Tuesday, March 3, 2015
Are multitasking reps capping digital growth? A recent Borrell Associates survey of radio managers showed 36% of stations have digital-only sales reps, three-times as many as 2009. But slower digital revenue last year — the segment grew 9% versus 16% a year earlier, according to the RAB — may be a warning sign of what Deseret Management Corporation EVP Clark Gilbert says are the limits of putting digital into the hands of traditional media sellers. “You can get some short-term growth out of your legacy sellers if you prioritize it,” Gilbert said. “But that is fleeting and once you’re saturated, it’s over. The data here is very transparent.” Speaking yesterday at Borrell’s Local Online Advertising Conference in New York, Gilbert said since Deseret created dedicated radio, TV and digital teams in Salt Lake City, a third of the cluster’s revenue now comes from online sales. “So much energy in this industry has been poured into salespeople doing both, but they can’t,” Gilbert said. “They think they can, but they’re stuck in the saddle — and that’s where most of the industry is.” Gilbert said there’s another, potentially more urgent reason to split duties. He believes the focus on digital ends up “pillaging the core business to grow the new,” when too much is put on reps’ plates. Gilbert said Deseret’s own results bear that out. “Our TV and radio businesses are better off than they’ve been in five years — and our digital is now bigger than both of them,” Gilbert said.
Reps ‘too distracted’ by digital: Glibert. Borrell Associates analysis of 37 companies’ 2014 revenue data shows the average traditional media company grew its digital billings 4.9% last year, compared to 23.4% for pureplays. At the same time, traditional local advertising sales growth has largely stalled. Firm president Gordon Borrell said at his company’s conference yesterday that most salespeople are “too distracted by digital” — to the detriment of overall growth. He’s forecasting radio revenue will climb a modest 2.6% this year, but nearly every other local media is likely to lose ground. Borrell has long advocated for digital-only sales forces and his survey calculates radio has 2.2 digital-only AEs, which trails television (3.1) and newspaper (3.6). Yet radio also has one digital rep for every 10.6 salespersons. That is twice the ratio as both TV and print. Deseret EVP Clark Gilbert agrees digital-only is the way to go, pointing out broadcasters long ago figured out that one rep selling two mediums — radio and TV — just doesn’t work all that well. “If your mindset is digital is an add-on, this is what it’s going to look like,” he said. “If your mindset is this is a new medium with a new business model, you can’t stay with that logic.” For 2015, Borrell forecasts an 18% increase in digital sales, which he partly attributes to larger numbers of digital-only sellers. Gilbert says there’s an easy self-test to use at this stage in the media transformation. “If you are not growing digital business by double-digits in 2015, something in fundamentally wrong,” he said. “You are not transforming your business.” More from the Borrell Conference on Page 2.
Cumulus scrubs plans to recruit an EVP of radio. Five months after hiring a headhunter to recruit an executive VP to handle day-to-day operations of its 525-station radio group, Cumulus Media says a newly strengthened regional management structure has made that position unnecessary. Addressing analysts yesterday during the company’s fourth quarter earnings call, CEO Lew Dickey said Cumulus had ended the recruitment process for an EVP of radio and that he would continue to oversee company operations. Dickey said Cumulus will put the finishing touches on a “newly fortified regional oversight structure” later this month. Just hours before yesterday’s late afternoon results call, the company announced it had promoted Chicago VP/market manager Donna Baker to Midwest regional VP. Based in Kansas City, Baker will oversee station operations in KC, Minneapolis and Des Moines. In addition to the beefed up regional structure, Dickey said he has been reorganizing the company’s managerial ranks to make the organization “flatter” and to “drive ownership of the company’s operating plan into the hands of our 95 managers.” That has put increased emphasis on staffing, sales and content execution. While there won’t be a new EVP of radio, Dickey said the company is making “key hires” in the areas of research, marketing and brand sponsorships and expects to have its executive leadership team “largely in place by the beginning of the second quarter.”
