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.


At, 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.

Don’t Ask. Don’t Tell. Don’t Buy.

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Recently, the chairman of the Federal Communications Commission “clarified” that body’s latest dictate requiring a “non-discrimination disclaimer” be included on all broadcast advertising contracts. Chairman Julius Genechowski, displaying a level of naivete possible only by a government bureaucrat, expressed his belief that a station would routinely decline a schedule that even hinted at any discrimination bias.

Mr. Genechowski unfortunately conflates the rights of buyer and seller. Sellers, by law, are prohibited from discriminating. Buyers are not.

A Radio station cannot refuse an advertising schedule for reasons of race, ethnicity, sex, age, and all the rest covered under federal law. But under the FCC’s reasoning, an advertiser would be required to buy ad time on ALL stations in a market if the advertiser’s desire is to exclude certain ethnic groups. So let’s think about this for a moment. If you are a seller of western-style clothing and your research indicates listeners to country music stations are most likely to purchase your pointy-toed boots, you can no longer buy time on just the two country stations in town. No, now you must also buy the Hispanic and urban stations, even though no one in their audiences has ever stepped into your store, or is likely to regardless of how much you spend on the minority stations. And if you’re the country stations, you’ll be required to refuse the schedule if you learn the western store is not buying the other stations.

The bottom line is that the FCC is dictating a requirement that is unenforceable. Radio stations cannot dictate to advertisers where to spend their money (they’ve been trying to do that for 70 years without result). Under our society, a buyer has the freedom to invest his money wherever he wants. Placing the burden on stations to police an advertiser’s buying decisions is not only a P.C. bridge too far, it is jeopardizing the license of the station via the actions of a third party that is beyond the licensee’s control.

Instead of the stated goal of eliminating discrimination, the FCC has established a new frontier for “Don’t Ask. Don’t Tell.” Stations will include the mandated disclaimer, and won’t probe an advertiser’s intent. Client’s won’t tell the station about their other media buys.

And, if the commission persists in its folly, advertisers will exercise their ultimate option when it comes to purchasing Radio time: “Don’t Buy.” At a time when Radio is struggling to recover from government’s profligate spending and a depressed economy, the FCC’s timing is impeccable. And senseless.

No Tacos Tonight

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It’s Friday night and you’ve got dinner plans. You’ve been looking forward to enjoying the delicious tacos at your favorite Mexican restaurant. The food is so good that you went there Monday night and now it’s time for another visit.

Oh, sorry! You can’t go to your favorite Mexican eatery. The federal government has a regulation that requires you to evenly distribute your restaurant choices among all available ethnicities. Since you’ve already been to a Mexican restaurant, you must select from Greek, Italian, Chinese, or one of the other styles available.

If you’re licensed by the Federal Communications Commission, this scenario is not quite the joke it appears to be. New guidelines from the FCC require stations to include a disclaimer on proposals to advertisers reminding them that discrimination in the purchase of airtime is illegal. This tactic is designed to prevent agencies from enforcing advertiser dictates for certain formats. No more should advertisers be able to say “No Hispanic” or “No Urban”. If you want to advertise, you have to advertise to everybody.

Of course, this flies in the face of the concept of targeted marketing and practices that have worked well for hundreds of thousands of advertisers for over 50 years. Managing several country music stations over my career, I was frequently faced with “No Country” dictates. While I thought the advertisers were short-sighted in taking that choice, we didn’t try to force the advertiser to buy our station. Of course, we weren’t the federal government. But even if we were, that approach would have been wrong. And it is wrong today.

In a free society, an advertiser — or a dining patron — should be free to choose where he spends his money. Forcing an advertiser to buy all the stations in a market without regard to format or target audience is typical bureaucratic thinking. It is not part of the fabric of American life, and hopefully common sense will prevail.

So enjoy your choice of restaurant — for the moment. We haven’t as yet progressed to the point where government is telling you where you can eat. But looking at this FCC mandate, one wonders if your favorite tacos might soon be on someones regulatory list.

