altrok main 7/19/2004

for July 19, 2004

Commercial Load
by Sean Carolan

Today, All Access posted this bit of news:

CLEAR CHANNEL RADIO has announced a company wide initiative -- that becomes effective JANUARY 1, 2005 -- to improve the value of radio to listeners and advertisers by placing a new and significantly lower ceiling on the amount of hourly commercial minutes across its radio group, as well as limits on the length of commercials in a spot break. In addition to reducing commercial capacity, CLEAR CHANNEL RADIO will also reduce and limit the amount of promotional interruption on all of its radio stations.

Specific ceilings will apply across the board at all stations and will vary by format and daypart. The thinking behind the plans is that the introduction of premium positions within shorter commercial pods will increase value to advertisers and will improve each station's listenability and appeal.

CCR CEO JOHN HOGAN explained, "Clutter is a major issue in our industry and our decision to limit the amount of commercial time and length of breaks, while reducing promotional interruptions, will benefit listeners, advertisers and the industry as a whole.

"Despite radio's great underlying listener trends, and the fragmentation in other media, radio is still discounted relative to other media. We're taking this step to close that gap and make radio more competitive, compelling, effective and valuable. And we actively encourage the rest of the industry to do the same."

On its surface, this is encouraging. Nobody really wants to hear advertisements, but station owners have to pay the bills somehow, and in the face of heavy listenership leakage (in the direction of Satellite and Internet radio) they're at least showing some grasp of what makes their listeners tune out.

But a translation of this is: they're planning to raise their ad rates to make up for the loss in volume. One wonders whether this would have been possible in the mom-and-pop world of radio that effectively ended eight years ago, when the act that opened the door for huge mergers in radio occurred. When advertisers look at a rate card, all they see is the per-spot price - they rarely think "oh, but my ad will be a part of a more listener-friendly environment." Any small radio station who raised their ad rates would immediately get their heads handed to them, as their competitors kept their rates low.

On the other hand, Clear Channel is its own competitor in most of its markets. One data point: according to a recent article in the San Francisco Bay Guardian, during the recent California recall elections, a candidate could only buy ads on many Clear Channel stations by buying ads on a group of them simultaneously. So a small candidate, without the blessing of a large campaign fund, couldn't afford to buy ads on any Clear Channel outlet.

Clear Channel could provide the same "service" for local businesses, raising rates and forcing "cluster" packages such that only the national chains can advertise. Mom and Pop will have to settle for the local pennysaver newspaper (as long as it hasn't already been bought by Gannett or Greater Media.)

If you think about it, this is another indicator that Clear Channel, far from being listener-focused, can simply do whatever it like in the marketplace. That they can spin it as a listener-friendly maneuver is a bonus. Don't let that fool you; like every other maneuver they've ever made, it's a profit-friendly maneuver, and the only justification they need is that it makes them more money. There should be no surprise when they make other maneuvers whose only motivation is profit.