A great discussion on the Seattle Radio Message board that someone posted asking when it would be worth while for JACK FM to put some jocks on the air.
They have a poster there named DJ Dan that has lots of insight into the $$$ dollars and cents of the business (I think he is an agency media buyer) and this is some of what he said a jock would need to do to earn their salary... and likewise... maybe you are doing this... so then what you should be getting paid.
Quoted Text
Rule of thumb for a promotion or trade value is 8-1 or 10-1. That means if a promotion costs 100,000, it better bring in 800,000 to make it worthwhile. You have cost of sale at 30-35% (regular commission, plus agency commission) hard cost of promotion, administration and operating costs and you get a margin of 30-40%.
I would assume the same holds true for air-talent. If you were to pay a morning show 500,000.00 they would need to bring in 4,000,000 to make it worthwhile. KZOK is the best Seattle example. The station was billing 5 million a year. 1-2 million in extra talent costs were added and now the station bills 15 million a year. It makes sense.
A station like KQMV or JACK bills around six million a year and cash-flow about 2 million. If you add airstaff and promotion at about two million in expense can you bill an addition 6-8 million? They would need to bill around 12-13 million to make it pay off. Remember talent needs to be promoted, otherwise why have them. In the case of KRQI, they were billing about 5 million, added three million in talent and promotion and ended up billing around 6 million. It didn't work. High risk, but high reward if it works like KZOK.
That is the sales point of view.
and then more:
Quoted Text
I am answering these questions based on my years in sales and management at a rep firm. Keep in mind that I disagree with the premise that radio needs to deliver a 40% margin to be viewed as successful on Wall Street. Who made that call? When I started, in the late eighties, radio in Seattle was owned largely by non-public companies like Ackerley, Golden West, SRO, KayeSmith,Fisher (non-public at that time) and others. 15% return on their money was pretty damn good. Then radio got swallowed up and now stock holders get value, only if companies meet the 40% margin threshold. That is what is killing radio. A station that bills four million and delivers two is a wall-street success. A station that bills ten million and delivers two is a wall street failure. Yet they both deliver the same cash-flow, but one serves the community with talent, news and promotion. Go figure!
To answer some of the above questions. To create a "bump" a morning show must increase it's ratings in the 25-54 bracket by one full share point on a four-book. That is worth about a million dollars. If a whole station goes up one share point in Seattle that is worth about three million dollars, provided they hold it over a four book. Stations in Seattle in the 2 share range deliver 4-5 million in billing. 3 shares go to 6-7. 4 share delivers 10-12 and 5 shares 15-17. All 25-54 numbers here and ratings as the only factor(which it is not as you will see below) 12+ is truly meaningless.
Sales 101 (now you are getting bored): What drives revenue:
1. Demand. This is the biggest factor. In first quarter demand was off 20% and cost per point in Seattle was off 20%. Stations had to dive on rate to get business. If there is no demand, due to recession, or a major tragedy like 9/11, there is nothing you can do. This is what is going on right now. Let's hope second quarter improves. In rep sales, my living depends on regional and national demand.
2. Ratings 25-54. 75% of all buys are based on the 25-54 demographic, whether it be adults, women or men. Ratings in these three are most important. That is why you see non-performing 12+ stations like KMTT and KPLZ do so well. They highly target this demographic. This is why KUBE, KBKS, KNDD, KQMV and others don't do as well despite higher 12+ numbers. Power ratio of formats is the word most used. Highest power ratios belong to News, Hot/AC and AC. Lowest belong to classical, rhythmic, hispanic, urban, alternative and active rock.
3. Relationship. This is huge. Sales people and talent have built relationships with direct and regional clients. This is why stations with air-talent, news talent or community service appeal do so well. They build relationships with listeners and clients and deliver results. This is bigger than most managers want to admit. The ability to do live spots, remotes, help clients in other ways is critical to delivering results. This is why stations like KOMO and KIRO bill in the top ten, despite low ratings. The sales people and stations have built community relationships. I see some FM stations with the same heritage sales people and talent. Top of my list would be KMPS, KZOK, KPLZ, KCMS and KUBE.
Sorry this is full of sales rep crap, but someone asked. End result is stations that have talent make more money. It is higher risk though to make the 40% margin than just turning on automation and when demand is tight, automation and reducing costs is the easy way to 40% margin and wall street acceptance. To repeat: Who decided 40% was the perfect margin for broadcasting? Spectacle is right: broadcasting is about relationships and if you cut your way to a 40% margin, rather than take the risks to spend your way to a 40% margin, companies will kill the industry.
