A week after Arbitron reported a 14.5% hike in time spent listening to Clear Channel's major-market stations, the radio giant announced a 6.5% drop in second-quarter radio revenue, both likely a response to its much-publicized commercial clutter-cutting campaign that encourages marketers to cut 60-second spots in half.
"We are building a new 30-second marketplace, which continues to move forward, albeit slower than we would hope," Clear Channel Communications President-CEO Mark Mays said during a second-quarter earnings call. Regardless, "our clutter reduction program lays the foundation for the future of Clear Channel Radio." By the end of second-quarter, 25% to 30% of the radio group's total commercial minutes were 30-second spots.
Whether Clear Channel can charge more for a less cluttered environment is somewhat out of its control, as it partly depends on what its competitors do, most of whom notched small second-quarter increases.
Infinity Broadcasting grew 1%, Citadel Broadcasting's same station revenue grew 2% and Entercom and Cumulus, two companies that have also embraced :30s, increased 4% and 1.3%, respectively.
"There are advertisers who just won't be pushed into a 30-second spot and, because Clear Channel now has fewer of those, that money is moving to competitors," said Laura Martin, senior media analyst at Soleil/Media Metrics. "It's a competitive world and competitors are then saying `hey, stay with us."'
In markets where more than one radio company had constricted ad inventory, adjustments came faster. Entercom's Exec VP-Chief Financial Officer Stephen Fisher told analysts in the markets Entercom shares with Clear Channel "the adoption rate for :30s [are] moving along a little bit quicker than in markets where, let's say, we're on our own in that regard."
Clear Channel told analysts average unit rates for 60-second spots were up 10% over first quarter, and average 30-second rates were up 18%.
Meanwhile, Cumulus suffered a revenue blow as its largest advertiser, Home Depot, moved its radio advertising from spot to network-raising the question of whether national advertisers, as they become more comfortable with 30-second spots, will move their money to network radio, where 30-second spots are plentiful and often less expensive.