We've received yet more responses and feedback regarding our coverage of the AAAAs letter to CC Radio CEO John Hogan voicing concerns about CC Radio's "Less is More" initiative (12/3 RBR #235), (12/6 RBR #236).

From Houston-based Ad Results, which specializes in live reads:

"We appreciate the opportunity to respond to the recent RBR article regarding Clear Channel's "Less is More" policy and the concerns voiced by the AAAA.

Ad Results is a Houston-based direct-response advertising agency, specializing in live endorsement radio. We deal with over 700 radio stations a significant portion of which are Clear Channel properties. Our experience in radio centers on using live local radio personalities to endorse our clients' products. Our approach is typically to purchase :60 live ads running first in the stop set or within the context of the programming. When we began utilizing this model of advertising for our clients the first in stop set item was not an issue. Our ads were designed to run within the editorial capacity of the hosts' program. It has only been somewhat recent that radio stations have needed to place these ads in the context of the rest of the commercials on a particular program and subsequently we have had to request that our client's ads run first in break. Frankly, the "Island" ads that Clear Channel has been speaking about recently only came about because the programming arm of these large broadcasters deemed that all the commercials had to run within a designated commercial break, and these stand-alone ads were our mutually negotiated solution. Live commercials in the past were almost always a component of the actual programming.

The underlying issue with this LIM program came about because of the sheer number of ads that were being run in each commercial pod. We applaud the desire of Clear Channel to create a better product, however the solution must provide equal incentive for both station and client. Since results are directly tied to rate, our advertisers would need to have a fair rate associated with their commercials in order to be successful. Cutting inventory and increasing the rates proportionally does not necessarily translate into a very successful model. The premise is that the LIM program will generate more listeners and a longer time spent listening among those listeners. At this stage there is no guarantee of this happening. Cutting the inventory by 20% and raising the rate by 20% or more does not necessarily mean 20% more business for the advertiser.

That is why Ad Results operates in the arena of live endorsement radio. The ads are done in a conversational style and we rely on our endorsers to communicate the features and benefits of our clients' products honestly, but also in a compelling manner. The results speak for themselves in the fact that many of our advertisers return to this advertising model year after year and in many cases they increase their advertising budget toward this medium. Because of the exclusive nature of live ads, we pay a premium for these spots, often including a talent fee for the direct endorsement of the talent. Radio is our medium of choice because, bought efficiently, it works.

The November 9th memo written by Mr. Kevin Gallagher, Chairman of the AAAA Local TV/Radio Committee to Mr. John Hogan of Clear Channel is of particular interest to us. Mr. Gallagher's memo underscores concerns that every radio advertiser should have about Clear Channel's strategy. We would like to address each of the concerns as Mr. Gallagher presented them.

One of the concerns expressed in Mr. Gallagher's letter to Mr. Hogan is that, "there is little or no research that documents either the potentially higher recall of either the first pod position or stand-alone "island" position." Our years of testing and research have yielded empirical data, which allow Ad Results to vouch for the fact that first pod position, and, by extension, stand-alone spots do, in fact, produce superior results. However, ad effectiveness is not simply a function of spot placement. Effectiveness must also be weighed against spot cost as well. Significant increases in spot costs for islands and first pod position can result in higher cost-per-order and therefore, lower results for advertisers. The question that Clear Channel must answer for its advertisers is, "How can I be assured that my dollar will become incrementally more effective due to this new placement strategy?"

Some Clear Channel groups are seeking increases of 20%-30% or more for "islands." Many of the Clear Channel stations and groups have agreed to more modest increases but some groups are still mandating a much higher rate for these "island" ads. This is an increase over and above the premium that spots in first position currently command. At increases of this magnitude, it makes little economic sense for advertisers to seek out the islands, and it can be absolutely devastating to the budgets of clients who have depended upon the traditional :60 to form the core of their radio message. Furthermore, if the stand-alone is understood to be the premium position for advertisers, would it not make sense to ask a modest premium for first pod position, allowing spots in the middle of a break to remain at the status quo, and to correspondingly decrease the price of spots buried in the back end of the stop set?

Clear Channel also promotes the idea that listeners will respond better to fewer ads. In contrast, Ad Results' buying research has proven, time and again, that the stations which produce the best results are actually those with the highest content of editorial programming, news, personality-centered programming, and, yes, even more ads. Soft AC's may be revered for less interruptions and higher ratings, but when the question is one of true effectiveness, the highly-attuned audiences of News/Talk stations, personality-driven music stations and their like, out-perform the results of "more music-less talk" stations in virtually every instance.

Clear Channel claims that less ad "clutter" will result in more listeners, which will lead to higher ratings, which equals greater ad effectiveness. One way to allay advertisers' fears about this uncertainty would be to guarantee ratings, in much the same way as television does. Television runs a post buy analysis, promising ratings delivery of a certain level. If those levels aren't met, make-goods run to offset the ratings shortfall. Whether or not Clear Channel would be amenable to this is uncertain. In Ad Results' negotiations with over 250 Clear Channel stations all across the country, only one station has offered to guarantee an increase in ratings.

In Mr. Gallagher's second point, he addresses a concern about Clear Channel restricting the first pod position to :30 advertisers only. We wholeheartedly agree with Mr. Gallagher's contention that this policy should be re-evaluated. We feel that the advertisers should be able to determine what spot length is appropriate for their product. Some products are well suited for shorter :30-second ads while other categories need the longer ad time to deliver their message. Allow the advertiser to decide which creative is right for them and allow them to pay the appropriate rate for that commercial, regardless of placement in the commercial pod.

