The Wall Street Journal’s Talk Radio Problem

Written By

SMI Staff

Published On

Thursday, Feb 12

In an article published last week, entitled “Talk Radio’s Advertising Problem,” the Wall Street Journal stated that, “There are plenty of people listening to talk radio. But over the past three years, it has become increasingly difficult to make money off it.” This was a surprise to me (and I’m sure to many of the Strategic Media clientele). You see, radio is a $20 billion (with a ‘b’) per year industry that, according to Nielsen (formerly Arbitron), has a better ROI than TV and newspapers combined. Direct Response radio measures profitability at the station level, and talk radio has a very captive audience that buys quality products and is often a marketer’s most profitable customers.

Statistics can prove almost anything, and the Wall Street Journal makes some interesting correlations. But the reason that their thesis doesn’t hold up is because correlation doesn’t equal causation. So, just as we analyze the data for a campaign, let’s break down the data provided by WSJ.

WSJ: “More than 50 million people in the U.S. tune in each week to news-talk radio stations that carry advertising, making it radio’s second-most popular format, behind country music, according to Nielsen.”

SMI: True.

WSJ: “But many national advertisers have fled from such stations in recent years, seeking to avoid associating their brands with potentially controversial programming.”

SMI: That’s a pretty sweeping generalization. A lot of advertisers did leave a certain talk radio host three years ago; but the implication that there’s a continued hemorrhaging across the talk radio platform is a little like referring to a few flurries as a blizzard.

WSJ: “As a result [of the fleeing] advertising on talk stations now costs about half what it does on music stations, given comparable audience metrics, according to industry executives.”

SMI: Whoa. Hold up. It costs half as much to buy advertising on talk stations than on music stations? I wish this were true. Talk radio has some of the best returns on investment in radio advertising. If it were half the cost, it would be even more profitable than it already is.

WSJ: “Pure talk-station revenue fell to $205 million, from $217 million. The number of talk stations shrank to 510 from 546 over that time period.”

SMI: Okay, so 510 talk stations generated an average of $.402 million each, as opposed to two years before when 545 of them generated an average of $.397 each, and that’s a bad thing? Yes, the landscape has changed, but the numbers would argue that this provides more opportunity and profits for advertisers, not less.

WSJ: “Talk radio’s rankings hit a new low over the summer, drawing 8.1% of radio listeners in July, although its share rebounded to 9% in December before the holidays, according to Nielsen.”

SMI: So, wait, is the issue that advertisers are flocking away from talk radio, or is listenership down? Not to mention the fact that talk radio still beat out most of the other formats during the summer, and, as Nielsen says, “Historically, fall and winter see the most radio tune-in during the year, and the uptick that occurs when the leaves turn is most noticeable.” Unless you’re comparing this year-over-year, it’s apples to oranges. Talk radio ratings always go down in the summer; music always goes up (it also goes up during the holidays). Sports goes up during collegiate and professional sports seasons. Trends like this can only be analyzed when also looking at the big picture.

WSJ: “The shift reflects more than younger listeners flocking to digital media.”

SMI: Since when are younger listeners flocking? According to the Pew Research Center’s State of the News Media annual report, “Radio news listenership is distributed more evenly across age groups than reading a newspaper. For example, radio news has held on to 20% of 18-24 year olds – compared with just 10% of that age group who read a newspaper yesterday.” (Sorry, WSJ. We got you beat.)

WSJ: Radio executives said the erosion of ad dollars from talk stations was driven in part by a series of organized social-media campaigns by liberal activists in early 2012 that scared away advertisers.”

SMI: (Why don’t any radio executives seem to have names anymore?) Yes, there was a social media campaign that followed remarks made by a certain host in 2012. How big that campaign was is debatable. Some “radio executives” say that it was in the dozens; some say in the hundreds or perhaps even thousands. Whatever the number, the result was that, in 2012, there were some brands that left that program. But, as the article aptly pointed out, “few blue-chip national brands [were advertising] directly on politically charged shows” anyway, and “the talk radio audience actually grew briefly after the 2012 controversy, drawing 11.1% of radio listeners in November 2012, its highest percentage since the radio industry started measuring listenership with digital monitors, according to Nielsen.”

Much of the rest of the article highlights the history of talk radio and makes repeated statements that the 2012 controversy was just bad for business, all around, until we get to this point…

WSJ: “David Landau, who until 2013 served as co-chief executive of [the] syndication company formerly known as Dial Global, said the campaign was so broad that it affected the industry overall even more than it affected its intended target. …It was enough to change the paradigm for all of talk radio.”

SMI: And here’s my basic problem with this article. I would contend that this kind of change is a good thing for radio advertising as a whole, not a bad thing. I built Strategic Media on the premise that advertisers should see all of their data, not just a portion of it. I believe that advertisers should be able to decide where to put their dollars. There are times when I might think a company would be a good fit for a particular host, but if the client doesn’t want to go there, we don’t. And we have that flexibility because, like any great agency, we can customize the media buying of a campaign on a granular level, specific to any program. This helps the profitability of our clients’ campaigns and provides the necessary transparency.

Look, we all have a “myside bias” – a confirmation bias that tends to favor ideas that already fit with our point of view. It’s natural to have a perspective and then attempt to collect evidence for it. It’s also why we here at Strategic Media like data. Accurate data provides an empirical understanding of exactly what is working best in a campaign and where there is room for improvement. Data provides direction.

Unfortunately, when the researcher is not engaged in objective analysis of rigorously gathered data, he or she is not always led to the truth. And in this case, the Wall Street Journal got it wrong.

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