THE “MPR’S” OF PROGRAMMING

PART 20: REVENUE BASICS

This month the MPRs of Programming  returns with a basic look at the final “R” on the list of MPR’s…Revenue. This time around we’ll take a look at the basic ways that radio station’s generate revenue based on ratings and other factors.

In review, the MPR’s of Programming are set up to help a radio station analyze it’s Music, Morning Show, Marketing, Management/Morale, Promotions, Production, Positioning, Personalities, Research, Ratings, and Revenue.

The revenue a radio station generates really is the “bottom line”. All of the MPR’s that I’ve written about are all in place to help a station garner ratings and ultimately generate revenue. While a programmer’s priorities should focus on the M’s, then the P’s, most GM’s and Sales Manager’s primary focus is on this particular “R”.

As a programmer, you can’t lose sight of the ultimate fruits of your programming efforts. If your focus on the quality of the M’s and P’s lead to successful ratings and revenue, there’s a great chance your company will keep you around for awhile.

REVENUE BASICS

While it would be simple to state that a station’s ratings automatically add revenue to the bottom line, there are numerous factors that contribute to a station making money. Here is a list of basics that are important elements in putting a station in a position to generate strong revenue:

·         Solid Ratings….While it’s not critical to have outstanding ratings to generate great revenue, it certainly helps. It’s possible to make money off of less than stellar ratings if you have a strong sales department, but it’s much easier to “guarantee” some sort of revenue if there are ratings to sell, particularly on a national basis. Most national business comes out of agencies that purely look at “the numbers”. The old tried and true cost per point is based on Average Quarter Hour rating numbers. These are solid black and white numbers that come right out of an Arbitron rating book. While astute GM’s and Sale’s Managers can usually massage the numbers into decent agency deals, the leverage that solid ratings afford are an important revenue generating tool in the negotiation process.

·         Great Management…..Solid ratings are an important foundation in generating revenue, but a strong supportive management usually gets the fact that revenue generating is long term and is ultimately based more on servicing the client rather than ratings alone. An astute GM and Sales Manager understands that there are many other ways to generate revenue if the station is going through a down time playing the ratings game.

·         Excellent Sales Department….One of the greatest ways to compensate for less than stellar numbers and put money on the books is having an excellent sales staff. Great sales people have that intangible mix of the ability to relate to clients and the killer instinct to close the deal. I’ve seen the benefit of an outstanding sales department in really being able to sell a station’s attributes despite the ratings. Imagine the power of a strong reliable sales staff in selling great numbers. This combination can be nothing short of combustible.

·         Good Game Plan…..A solid revenue base needs a great game plan. Similar to a Program Director’s programming plan, a radio station that generates strong revenue usually has a solid annual sales and marketing game plan in place that is set up to make money in ways well beyond just selling spots. A good game plan for generating revenue is a benefit for both programming and ultimately sales.

·         Non-Traditional Ideas….The days when a radio station’s sole revenue generating was based on selling spots are long gone. Value added promotions, sponsorships, the Internet, event marketing and other non-traditional ideas have added millions of fresh dollars to radio station bottom lines. In many cases, these non-traditional forms of generating revenue have taken precedence, particularly with radio station’s that are having ratings trouble.

NON-TRADITIONAL REVENUE

The idea of thinking outside of the box to generate non-traditional revenue has been a huge boon to radio over the last decade. Taking a hint from some of the non-traditional ideas mentioned above, here is a list of revenue generating ideas that go well beyond just selling spots:

·         Sponsorships….In many ways, sponsorship opportunities for a radio advertiser are a more valuable tie-in for advertising a product or service than just buying spots. Major beverage, food chains, and retailers have been sponsoring radio programs or events with great success for many years. Major beer and soda vendors like Budweiser, Miller, Coke, and Pepsi are consistently sponsoring radio programs and events for the lifestyle tie-ins they afford, particularly with Rock and CHR radio stations.

