LOS ANGELES (AdAge.com) -- Live reads, or radio ads delivered by on-air talent, are perhaps the oldest form of sponsored entertainment. A century later, they're making a comeback, but with a different playbook.
In the early days of radio, ads were often introduced by DJs who were paid to talk up the benefits of Colgate toothpaste or Marlboro cigarettes, long before there were 30-second TV commercials. But today, when a popular personality such as Ryan Seacrest or Steve Harvey talks up a product or service on his daily radio program, there's a lot more than just a paycheck involved.
Mr. Seacrest, the host of Fox's "American Idol" and E!'s "E! News Daily," made industry headlines last year when he signed a five-year contract with Premiere Radio and Clear Channel to help sell ads for his show "On-Air With Ryan Seacrest." As part of the deal, Mr. Seacrest leveraged his existing relationships with sponsors such as Procter & Gamble's Scope and Crest brands to bring them to radio, banking a commission for each deal along the way. In turn, Mr. Seacrest appears in several of those sponsors' TV commercials.
Mr. Harvey, a stand-up comedian and best-selling author who hosts Premiere's "Steve Harvey Morning Show," applies a more grassroots approach to his live reads. When he talks about advertisers like Ford and State Farm, it's because the brands have been a part of his life for years, he told Ad Age.
"I will not do any live reads unless I absolutely believe in the product," he said. "I always try and protect my integrity to the listening audience. I'm too straight of a shooter, and also a stand-up [comedian] -- so eventually if I'm doing something I don't believe in, I'll make fun of it."
That must bring a sigh of relief to Clear Channel's legal team, too, since new FTC guidelineswill make it even harder for personalities like Mr. Harvey to speak out of character for the sake of a brand endorsement.
Greg Kahn, senior VP-strategic insights at Optimedia, an agency that has inked multiple talent-based deals with radio talent in recent months, said live reads are often worth 1.5 times the average 60-second spot but often work best as part of an integrated marketing campaign or the personality's ongoing relationship with a brand. "The marketplace is too sophisticated now, that it's very evident if someone's just an actor saying words," he said.
Ford, for example, had sponsored several contests and giveaways on Mr. Harvey's program for a year and a half before the host made the connection that he had a three-decade history with the company. Mr. Harvey worked at a Ford Motor Company plant in Cleveland from 1977 to 1980, and later lived out of a 1976 Ford Tempo during a three-year period of homelessness. "If you live in a car, you've gotta have a little bit of faith in that car," he said.
Mr. Harvey used similar criteria for his ongoing partnership with State Farm. When the marketer initially tapped him to participate in the company's ongoing 50 Million Pound Challenge, Mr. Harvey agreed because he happens to be a long-time State Farm customer, insuring his Ford F-150s and his ranch with the company for years.
Since the initial partnership, Pamela El, State Farm's VP-marketing, said Mr. Harvey has helped the company attract participation in its weight-loss initiative, which has enrolled 1.5 million people. But he's also become the No. 1 radio personality among African-Americans, a key reason State Farm is spending more on radio ads than ever before.
"Our spending has increased because when you have personalities like Steve, who own certain segments of a target audience, it's a good choice and a good buy to continue to put money behind," she said.
She added that the "50 Million Pound Challenge" website saw spikes upwards of 10,000 to 12,000 people whenever Mr. Harvey mentioned it on-air, a sign that his active following was engaging with the program in real-time. Now the marketer and Mr. Harvey are taking their partnership online, with a series of comedic webisodes, ""Harvey Knows Best", that launched in late October.
But the resurgence of live reads goes beyond celebs like Mr. Seacrest and Mr. Harvey. CBS Radio announced this spring that it would tap its local DJs to do live reads for its local streaming audio stations through its partnership with Yahoo Music, one of the largest online commitments to the format to date.
Clear Channel has also taken a company-wide investment in connecting local talent with advertisers, luring Las Vegas Tourism, Orlando's David Maus Toyota and Purina onto the air for integrated sponsorships.
Greg Ashlock, president-market manager for Clear Channel Radio Los Angeles, said each of the markets' DJs fills out a personality profile listing the products and services they're most interested in, to be used as a lead-generation tool for the sales teams. "If the advertiser sees how passionate the jock is about its product, in many cases it goes beyond a spot buy because they're already part of that person's life," he said.
Fletcher Whitwell, corporate media director for R&R Partners, said he saw a recent mid-six-figure buy for Las Vegas Tourism across eight major markets over-deliver on impressions and ratings, thus prompting the advertiser to re-up its investment with those stations. "With a radio station, its most valuable asset is its DJ talent, so marrying our client's brand with Clear Channel in a lot of key theater markets made a lot of sense," he said.
Increased investment in radio ads is exactly what the industry needs, in a year that has already seen a 23% drop-off in ad revenue during the first two quarters, led by major cuts from the automotive industry and a 25% decline in local ads. Online is the only sector to post growth for the industry, increasing 10% in the first half to $221 million.