Lastly, Mr. Gallagher touches on the point that many clients today are asking for audits and increased accountability measures to verify that their ads run as negotiated. Ad Results addresses this issue by monitoring ads on a weekly basis, and verifying spot placement by requesting airchecks including one minute both before and after the ad. However, not all clients and agencies have the capability to monitor spot placement this carefully. So, for those without these monitoring capacities alternative media auditing services will be needed. The use of these services will not come cheap. Clear Channel must recognize the extra expense advertisers will be taking on by addressing this issue.

Clear Channel has shown a willingness to work with their advertisers and partner agencies to come up a landscape that is dramatically different than today's. We have, to date, received no less than seven calls from Clear Channel regional Vice-Presidents, expressing their commitment to our clients and to making our ad campaigns successful. Time will tell whether the overall scope of "Less is More" can be judged as a success or a failure. However, a commitment to building a better radio product, attracting new listeners, and improving ad effectiveness is something on which we can all stand behind Clear Channel.

The solution is simple: build a better product. The advertising is not the enemy, the way the ads run has become the problem. No one wants to hear eight to ten ads at twenty and fifty minutes after each hour the way the stations play them now, regardless of the length of the ad. If you build a radio station with quality programming, creative hosts and announcers, and commercials that are not back-to-back to back, listeners will follow. The fact is, More is More and Less is Less, and it always has been."

From Suzy Ernest, GM/CFO KSID Radio Sidney, NE:

"Why is Radio always tagged as the problem? When will agencies realize that not all markets are the same? We are an unrated market that has many of the clients that these agencies represent. We have Safeway, Ford, Dodge, Chevy, Quiznos etc.. All of the agencies buy the same way..6a-9a, 10a-2p etc.. trying to hit the drive times. Which is great if you are in a large market.

We don't have a "drive-time" here. Sure we all drive to work..but we are in a county that has 4 stoplights..all of them in Sidney. Agencies need to look at different markets and buy time differently for the benefit of their clients. Ad reps..pay attention to what the Local Sales Manager recommends!

Do many of these big clients really need to advertise in a small unrated market? The answer is an emphatic YES. If you don't, at least give your local franchise an advertising budget and allow them to buy radio themselves. Our local Quiznos just closed it's doors their agency wouldn't spend much and the store itself was told they really didn't need to advertise because of all the national ads (which weren't running here.) What they bought were 60 second call downs, which only work here if you are running a bigger schedule like an ROS. So, we get the excuse "We tried radio and it didn't work."

Our local Alco/Duckwall had been here for 30 years, advertising only with newspaper inserts. but when Wal-Mart opened they closed. Didn't even tell their employees..just papered the windows and the employees found out when they came in for work one day. I spoke with one of the Vice Presidents of the company, who felt the need to "give me a lesson in economics". He told me "they tried radio and it didn't work". I asked him where? The answer was Des Moines, Detriot. I told him that they never tried it here, but they did buy about 50 dollars worth once when the newspaper inserts had an error..hmm. I'm glad I didn't buy into his form of economics.

When the local Radio Shack opened its doors they received a great deal of ad money and coop dollars. Then the following year, the national firm decided to go with TV and newspaper, which hurt our local store. Our local Radio Shack owners are firm believers in radio. They notice a big difference when they are on the air, so they budget quite a bit for radio. THEY KNOW IT WORKS.

What's my point? I don't think this is radio's problem. This is the agency's problem. Why? They don't know radio. What I mean by that is this...they don't get it! They just don't understand what radio does, how it works and how to make it work for their client. When it doesn't work, they turn around and blame radio, telling us that, say it with me now.."radio doesn't work".

Do clients realize that some agencies don't pay stations until 90-120 days out? (Especially small market stations.) Then we get a phone call from the agency that we neglected to send them an invoice two months ago..and they can't pay that invoice until we send another one? Trust me, we sent your invoice. Agencies know that, but they let the upfront money that clients send them sit in a bank gathering interest. Which isn't a bad idea, but I would like to pay my employees...

True story: We asked a local dealer, who is part of a large national company, if he had any pull with the agency because we were getting nowhere with them. We were owed over $6,000 from the agency over a 5 month period. (we kept hearing.."oh, they cut the checks yesterday, you should be getting one soon.") The national company had to put almost $100,000 in upfront money to this agency, so the agency "could pay for advertising bought on behalf of the client." The national company axed the agency.

Note to agencies: Payment is due when services are rendered.

My advice to agencies? Listen to the small radio stations when they make a recommendation. We actually know our listeners, they are our neighbors, friends and relatives. We have always sold 30's in addition to 60's and yes, even 15's. We know our market, we know when people listen. We know what they like and what they don't like (they didn't like Burger Kings ads last year..they don't like the car ad where the guy tells someone to "spit" on someone else.) Trust us.

Radio is doing well here. We are locally owned and operated in a community that shows extreme loyalty to us. (If I am off the air too long I start getting get well cards.) We do 90% of our own programming, taking some shows like Nina Blackwood, Casey Kasem etc. Our music scheduling is in house. We broadcast local high school sports on both stations and over the web. We have our own dj's..many of whom are part-time high school students. Two of our employees have gone on to college, majoring in broadcasting.

30's, 60's, 15's or 120's...it's not the length, it's the message. Why sell a 60 when the message is only 30 seconds?? We've known that for years, so has Clear Channel, but someone had to say something. This is just my opinion, for what it's worth."

RBR observation:
The more live reads stations can get their talent to do, the less likelihood of listeners opting for another station during a stop set. Live reads are very effective - - more so than :60s and :30s. As hard as it might seem to do live reads from DJs on national spots, we would suggest a few experiments in that direction as well. Live read ads cost more, so by instituting more of them, maybe less overall ads will be needed in each stop set to keep revenues stable.