Radio puts on its best face

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When asked why his company has embarked on its $1.5 million "Radio 20:20" campaign, Interep's Marc Guild laughs and responds, "Usually when people ask us about this, their first question is `How much longer are the bad times going to last?' "

OK, so maybe the motivation is fairly obvious for the 18-month effort titled "Radio 20:20-A Sound Media Investment," designed by radio's largest ad rep company to prod advertising from its current slumber.

Radio joined the ad spending joy ride, with revenue up 12% to $19.8 billion last year, according to the Radio Advertising Bureau.

But after four years of double-digit growth, radio ad revenue has hit a wall. Analysts have been reducing growth projections for 2001 to anywhere from no growth to 1% or 2% growth; Veronis Suhler in its recent "Communications Industry Forecast" predicts a 0.7% dip in radio ad spending this year. RAB has logged only two years since 1945 in which ad revenue dropped-1961 and 1991.

"I doubt that radio stations and networks will ever take anything for granted again," says Natalie Swed Stone, managing partner-director of national radio services with Omnicom Group's OMD USA, New York.


Interep has three main goals with "Radio 20:20": to alert advertisers to the benefits of advertising on radio, to increase national spot radio sales in the remaining months of 2001 and to grow radio's share of total ad dollars. Only 8.3% of the $236 billion in U.S. ad spending last year found its way to radio, placing the medium far behind newspapers and broadcast TV, according to Interpublic Group of Cos.' Universal McCann, New York.

By June 1, 2002, Interep will have shown its "Why Radio?" presentation to more than 1,500 advertising decision-makers.

Developed without the help of an outside marketing agency and not supported by paid media advertising, "Radio 20:20" is similar to Interep's "Radio 2000" initiative, launched during a comparable down cycle in 1992. Despite 2001's tough market conditions, Mr. Guild, president of Interep's marketing division, believes the climate is ripe for a full-frontal assault on low- and non-radio advertisers.

"The more insight you can bring to the ad community, the more likely they'll move their ad dollars to radio, whether now or when things get better," he says. "Also, anytime you make a concerted effort to get out in front of advertisers, it makes a strong impression."

As part of "Radio 20:20," Interep is putting $200,000 toward establishing Arbitron Co.'s proposed Radio Effectiveness Lab, an entity designed to provide advertisers with more information about the impact of radio advertising.

"We're hoping to make the radio medium even more accountable in terms of measurement," says Linda Dupree, senior VP-advertiser/ agency services at Arbitron, which measures radio audiences. "The more accountability, the more interest and appeal to advertisers."

The radio community, at least, sounds impressed. Lew Dickey, chairman-CEO of Cumulus Media, an Atlanta-based radio company, lauds Interep for joining the battle "to educate advertisers about how affordable and flexible radio is in today's mobile society."


Radio's current slump, some executives say, was partly self-generated. Radio contributed to its own predicament by assuming the boom times would last indefinitely, they argue.

"Stations were sitting by the phone and deciding which advertisers they were going to take," says Mark Lefkowitz, exec VP-media director at Furman Roth Advertising, New York. "They said, `These are our terms,' and didn't bother to work with advertisers, especially in dot-com-heavy markets like San Francisco and Boston."

Pete Stassi, director of local broadcast at Omnicom's Penta-Mark Worldwide, puts it more succinctly: "Stations gouged advertisers. Why? Because they could."

Several industry watchers suggest that consolidation of station ownership has contributed to the highly pressurized environment. Publicly owned radio companies like Clear Channel Communica-tions and Viacom's Infinity Broad-casting Corp. demanded that their stations add units of commercial time, a development not exactly received enthusiastically by listeners.

"Two or three years ago, there were plenty of buyers. Now, there's a glut of inventory and nobody wants it," says Mark Fratrik, VP of BIA Financial Network, which tracks the ad revenue of radio stations.

"So many of these companies sold their soul to Wall Street," says James Marsh, senior broadcasting analyst at Robertson Stephens Equity Research. "They made big promises about numbers that they can't keep. It's inevitable that the Clear Channels are going to say [to their stations], `Here's what you did last year-now beat [those numbers].' "

In last year's high-flying economy, radio companies also jacked up ad rates because they could-their medium was hot and advertisers were spending freely. Then came 2001.

The new year included the collapse of the dot-coms, the 2001 millstone around the necks of most ad media. Since fledgling tech companies had been quick to take to the airwaves, radio was particularly hard hit when the bubble burst.

"The dot-coms threw everything out of whack," Mr. Stassi says. People in the industry "should have projected that last year was an aberration."

While the short-term future looks fairly ominous-few observers believe that the recovery will commence before the second quarter of 2002-even hardened pessimists believe the radio ad market will bounce back and thrive anew before too long.


Furman Roth's Mr. Lefkowitz points to pockets of strength in the direct-to-consumer healthcare and retail categories, while Joaquin Blaya, chairman-CEO of Hispanic news/talk national network Radio Unica, notes that radio ad revenue within the Hispanic market should grow by 15% in 2001. Ad revenue at stations in Denver, Houston, Las Vegas and Phoenix have held up and even increased in the face of the difficult economy.

Radio, it should be remembered, has been counted out before. "The captains of industry have all had their fingertips singed," says RAB President-CEO Gary Fries. "The ones who come out of this are going to look at themselves as survivors and be more careful in the future."

Adds Robertson Stephens' Mr. Marsh: "Radio has had to claw and scratch for every bit of its success over the past 40 years. People in this industry are fighters."