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June 15, 2006

A New Radio Advertising Strategy for Clear Channel?

Brett: A recent article in Adage talks about a “new radio ad strategy” Clear Channel is considering. It’s the “blink”, or one second spot. Jeff, in your 10+ years in radio advertising, have you seen anything like this work?

Jeff: No, never. Based on the testing we've done, the 30 second spots are not as effective as the 60 second spots. I don't see how a one-second spot will be any more effective no matter how it is used. Less is more, except when it comes to Clear Channel.

Brett: It seems like another move that undermines the effectiveness of advertising on their stations.

Jeff: Unfortunately that appears to be the case. They may be searching for ways to grow profits amid falling industry revenues. But from the outside, this looks more like playing with the math by trying to charge more for less effective advertising time. It would seem a better approach to find ways to add value for their advertisers by adding value to what they provide.

Brett: First it was “Hey, let’s sell half the time for more than half the price”. And now:

Clear Channel said it hasn't decided on pricing and package information, but Mr. Gaither estimates that the time may be sold at a 200% to 300% increase on what one-thirtieth of a 30-second spot might cost.

At a 200% to 300% premium, this move could actually boost their revenues and profitability. But for how long?

Jeff: My question is this: in what way does it show consideration about what works for the paying customers – the advertisers? I can understand the need to give Wall Street a reason to believe management will grow revenues. But the reality is that it's challenging enough to convey a strong, succinct message in 60 seconds. Cutting that in half or less means that only advertisers who can't or don’t measure the effectiveness of their advertising dollars will continue to be Clear Channel customers.

Brett: And if they continue that way, they won’t be Clear Channel customers for long because they’ll be eaten for lunch by competitors who do demand accountability in their advertising.

As the Adage article alludes to, the rationale behind this may be the PR it generates for Clear Channel.

This is a way for Clear Channel to get more news," Mr. Gaither said. "I don't think you're going to see any kind of mass exodus from traditional 30- and 60-second radio advertising to people doing one-second spots. You're going to get a dozen people that it makes a lot of sense for ... and we'll call it a day, and Clear Channel will be the ones that were out there doing it first.

A strategy that might create value for a dozen of ClearChannel’s customers? Neither of us can see how this constitutes a revolutionary new radio advertising strategy, nor how this kind of "news" will bring positive attention to Clear Channel, or any attention that in any way that will meaningfully boost Clear Channel revenues.

Posted by Jeff Small & Brett Astor at 10:12 AM | Permalink