I have a sneaky suspicion that at higher levels of management, this concept is well understood.
The problem is: How do we find and recognise Talent when it is presented to us?
As I was grinding my way through the gray, smog-laden sleet of another bleary afternoon down Lakeshore and the Gardiner into the city to do some studio-work, I was scanning the Toronto Radio Landscape. This was about 3:00 PM. Definitely the snooze period for Toronto Talent - doing their positioners and promos and being very light, tight and bright all.
It was reassuring, hpwever, to know all were playing the "best" music and more of it.
I was wondering, however, if Radio people today - particularly Programmers - are aware they are working a strategy that is designed - at best - to avoid losing rather than a strategy for appealing to an audience....
As to a 40% return on investment: Wisht I had me one o' them!
Not sure if some programmers understand this or not. Some companies I've worked for are all about the VT. The more the better. They've done extactly what this guy says NOT to do...cut your way to 40%.
I've always felt this way doesn' work. It's really nice to see someone say it from the money side of things.
And as far as the jocks just doing liners. That's a whole other battle. Let's first stop the bloodletting of VT....then let's work on putting the "theatre of the mind" back into radio.
Wait a minute...just read that last line to myself...screw it...both can be fixed! Jocks doing just liners don't have to be boring. The Racoon didn't seem do much more than liners but OH MY GOD he was a joy to listen to. Being entertaining while not saying much is becoming a lost art form. Some still do it amazingly well...so there's hope.
Radio has always been languishing as the # 4 buy in advertising strategies and, in my view, are lucky to maintain that position. V/T'ing and liner-deliveries are only strategies for hangin' on.
Now, I don't expect the Industry to turn tail; holler "Mea Culpa" and re-arrange everything in order to bring Talent back into the mix.
What I do expect, however, are some people to put their heads together and decide to rip their markets a brand new one.
The rest - when it happens - will be reeling for years while the risk-takers are partying on the yacht.
it is an interesting thread, and if you click on it and read all the posts then you'll see that things are obviously different in the US.
For example, a cluster there is much larger... like i think the big guys in Seattle own 8 stations. And the big guys own 8 station clusters in many LARGE media markets.
so they were saying most the clusters basically have two to four "full service" stations and then like four stations that are auto boxes that they use to smash into the other clusters.
In Canada, the game is different, a company can only get 2 FMs and there are fewer markets in the country worth serious dollars/audience. So I don't know how this all translates here... but I thought it was a good read.
Another poster on the thread says that, for example:
You have an autobox JACK format that bills $6 million a year and has $4 in expences then they have a profit of $2 million.
If you spent $2 million on people and the station is able to bill $8 million and one dollars, thus earning a $2,000,001 profit, then it is worth putting live people on the air to squeeze out that buck.
But as DJ Dan says, you then also have the potential to bill $15 million, so that too makes the risk worth it.. in his mind (and of course my mind, but it ain't my $2 million I'm betting).
These are some favorite mispronunciations . . . FER . . . for TUH DAY . . . today TUH MORRA . . . tomorrow AN' . . . and LIL' . . . little AY . . . a THEE . . . the NOTHIN' . . . nothing IRREGARDLESS . . . regardless
Ad libs from nearly all traffic reporters . . . "The Lions Gate Bridge is moving again." (to where?) "The Iron Workers Bridge is all tied up." (UBC engineers again?) "The Port Mann Bridge is all backed up." (in need of a laxative?)
To AM 320 – stop nitpicking...do you hear everyone in life going around speaking in perfect english?
No, we don't always hear people speaking "perfect English" but those that do, that enunciate clearly with a rounded command of our native tongue (english and/or french) make far better broadcasters than the likes of what we hear on the air in Vancouver these days. Radio has a responsibility to provide quality announcing with announcers who are expected to speak 'perfectly'. Because many in the general populace don't speak correctly is no reason to let radio announcers off the hook for sloppy writing or lazy conversation. On the other hand, maybe that's the new style of broadcasting that BCIT and other schools find acceptable . . . but it is not pleasant to listen to. The exception to the rule perhaps, is the illiteracy spewed out each morning by Neil McRae . . . not exactly a role model that immigrants should learn from.
Home
Calendar
Search
Register
Login
Logged