·         The Internet…Another valuable source of non-traditional revenue for radio stations has been their ability to advertise on their web sites. Over the last several years the amount of additional revenue that some radio stations have made off their web advertising has gone well beyond the “value-added” status to a clear case of new “revenue-generated.” There are several ways to generate revenue from a radio station web site including banner advertising, sponsoring lifestyle pages, selling music, and selling promotions that tie in the interactivity of visiting the web site and listening to the radio station.

·         Event Marketing….Several radio stations have taken advantage of the success in selling advertisers a chance to be a part of major lifestyle station events like festival concerts and major on-site promotions. Active and Alternative Rock stations around the country have been making very healthy profits from promoting their own major rock festivals. KROQ in Los Angeles has really developed a strong ratings, marketing, and revenue generating event over the years with their annual “Weenie-Roast” concert festival. This annual festival concert has become such a major event that last year the concert was held before an audience of 50,000 fans at Anaheim stadium. Besides the revenue generated from ticket sales, radio stations make additional dollars by selling major advertisers on-site booth spaces. This type of event marketing has become a major non-traditional win for the radio station, it’s advertisers, and it’s listeners.

·         Job Fairs…..Another great lifestyle event for radio stations that may have a younger audience base is the development and sponsorship of job fairs. This is a great way to directly benefit a radio station’s clients and it’s listeners. Many retailers who wouldn’t traditionally advertise with a radio station may be pleased to see the positive results gained by being involved with an event of this type. It’s also a great service for the listener, especially if they find a job they like. A positive emotional investment on the part of the retail advertiser and the listener can pay huge dividends for a radio station, well beyond the non-traditional revenue generated.

SELLING PROMOTIONS WITH LISTENER BENEFITS

While the development of non-traditional forms of advertising is an important aspect of generating revenue beyond selling spots, one of the biggest challenges a radio station constantly deals with is taking the hundreds of mundane sales promotions and making them effectively work with the “listener benefits” that programming-driven promotions afford. Today’s revenue demands amidst continuing consolidation have put a premium on doing promotions that add to a radio station’s bottom line.

While the revenue generated from doing sales or “value-added” promotions can be quite substantial, the key question that should always be discussed among the programming and sales department is…”what’s in it for the listener?”

A heavy dose of purely sales driven promotions without any listener benefits can actually create ratings decreases that will hurt the station’s bottom line more substantially than any of the potential revenue generated. The most effective sales promotions should always synergize the programming and sales efforts creating a win for clients AND listeners.

While I was programming KSJO in San Jose in the late 80’s, our promotion department developed “Solid Rock Patrols” which were basically a programming twist on a typical retail sales promotion. The station would send different jocks out to various client locations in the market for a 90 minute on-site appearance complete with the usual call-in’s and station prizes as well as certificates from the client.

Another example of how a radio station took a purely sales-driven promotion and created one with true listener benefits was the recent “Broken Hearts Ball” developed by KDOT in Reno. The station turned a regular Valentines Day  bar remote into a huge singles party.

The station’s night time host Nick Danger actually called it a “losers” party and did relationship contesting on the air the week prior to the event. The station had a paper shredder at the door which was used for marriage certificates and old love letters and they crowned a King and Queen of the ball who announced their story of heartache to the crowd. KDOT also gave out prizes like single movie passes and dinner for one and even decorated the bar with black balloons. The night was a huge success.

These promotions effectively positioned a typical sales promotion as a programming driven appearance. With this spirit of creating and executing sale’s promotions with “listener benefits,” you can potentially come up with promotion ideas that’ll even make a lube job sound exciting.

The basics of generating revenue for a radio station should not be just a sales issue. The real astute programmers should keep an eye out for programming opportunities that not only benefit listeners but have revenue generating impact as well.

Next time, the “MPR’s” of Programming continues with a look “beyond the basics” at this final “R” on the list…Revenue. We’ll hear from top GM’s, a Sales Manager, and programmer about the best ways to efficiently maximize a radio station’s revenue potential.