction was our daughter, Carrie. She grew up in Radio, performing every job from board operator to top salesperson. Carrie went on to excel in sales for Clear Channel and CBS before leaving Radio for other pursuits. Both Carrie and I feel Delena’s loss deeply.

Delena’s name will not appear on the pages of Radio Ink, be noted by the media “movers and shakers”, or be listed in the Radio Hall of Fame. But her legacy will live on in those whom she trained, and with her husband who will carry her in his heart for the remainder of his days.

Goodbye, Delena. I love you so.

The Mysteries of Supply and Demand

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Most people intuitively understand the concept of supply and demand. When you have an abundance of something (bananas, I-Pods, gasoline) and demand is low, prices decrease. When those same products are short in supply and demand is high, prices tend to increase. Despite the best efforts of man and government to the contrary, the supply and demand concept still prevails.

And it is especially relevant for Radio.

A check of your inventory reveals you have a limited number of slots for advertisements. Unlike the newspaper that can add pages when demand for space is high (and remove them when it’s not), your stations can’t add or remove hours from the day. And while some stations with live formats will cram in extra ads when the demand for spots is heavy, listeners have supply and demand working for them, as well. When the supply of ads increases, demand for your air sound decreases, and listeners migrate elsewhere.

Achieving a balance of supply and demand in your ad sales is a crucial factor in maintaining profitability. When I was a newbie sales rep at my first station, the general manager made up the ad rates once or twice a week. Later, when I was managing a group of stations, I realized there had to be a better way than “trusting my gut” to price our air time.

The answer, of course, was yield management.

Surprising to me, even after our group of stations experienced a dramatic revenue increase using true supply and demand pricing, managers of other markets in our company were reluctant to take the plunge. Old habits die hard. Even managers — especially managers — can be reluctant to trade their known, comfortable methods to embrace an unknown idea that might disrupt the “normal” flow of business.

In the case of our stations, we had hit a revenue plateau that required a new solution because the old way was no longer working. If your stations are struggling in this difficult economy that apparently won’t be reviving soon, and you haven’t yet embraced yield management, now would be an excellent time to break free of what’s no longer working.

Once you start enjoying the benefits, you’ll find it a mystery why you waited so long.

When You Don’t Care Enough…

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Hallmark Cards adopted the slogan “When you care enough to send the very best” to distinguish their line of greeting cards from the competition. It has served them well over the years mainly because it is a “truism” — when one really cares, only the very best will do.

In 2011, how are your stations doing in sending “the very best” to listeners?

Last week, I was listening to an AM station — one of several owned by a major chain in the Orlando market — and heard far less than the very best. Twice within two days, this station broadcast two announcements simultaneously, resulting in a mish-mash of audio that was incomprehensible. On a Friday morning, they provided a detailed weather forecast — for Thursday!

This situation is all too often typical of operators with too many stations and not enough personnel.  It is also why most stand-alone stations excel in their markets; the staff is focused on delivering the very best product…because it is their only product. When a company adds a second station to their lineup, their 100% effort becomes 50-50. Or more likely 90/10 as the trend is to focus on the major revenue source and ignore the lesser. This problem is compounded when adding a third, fourth, or fifth station.

Management must pay attention to the details on all the stations in their cluster. If it is not important to management, it won’t be important to the employees. The adage “employees respect what management inspects” is another truism that still applies today.

When a station doesn’t care about its listeners, the listeners soon return the favor. And they won’t send you a sympathy card — they’ll just turn the dial.

Eliminate the Debt Ceiling

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From operating a Radio station to your personal finances, everyone has to abide by a budget. Your personal economic situation might not be guided by a plan on paper (or in a spreadsheet), but it is quickly obvious to even the most financially clueless that you cannot continue to spend more than you accumulate.

Unless you are the government of the United States.

In that case, the good times never end. Those in control of the country’s purse strings have — for the past several decades — opted to spend much, much more than is actually in the nation’s coffers. But not to worry. Being as it is the government we’re talking about, they can a) increase taxes; b) borrow more; and/or c) print money. What could go wrong?

Now, there looms the specter of exceeding the “debt ceiling”; the amount of money authorized by congress for the government to borrow in order that we may continue to spend that which we do not have. Unlike those of us dealing with MasterCard or Visa, the government routinely increases the amount of money the nation can borrow. This would be as if you could call up your credit card company and inform them they are increasing your debt limit to an amount you specify. Try doing that tomorrow and see how long it takes them to stop laughing.

But if our betters in congress choose to increase the debt limit each time the country bumps up against that pesky boundary, why have the limit at all? If government “stimulus” is good for the economy, let’s just do away with the debt limit entirely and spend, spend, spend!

Think of it: we could borrow trillions…quadrillions…(whatever comes after quadrillions). If unbridled spending is actually beneficial for the nation and its citizens, let’s borrow every dollar, peso, yen, ruble, mark, and pound in existence! No more limits! We could give each citizen 100 trillion dollars and end poverty completely.