Car dealers seek broader media mix from radio sellers. As confused as radio may be with how car dealers are allocating their media budgets, dealers are even more uncertain about how their own business is being disrupted. That’s according to Duncan Scarry, whose Haystak Digital Marketing works with auto dealers. He told the Borrell Local Online Advertising Conference yesterday in New York that how Americans — especially Millennials — are buying cars has shaken dealers’ foundation. The latest data shows 76% of car buyers now use the internet to make a purchasing decision with seven out of 10 customers on a showroom floor driving out with the car they expected to buy. And 88% of Millennials did their car shopping on a mobile device. The result is Borrell Associates estimates 57% of dealer dollars went to online advertising last year, up from 45% in 2013. “If you look at the shifts of people taking money from traditional and taking it to digital, they’re actually taking it to some pretty interesting places that all of us can play in,” Scarry said. Whether it’s search, display, social media or video ads, local media companies can offer many of those products, sometimes working with a third-party partner. And dealers may also be predisposed to working with a local team. “What dealers want right now is one-stop shopping to cover large swaths of the market metrics — and they want them to be synergistic,” Scarry said. Several industry initiatives are working to position radio as a cost-effective way to get buyers to a website. But Scarry also noted that automakers are clamping down even more tightly on how local dealers can spend their co-op dollars. The latest maneuver is to give dealers a short list of pre-approved digital companies they can work with. Those not on the list won’t be eligible for co-op funds.
Moonves says radio fits CBS’ content strategy. CBS chief executive Les Moonves yesterday again brushed off speculation that the company may sell its radio division, saying radio is consistent with its strategy of being a content company. But he reiterated an intention to focus on the largest radio markets and suggested CBS could conceivably shed more medium market stations, like it did last year in a multi-market swap with Beasley Media Group. “We’ve always talked about how, yes, we have a lot of radio stations and 80% of the revenue comes from the top 70 radio stations,” Moonves said at the Morgan Stanley Technology, Media and Telecom Conference in San Francisco. “If we were to trim some of them, that might be a possibility.” CBS spun-off its outdoor division because it didn’t fit the strategy of owning content-producing assets that can be monetized across platforms, which Moonves called “our future.” CBS Radio, he noted, “is still a content company.”
Fourth quarter at Cumulus: Local down, national up. Fourth quarter began with great promise. But by Thanksgiving, a challenging holiday retail season soured ad spending, which continued to deteriorate into December. That’s the look-back on the last three months of 2014 from the view of radio’s second largest station group. The color comes courtesy of Cumulus Media CEO Lew Dickey who told analysts yesterday that in the 56 markets audited by Miller Kaplan where the company operates, core local broadcast revenue was down by 3.7% in Q4, though Cumulus did a smidgen better, down 3.4%. But national spot business in those same markets rallied, up 4.9% in the quarter, driven in part by political dollars. Cumulus outperformed its markets in national business, Dickey said, up 9.4% in the quarter. “We were not immune to the material weakness and cancellations beginning around Thanksgiving and continuing through January,” Dickey said. Putting a finer point on the Q4 trend, Dickey said Cumulus revenue was up high-single digits in October, flat in November and down mid-single digits in December. The spot revenue declines have made NTR, events and digital “increasingly more important,” Dickey said. While digital across its markets grew 9% in 2014, Dickey said Cumulus stations did a lot better, jumping 30%. “Digital is a small but rapidly growing segment of our business,” Dickey said. Cumulus reported a slight fourth quarter revenue increase of 0.3% to $329.2 million. Core on-air spot revenue fell 6.8% during the quarter, which offset a whopping 144% gain in digital advertising. For the full year 2014, the company says pro forma revenue grew 1.4% to $1.26 billion.
After first quarter choppiness, Cumulus sees second quarter turnaround. With the year off to a choppy start, Cumulus Media refrained from offering financial guidance for 2015 during its earnings call. But CEO Lew Dickey says skies are brightening for the second quarter. “The choppiness seen in fourth quarter has broadly continued into the first quarter,” Dickey said, adding that that Q1 is pacing down low-single digits for the Cumulus station group with “sequential improvement in each month of the first quarter all the way through Q2.” While still early, the company’s station group is pacing up mid-single digits for the second quarter. But Dickey was less upbeat about the company’s network radio business. “We expect a tough couple of quarters for Westwood One,” he said, as it works to finalize its integration with the station group and terminate what he called “non-cash flow producing contracts.” Despite “revenue challenges in the network,” Dickey said continued expense efficiencies will offset any network revenue declines in 2015. “It’s hard to say how it will play out for the rest of the year,” Dickey acknowledged. “Second quarter is pacing up solidly [for the company’s station group] but it’s early.” Looking further into 2015 and beyond, Dickey anticipates political advertising “ramping back up” as the 2016 election cycle unfolds, with dollars expected to begin rolling in as early as this November.
