David Verklin sees bright future for radio
Carat Americas CEO David Verklin spoke with RBR after his very well-received speech at the Bear Stearns/Interep Radio Symposium in New York this week. David mentioned he had the wrong information on the number of stations HD Radio could add for broadcasters, using Clear Channel's near 1,200 stations as an example:
"I misspoke yesterday, but what I said was Clear Channel owns 1,200 stations, and with the new HD digital signals, each signal could add up to two more. So that would mean 3,600 stations they'd have to work with in the marketplace. However, I later realized the AMs don't add an extra HD station and FMs usually just add one extra HD station-HD-2."
Well, some are starting to experiment with HD-3 on FM, and it's possible. WAMU-FM in DC is one example of ramping up to HD-3. If CC Radio added two extra HDs to each of their FMs, the total CC would have would be 2,900 stations, considering 350 AMs and 850 FMs.
"With that said, my point was simply this-with the advent of new signals one of the interesting areas I think we'll be able to see is the launch of new "verticality" in radio. I gave the example yesterday of an all business news radio station. As stations are able to proliferate their signal, they are going to be able to deliver narrower and narrower vertical slices. And that begins to get interesting, in particular to a guy like me, when those can be banded together into a national network. So imagine not just the fact that you've got a 24-hour business news station, but you've got a 24-hour business news station in the Top 20 markets. To me, that's an opportunity for companies like Carat to create a new narrowcast business news radio network. I believe in the future, with the advent of new signals that this could become a real opportunity for radio to create more new networks that serve narrow target audiences on a national basis.
So that was where I kind of challenged the industry and said, 'Look, are we thinking this way? Are we really looking at these new stations as a chance to innovate in more narrow formats? And then once we've got those more narrow formats, is there a chance then to look at those formats on a national or network radio basis'?"
He added, "The hottest idea in the American media business today is Media Mix. Not a new idea, but the idea of diversifying your portfolio of media delivery systems or channels is right now the hottest idea in the media business. And that means there is money in the market for all kinds of alternatives to television."
And the goal should be for network broadcasters to buy up those other media delivery systems so they can still get the money.
"Precisely. Now I've created a company at Carat as you know, which is a diversified marketing services company with media, etc. In other words, I'm in sports and events marketing and I've bought website design and build companies and I've got business in search engine optimization and trade, marketing analytics, etc."
Carat was one of the first to do this, indeed-"The Crackle of Change" is how you put it over a year ago at the AAAAs.
"I thought if we could create a company where we could just put buckets under water coming off of different parts of the roof, that we could make some real money. What's interesting is the margins are even better in the ancillary businesses as they are in the cores.
So what I also talked about is I think this year's television upfront will be about a 9-9.1 billion upfront. Last year was about a 9.5 billion upfront. So in my mind there's about 400 million in the market, as we speak, that are looking for a new home. Now digital will get a good piece of that. Online digital will get a good piece of that, maybe 50% of that. So there's 200 million in the market right at this moment that's up for grabs and I think radio could get it. I made a very controversial statement, which is I think radio should re-orient its presentation and pitch reach. I argued yesterday it's the most precious commodity in commercial radio today."
Because of all the media fragmentation.
"Precisely. I mean TV for many years has owned the positioning as the place to go when you need to sell stuff in America fast. I mean that's the high ground in marketing. And I believe that proposition has been unassailable for a long time. And for the first time in history...look, explained I have clients that need to sell stuff to America. And I believe that network radio, pulled together in a proper presentation, should sell reach. I mean how does one generate reach in radio? It's not that complicated-you buy lots of stations in each market. If you want frequency, you buy lots of spots on the same station. So this positioning that clients have of radio being a frequency medium, in my opinion, is inaccurate, and more important, it doesn't serve the purposes of radio. I believe that reach should become the new mantra of the radio industry, about 'We can reach America rapidly.' And you can do that on a local basis, obviously, by buying lots of stations, or we can do it on a network radio basis.
And a couple of analysts came up to me after the speech and asked me what changes radio has to make to talk more about reach. And I kind of laughed at them and said, 'None-it's just a sales pitch.' You don't have to buy a new station, you don't have to buy new software, you don't have to hire any new people. You need to wrap your head around looking at radio in a different way, in my opinion, because TV is vulnerable. There's 400 million dollars out there right now looking for national reach. The money came out of national television. The home it is looking for is some other kind of national delivery system. The web will get its piece, but it could be national radio as well."