Of course, this scheme is quite insane. Not even the United States can escape the consequences of unfettered borrowing. Sooner or later, the money must be repaid. And congress, as well as this clueless administration, knows it.

So if there is to be a debt limit — and in a sane world, this cannot be avoided — it must truly be a limit. A boundary beyond which we cannot pass.

As is typical of the Washington crowd, financial Armageddon is predicted if the debt limit is not increased. Contrary to their claims, the United States will not default on its obligations if reality triumphs. We will pay those obligations due, and be forced to reduce or eliminate those optional expenses we cannot afford. This is secret code for cutting expenditures. Which is the whole point of the exercise.

If the debt limit is to mean anything at all, it must be respected. As with your household, when you run out of money and the credit cards are maxed, you stop spending. The alternative will increase the nation’s slide to complete economic collapse, and the end of the United States as we know it.

Clutter? Ya Think?

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There was recently much buzz in the trade press about clutter on Radio. This revelation was about as shocking as announcing there are peanuts in peanut butter or corruption in government. Of course Radio is cluttered, and it’s primarily due to the never-ending desire of owners for increased revenue.

Back in the early days of Radio — when the F.C.C. was only concerned with eliminating interference between licensed stations (its original purpose) — there were essentially no limits on the number and length of commercials that could be broadcast. It was only common sense among programmers that allowed them to understand that listeners wanted entertainment first and would tolerate only so many ads before turning the dial.

When the government via the F.C.C. mandated limits on commercials, those limits were generous: no more than 18 minutes of ads per hour. Most Radio broadcasters eventually became much more conservative, with some stations airing only nine ads an hour. Alas, this is now history.

Today, commercials are back with a vengeance. While some music stations still air a modest number of commercials, they air them in one or two breaks that last for up to six minutes — an eternity for listeners.

But talk Radio has become the worst offender. In an effort to obtain maximum revenue, the number of 15, 10, and 5 second ads has become overwhelming. And any programmer who thinks this overload of ads doesn’t affect listening should sit in the back seat of any commuter vehicle and watch how fast the channel is changed when the break begins.

Unfortunately, clutter knows no bounds. It extends to the mindless chatter of the majority of local Radio “talent” in almost every market. A mentor during my early days in the industry revealed a pearl of wisdom: “Most DJ’s confuse talking with personality. They aren’t the same thing.” This mentor stressed the rule of focusing on one thought per break — the next live broadcast or the current contest or a teaser for the next song coming up…but never all of them, or even two of them. Just one.

When a broadcast professional leaves the industry, he will soon start listening to Radio as an ordinary consumer. Now, he hears things differently. The many program elements he tolerated as an insider have suddenly morphed into… well, clutter. There’s no other word for it. And it’s why alternatives like Pandora have found a prominent place in many listeners’ media mix.

So, yes — there is far too much clutter on Radio. Now the real question: what’s Radio going to do about it?

One Small Step for Issues and Programs

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One of the most painful radio station experiences is being forced to give away profits. Specifically, giving away cash in the form of an F.C.C. fine. Yet several times a year I am amazed to see stations forced to surrender thousands of dollars — often ten thousand or more — in fines because of missing or inadequate public files.

When assuming the management of a newly acquired station, my first action was always to examine the public file — especially the Issues and Programs section. It appears that shortcomings in the Issues and Programs List are most often the cause of commission fines. This was certainly the case with each new station I managed; the Issues and Programs List was often either sparse or absent.

The F.C.C. is reasonably clear about the requirements for Issues and Programs Lists. However, a shocking number of licensees are either ignorant or indifferent to these regulations.

(SHAMELESS SELF-PROMOTION ALERT!)

At Radio3K.com, we debated for several months over the creation of a new application designed to help stations do a better job with their Issues and Programs Lists. Our natural inclination is to stay as far away from F.C.C. issues as possible. However, the number of fines relating to Issues and Programs Lists (and the amount of those fines) finally prompted us to develop and release that new application.

The program is called QuIPList (for “Quarterly Issues and Programs List”) and is a management system designed to help you organize your community issues and responsive programs. You can read more about the program at the link, but the bottom line is that QuIPList delivers your printed Issues and Programs List in a format recommended by attorneys knowledgeable of F.C.C. requirements, ready for placing in your public file. You can optionally generate the Issues and Programs List as a PDF file, easily placed on your station’s web site (recommended by the F.C.C.). Follow the link to download QuIPList and try it free for 30 days.

Of course, you will still have to determine relevant community issues and devise responsive programming for your stations. QuIPList is not a miracle worker, but it is a management system that will help you produce the necessary documentation to avoid expensive penalties provided you supply appropriate content.

Undoubtedly, there will continue to be stations that try to skimp on their Issues and Programs Lists (such as running only Public Service Announcements in place of true issue-oriented programming). And the F.C.C. will continue to issue thousands of dollars in fines. If our QuIPList application helps you avoid even one fine, it will be a step in the right direction. And maybe that’s all we can hope for.