NAB fights to keep political ad pre-emptions in place. The National Association of Broadcasters is pushing back hard against a proposal put on the FCC’s doorstep by a political media buying agency. If the agency goes along with the proposal presented by Canal Partners Media, it could shake up the way radio and TV stations pre-empt political spots heading into the 2016 presidential election. Canal argues the so-called “last in, first out” pre-emption method — used by stations to pre-empt a political spot in favor of a commercial advertiser’s previously-purchased spot — violates laws ensuring federal candidates have access to the airwaves. Canal argues any political spot must be treated as a “first-in” advertiser, regardless of when the candidate actually purchased the airtime. But the NAB says that amounts to giving politicians “preferential treatment” over typical advertisers, telling the FCC in a filing that it amount to “last in, never out” protections for candidate commercials. It’s a notion both Congress and the FCC have long shied away from, the trade group points out. The FCC last upheld “last in, first out” in 1992 when it updated political advertising rules. Because stations are able to charge a premium price for spots that aren’t pre-emptible, new rules could also hit station revenue. To make up the shortfall, NAB warns stations would be forced to eliminate certain classes of cheaper pre-emptible time. “Not only would commercial advertisers be harmed,” NAB argues, “but candidates who seek lower cost advertising time certainly will be as well.” The Media Bureau hasn’t said whether it plans to open a full rulemaking, and for now the reply comment window is open through March 17. (MB Docket No. 15-24)
Podcast measurement service coming from Triton and Edison. Recent podcast initiatives from NPR, CBS Radio and others have thrust the channel into the limelight. Yet podcasting remains underutilized by advertisers, due in large part to the lack of any standardized audience measurement. Triton Digital and Edison Research are jockeying to fill that void by launching a podcast measurement service later this year. The companies says they’ll combine their technology, relationships and market experience to help publishers scale their sales efforts and better monetize podcast content. Details on their planned Webcast Metrics On Demand service are spare so far but likely to get a warm reception from the growing number of podcast aggregators, some of which have started to adopt ad insertion technology. “We’re in the early stages, and I think this could be very quickly a $100 million industry,” Podcast One founder & CEO Norm Pattiz tells Inside Radio. Triton Webcast Metrics GM & chief compliance officer Rob Favre says the lack of standardized third party audience measurement is holding the podcast medium back. With the introduction of a ratings currency, “podcast inventory gains the credibility to transact broadly and build greater market value for both publishers and advertisers,” Favre said in a statement.
What impact are NextRadio ads having so far? The real test for consumer interest in NextRadio has begun with the industry airing thousands of spots last week promoting the app that wakes up FM radio in smartphones. It will be weeks or months before the true reading comes into focus. Even so, app developer Emmis reports the total number of NextRadio downloads increased 10.5% during the past month. To date, 1.74 million downloads have been recorded with the app logging 3.06 million hours of listening, a 16% gain from a month earlier. The coordinated industry ad effort started February 23 so last month’s gains can only partially be attributed to the marketing. But in the first five days of the campaign, Emmis says the NextRadioApp.com website saw web traffic jump 500% and last Friday the app was downloaded 10,000 times. Beyond just getting Americans to use the app, the marketing effort is designed to educate consumers and urge them to push cell phone carriers to follow Sprint’s lead. Emmis says website visits to FreeRadioOnMyPhone.org surged 6,500% and nearly 19,000 people sent a social media message to their phone company. On Twitter the hashtags #unlockFM #freeradio generated at least some pushback from AT&T Wireless. When a fan of radio asked the carrier to unlock FM on his phone, AT&T customer service responded, “There are plenty of great radio apps you can download for free radio.” But Stephen Fall of Parsons, TN wasn’t taking no for an answer. “Those use data from my plan and in my area I don’t have high speed in all areas,” he shot back. NextRadio currently works on one AT&T model: the HTC Desire 610.
