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January 24, 2007

Radio Advertising Welcomes Departure From "Less is More"

According to this press release, Clear Channel Radio (NYSE:CCU) has invented a unique new radio advertising solution that is a significant departure from their "Less is More" strategy. We find it refreshing to begin seeing the fruits of the recent acquisition.

In their "Less is More" approach, Clear Channel all but eliminated the 60 second spots that are a mainstay for direct response radio advertisers, forcing radio advertisers into 30-second spots and even 1-second "blinks". Sixty second spots are also the one's that both our data and independent research has shown to be the most effective return on radio advertising dollars.

Now, Clear Channel is heading back to longer spots, except in a new way. This from their press release:

"The campaign, which consists of entertainment spots featuring celebrity interviews with DJs, will now be offered to Clear Channel Radio stations all over the country. The spots have been airing in radio markets on the West Coast."

"These two-minute spots give celebrities an opportunity to talk about their current projects, segueing into opportunities for listeners to win vacations at Consolidated Media's various properties."

We love this kind of creativity. We have built campaigns built on DJ endorsements as well as DJ/Client spokesman reads and they can be very successful. Taking this approach, expanding it to 2 minutes, and offering the exciting chance to win a vacation is a great evolution. Not altogether new, but the fact that Clear Channel is announcing it means they are seemingly going help address one of the problems with this approach: scalability. This is important because one problem with this approach for our direct response radio advertising clients is that when it starts to work, they want to grow their business and too often that scaling process is made overly complex and clumsy by inadequate coordination inside Clear Channel.

Before we leave this topic, we'd like to take a moment to comment on something for the benefit of our clients and others who want to understand and learn about direct response radio advertising.

There is one comment from the Clear Channel press release that discerning direct response radio advertisers will pause on:

"With the expansion of this campaign, Consolidated Media is expecting an increase in call volume of six times, to 600 calls per spot."

A direct response radio advertiser will immediately ask some questions. First, what is the media cost that delivered this 600 calls? That will provide a cost per lead (CPL) figure that can be looked at in the context of the client business model to see whether it is in the ballpark of profitabilty given conversion and customer lifetime value data.

Another question that a direct response radio advertiser would ask is: "is this increased call volume attributable to increased media spending or increased efficiency due to the above described (2 min., DJ/celebrity, chance to win) approach?"

Increased efficiency means that with the same ad dollars, more calls are being received. That's a true breakthrough. But if the 6x increased call volume happens with 6x increased ad spending, we have a different story. The statement above is not clear on that answer. In fact, the lauded "unique" approach is only newsworthy if the client achieved 6x increased call volume on something meaningfully less than 6x increased media spend.

Sometimes it's all about asking the right questions.

Posted by Jeff Small & Brett Astor at 09:58 AM | Permalink