As Google works its way into buying radio inventory after purchasing DMarc last year, two private radio owners, Blaire Howard of WBEB-FM in Philadelphia and Andrew Shearer, CEO of Royal Broadcasting, said there's still money to be had on a local level. It's even there for the big guys. Clear Channel, for example, had two operations in Phoenix and Las Vegas to post growth of 10% and 6%, respectively, in 2005 despite an overall market lapse of 2%.
In a conference call with Wachovia Bank senior analyst Marci Ryvicker last week, the Messrs. Howard and Shearer shared their thoughts on a few upsides to their business' downturn.
Smaller clients, bigger returns. "From a local standpoint, we've done very well because of the local ability to serve," Mr. Shearer said of his two AM and FM stations based in Winchester, Va. "As a smaller market and a smaller station, we have to super-focus on taking care of the local people. So in six years we're up 62%, and that trend for 2007 is looking to continue."
Mr. Howard also had success in the competitive Philadelphia market, rising 7% when the city's market was down 2% overall. But because this is the market's third consecutive down year, he was less optimistic for 2007. "If the market is flat, I might throw a party. If the market is up, I don't know what I'll do with myself."
Less does not always equal more. "[Clear Channel's] 'Less Is More' idea was to clean up the clutter on radio stations," Mr. Howard said. "Now they're running less minutes but almost the same amount of units when you split them into 30 [second ads]. Does that effectively sound cluttered? I'm not quite sure. What has it done to pricing? I can only say their tactics really just boggle my mind."
Mr. Shearer, meanwhile, has had the same inventory he had six years ago -- 14 minutes an hour -- without having to worry about integrity in ad sales. "We've been able to maintain that steady growth rate, which is necessary for a small company to survive."
Google doesn't pose a threat to local radio -- yet. "That may be something that might have some appeal in the long term, but in terms of what [Google] does, its effect to me is the same as satellite radio," said Mr. Shearer. "If it's not local enough, it's not a bother to me."
Mr. Howard has yet to see any Google sales people in the Philadelphia or Boston markets. "It looks to me like they want to go after national spot or network spot business with this," he said. "I'm not quite clear in my own head -- this is my pure speculation -- and if they get $1 billion worth of network radio from Westwood or CBS or somebody, now they're out there competing for national buys. And I don't know how you sell remnant radio if you buy $1 billion worth of inventory. I don't know how they're going to resell that or what they want to do."