A RISKY MOVE FOR RADIO? Stacey Burling – Philadelphia Inquirer
Clear Channel's "Less Is More" campaign urges advertisers to pay more for shorter ads. But research shows it's not such a great deal.
After Clear Channel, the nation's biggest radio station owner, started pushing advertisers to buy shorter, more expensive ads, David Allan, a St. Joseph's University marketing professor, decided to study whether that's a good deal.
It's not, he concluded.
Allan, a former disc jockey and radio station executive, says the 30-second ads - with asking prices at 70 to 80 percent of 60-second ads - are only about half as effective for conveying some kinds of messages.
The question of which ads work best and how much they're worth grows more important as local radio stations grapple with new competitors that don't have commercials: satellite radio and devices like the iPod. Late in 2004, Clear Channel, which owns more than 1,200 radio stations, including six in Philadelphia, started its controversial "Less Is More" campaign aimed at reducing airway ad clutter while bolstering revenue.
Since then, ratings have improved. But Clear Channel's radio broadcasting revenue fell 6 percent in 2005 to $3.53 billion before rebounding 5 percent in this year's first quarter.
"Clear Channel is kind of the guinea pig here and if it works everybody else will probably cut inventory," said David Bank, an industry analyst with RBC Capital Markets. Inventory is the amount of commercial time available for sale.
Clear Channel did not respond to requests for comment. On its Web site, the company says people are more likely to listen to ads when they are shorter and there are fewer of them. It cites research, which it funded, showing that recall can be just as good for the shorter ads. It did not define recall and did not respond to a request to see the full study.
Officials at companies that specialize in buying advertising time say they have often been able to negotiate rates well below Clear Channel's asking prices. These media buyers said they still bought longer ads when they thought that made the most sense for their clients.
Mary Meder, president of Harmelin Media in Bala Cynwyd, said she thought Clear Channel was "still fighting an uphill battle to convince buyers that" the shorter commercials were "the right strategic way to go."
On the other hand, Ray Mayo, managing director of MayoSeitz Media in Blue Bell, said he was "definitely coming around" to the shorter ads. "I think that we better get used to shorter unit lengths in all media," he said. "I also think that the consumer has a shorter attention span, and shorter than ever before."
Intrigued by the debate, Allan got a grant from the National Association of Broadcasters to study the issue. He played for 85 St. Joe's students four 30- and 60-second commercials from Macy's, Home Depot, Cavit wine, and LasikPlus Vision Center, embedded in a pop music format.
He found that the shorter ads were about 75 percent as good as the long ones at promoting brands. But the short commercials were only half as good at conveying the more specific information that was the spots' raison d'etre - like what was on sale.
As a result, Allan thinks the shorter ads should cost only half as much as the longer ones. He now wants to study whether running a short ad twice is as effective as running a long one.
He thinks radio stations can make the short ads work, maybe by selling more of them. And, he thinks stations could make ads more palatable by telling listeners why they're necessary - it's how stations pay their bills - and explaining that listening is the cost of "free" radio. "I'm a radio guy, so I'm looking for radio to keep all its money," he said. "I'm not looking to throw anybody under the bus."
Industry experts said radio created some of the advertising problems. Analyst Bank said stations expanded ad time during the dotcom boom, but were left with a glut after the bust. "They got to the point where some stations were probably running 20 minutes per hour," he said. Clear Channel was among the companies running the most, he said. While there's no industry standard, companies are aiming for closer to 12 minutes now, he said. Other radio corporations also are trying to reduce inventory, though none has been as aggressive as Clear Channel.
On its Web site, Clear Channel has posted a study showing that its stations on May 29 ran an average of 8.9 minutes of commercials per hour, down from 9.3 last year. The average among general-market broadcast companies was 10.8 minutes. The data came from Media Monitors, which Clear Channel purchased in January.
Blaise Howard, vice president and general manager of B101, a rare locally owned station in a major market, said B101 always stuck to 11 to 12 minutes per hour but paid the price anyway as the glut pushed prices down.
"It turned into a frenzy," he said. "The agencies, the buying services around town were having a field day. It was all about price. It's almost like people could smell the blood in the water."
Prices still haven't recovered, he said. His station will sell advertisers the time they want, but there isn't much demand for 30-second spots. The station works to keep advertisers and listeners by holding breaks from programming to two to four minutes and steering clear of loud, obnoxious or controversial ads. "There is a price that people will pay for great radio and stick around for a certain number of commercials... but you can't abuse that," he said.
Howard added that it was "absolutely admirable" that Clear Channel had tried to address the clutter problem.
Stephen Godofsky, regional vice president for Entercom, a Bala Cynwyd-based company that owns multiple radio stations, said Entercom was encouraging advertisers to buy short-form ads and, as a result, "we have also reduced the total minutes of commercials we air each hour at just about all of our radio stations." He did not say by how much.
Karen Mateo, a spokeswoman for CBS Radio, said her company had taken on the issue on a station-by-station basis. It saw no reason to change the ad ratio at New York's 1010 WINS, which she said was the most-listened-to station in the country. But it did reduce the number of ads at its country station in Houston, which had two competitors. Ratings went up.
Media buyers said they wanted the option of buying the time that best suited their needs. "If all I have to do is tell you there's a sale, you don't need 60 seconds for that," said Mary Padula, media director for the Star Group, based in Cherry Hill. "If you're introducing something new, you can't do it in a 30."
Some media buyers think radio stations need to do more than reduce commercials to hang on to listeners. People switch to satellite or iPods not just to avoid ads but to get more interesting programming.
"They can run one commercial per hour and if the music or whatever they're playing is not good, it doesn't matter," said Rich Russo, senior vice president and director of broadcast service at J.L. Media in Union, N.J. |