Radio — R.I.P.?

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Recently, I heard someone who controls a very sizable media budget declare: “Radio is a dead medium!” He has moved all his ad dollars to other avenues…Radio gets $0. Period.

Is Radio dead?

Since leaving my management position in Radio a number of years ago, I must confess my Radio listening has declined dramatically. From listening almost constantly, I now listen to Radio…not at all. This was initially shocking to me — someone who was steeped in the magic of Radio since I was a pre-teen now moving into the ranks of a non-listener.

Inquiring of friends who are not in the industry elicits much the same response: little to no listening to Radio. Has Radio lost much of its audience? Could be.

What I know for certain is Radio people don’t use the medium the way “average” listeners do. And that could be the reason a growing number of people have abandoned Radio.

Don’t get me wrong. I still love Radio. It’s just that Radio is no longer the center of my life. I’ve become “normal”, and that could be the key.

It would be ideal if everyone working in Radio was able to take a year off. Get away from the day-to-day grind and start listening like a “regular” listener. I suspect the revelation would be profound. And the result could be a re-invigoration of Radio that would boost the medium far into the new century.

I ask again: is Radio dead?

The problem with being dead is that you don’t know you are. I hope Radio is not in that situation. But ultimately it depends on the listeners. And if they’ve decided Radio is no longer vital to their everyday lives, the medium I’ve loved for over a half century is in real trouble.

The Final AM Sign Off?

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The most recent buzz about AM Radio isn’t encouraging. Many have written off the band as consumers increasingly turn to FM and digital for entertainment.

So where is the surprise? Technologies advance, consumer preferences change, and time marches on.

If, like me, you’re old enough to remember the “golden age” of rock and roll, AM Radio was the medium everyone wanted. AM Radio launched Elvis, Jerry Lee, The Beatles, and countless others. Legendary stations such as WABC, WLS, KHJ, and KCBQ — to name but a few — brought music to millions of teens now into their senior citizen years. The memories are irreplaceable, but unfortunately the medium that delivered all this magic is not.

Again, where is the surprise? The AM generation moved from vinyl to cassette tape to CD’s and now streaming digital. The delivery method has changed, but the concept remains the same.

The truly sad part is the magic that made it all so special is gone. The terrific radio stations with personalities who drew millions have diminished to the point that most listeners can’t identify anyone past morning drive. For those of us who spent time DXing AM stations from hundreds of miles away, those evening jocks made the AM band sparkle like nothing ever heard on FM, let alone digital. It’s a world forever lost to those who have never experienced it.

So let AM slide quietly into oblivion. It was wonderful while it lasted. And if you lived it, the magic you experienced is a part of you that will never fade away.

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,
Years 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.