Entravision appoints its first CMO. For the second time in five months, a radio company has appointed its first chief marketing officer. Entravision yesterday promoted María Lopez-Knowles from chief marketing officer of its Pulpo Media ad services unit to the newly created position of CMO of the Hispanic media company. Lopez-Knowles will oversee Entravision’s marketing efforts across its broadcast, radio and digital properties and develop and manage corporate marketing strategy. She’s expected to ratchet up efforts to position Entravision to advertisers as offering one-stop shopping that spans Latino-focused TV and radio, big data and analytics through its Luminar division and Pulpo’s data-driven digital ad network. The announcement follows iHeartMedia’s October recruitment of Gayle Troberman as CMO from ad agency IPG Mediabrands.
Journal-Scripps merger nears the finish line. Two influential shareholder advisory firms are recommending Journal Communications stock owners vote in favor of the proposed merger with the E.W. Scripps Company. Institutional Shareholder Services Inc. sees a “strategic rationale” for combining each company’s broadcast and print assets into two free-standing companies. Separately, Glass Lewis & Co. agrees. Journal needs two-thirds of shareholders to cast a “yes” vote, so the advisories may help make up some minds. Journal expects the merger to close “promptly” following the March 11 shareholder votes at each company. Signaling that may come in a matter of hours Journal says it won’t bother holding a conference call with investors when it releases fourth quarter revenue the following day. When the dust settles, current Journal shareholders will own about 31% of Scripps, and Scripps stock owners will receive a $60 million dividend.
Inside Radio News Ticker…Potholes help fill radio airwaves…It’s just not humans that are winter weary, so are plenty of cars and trucks. No surprise then to see two auto parts and service retailers among the biggest volume advertisers last week, according to Media Monitor’s Spot Ten. O’Reilly Auto Parts moved up from No. 12 two weeks ago to No. 6 last week. AutoZone jumped from No. 83 to No. 9. Combined they ran 39,974 radio spots — nearly 2,000 more than last week’s No. 1 advertiser, Walgreens…Piolin’s radio comeback hits 40…The broadcast radio return of Eddie “Piolin” Sotelo is now two months old, and his production company Alliance Radio Networks says it has secured a spot for the show on 40 stations. Under a long-term syndication agreement, Entravision makes up the largest station group for “El Show de Piolin” with 14 affiliates. It also handles ad sales for the show. “The response to the show has been amazing, and it’s a thrill to be back on broadcast radio doing what I love to do,” Sotelo says…CRS attendance ticks up 4%...Snow and cold couldn’t keep country programmers out of Nashville last week. The Country Radio Seminar reports it had 2,424 full registrants filling the Nashville Convention Center. That’s a 4% increase compared to 2013. The three-day event will relocate to the Omni Hotel in Nashville next year...Two Nielsen owners offer up stock…The Carlyle Group and Kohlberg Kravis Roberts & Co. will shrink the size of their holdings in Nielsen as they put eight million shares of company stock up for sale. It will raise roughly $362 million. All of Nielsen’s private equity owners, a group that also includes The Blackstone Group, Thomas H. Lee Partners, Hellman & Friedman and AlpInvest Partners, have also been liquidating some of their company holdings over the past year…Sound stays with Cromwell…The Nashville Sound has extended its deal to keep Cromwell Group’s “102.5 The Game” WPRT-FM as its radio flagship. The two have been partners since 2012. Cromwell says a few games will air on “Game-2” WQZQ (830, 94.9) due to conflicts with Nashville Predators games. Sound COO Garry Arthur says it’s important for the team to be on a station that focuses on sports programming. Jeff Hem will return as play-by-play announcer with former baseball pro Kevin Jarvis joining him on select broadcasts as color commentator. The Sounds enter its first season as the Oakland Athletics’ Triple-A affiliate in 2015...Dallas sports talker launches local music show…A local music show on a sports talk station? That’s the ticket for Cumulus Media’s “The Ticket” KTCK-FM&AM, Dallas (96.7, 1310). “The Local Ticket” will air Sunday nights from 8-10pm, hosted by Mark Schectman, known in the market for previously hosting “The Adventure Club” and “The Local Edge” at crosstown iHeartMedia modern rock “102-1 The Edge” KDGE. The new show will feature music, interviews and live performances from local artists and independent artists from around the country. It will also stream on the station’s website, mobile SportsDay Talk app and on iHeartRadio.…People Moves…Sports stations in Los Angeles and Seattle make lineup adjustments. Read People Moves HERE.
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