Radio — Fear No Evil

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In Greek mythology, the first female — Pandora — was given a box (actually a jar) she was told not to open. Of course, she failed to heed the warning and opened the box…allowing all the evils inside to escape and plague the inhabitants of the earth.

As of late, the internet web site Pandora is being touted as Radio’s evil — the threat being that the streaming music service provided by Pandora will result in the demise of traditional Radio.

It could happen, if Pandora could somehow manage to

  • Provide local news content
  • Update listeners on local weather
  • Furnish local emergency information during floods, tornadoes, blizzards, earthquakes, and other natural disasters
  • Participate in local events such as fund drives and other public service events
  • Have local personalities appear at community events to interact with listeners
  • Have local personalities, period

The key word in each of the above: local.

I first found Pandora a couple of years ago, apparently shortly after the service was inaugurated. While I enjoyed the uninterrupted music, the lack of personality — of fun — made the service little more than a jukebox. After a few months, I stopped listening, choosing instead to avail myself of my own extensive music library on my computer’s hard drive. My custom-programmed jukebox was a better choice for me than Pandora’s semi-custom jukebox.

Is there a place for Pandora? Certainly. With the projected increase in in-car audio streaming, Pandora will certainly be a major competitor for Radio.

But will Pandora cause Radio’s demise? No. Hopefully, it will cause Radio to start doing a better job in the areas I outlined above.

When it comes to local content, Radio is king. Pandora will find a long, difficult road ahead in trying to approach the throne.

Selling Without Numbers

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When station revenues begin to decline, management quite sensibly looks to reduce expenses. One obvious example of red ink on the P&L is the monthly payment to Arbitron (or whatever ratings service your station employs). While it’s tempting to not renew the ratings contract and pocket the savings, most sales people shudder at the thought of selling without “numbers”.

In major markets having access to ratings information is vital. But in smaller markets, where local direct is king, the numbers are less important. Experience shows that less scrupulous stations frequently compensate for bad ratings by distorting the numbers. This adds to the clients’ general confusion and distrust of ratings in general. Who do you trust when every station is claiming “we’re number one!”?

At least one market manager decided to try a different approach. Taking the bold step of not renewing his ratings contract, he took the rather substantial sum he saved and applied it to persuading clients to make year-long commitments to his stations. When key major advertisers were offered an all-expense-paid two week vacation for two in Hawaii in return for a year’s contract with the station, the result was a 37% increase in station revenue.

Advertisers are people, too. They respond to personal inducement just as would anyone else. The money freed up by dropping your ratings service can be multiplied via innovative approaches into more profit for your stations. Once sales people see the potential, the question of selling without numbers becomes less important. That’s because sales reps are people, too. And they always love making more sales.

Goodbye 2010

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It has been another long year of discontent on the economic front and Radio, to my disappointment, has yet to recover along with the rest of the country.

With two years to encourage renewed economic growth, the current administration has been able to barely make the needle quiver. While Radio station operation is a far cry from managing the fate of any nation — let alone the United States — any manager with a modicum of effort can effect a turnaround of an ailing station within two years. Yet here we are, two years after the arrival of “change”, mired in near-10% unemployment, with no sign of any improvement on the horizon.

Instead of taking steps to boost employment and encourage the growth of business, the government has taken almost every step possible to slow the economy. Uncertainty on taxes (then extending the current rates for only two years), new regulations that serve to restrict bank loans, extending unfunded jobless benefits (for which businesses bear the burden), and talk of increasing the minimum wage to $9.50 an hour — a definite job-killer.

It will require a truly pro-business administration and congress to get the country back on track to prosperity. And I don’t see that happening until possibly 2013, or beyond.

So, goodbye 2010. You’ve been a lackluster year, and I hope you won’t be joined by 2011 and 2012. But I wouldn’t bet my Radio station on it.