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Wednesday, July 28, 2004

Clear Channel capping ad minutes per hour on radio

monday
In a surprise move likely to reverberate throughout the entire radio industry, Clear Channel is admitting to what media buyers have been complaining about for years: commercial overload, or ad clutter.
Definition: too many darn ads so that listeners tune out and advertisers feel hosed for paying for spots folks just aren't hearing.
Reacting to a slide in radio ad prices, the nation's largest radio company will cap the amount and length of commercials that air on its 1,200-plus stations.
The behemoth's aim: Reducing the overall number of available ad spots will drive up the price advertisers are willing to pay to have their messages air on Clear Channel stations.
Ideally, the reduced inventory will raise demand and thereby prices sufficiently to generate higher revenues overall. Or that's the bet.
Another bet is that Clear Channel's lead will be followed by other major radio groups contending with that same issue of falling prices in the faces of the bloated inventory that's arisen from radio's worsening clutter problem.
Under Clear Channel's new rules, which go into effect Jan. 1, no station will run more than 15 minutes of advertising per hour.
Additionally, no commercial break will last more than 4 minutes or contain more than six commercials.
Clear Channel stations will also reduce promotional inventory--ads promoting contests or upcoming segments--beginning Oct. 1.
The decision follows months of lower-than-expected growth in ad spending, in addition to endless complaints from advertisers regarding the glut of commercials on nearly every radio station.
Combined national and local ad spending rose only 4 percent during the first five months of the year, and only 2 percent in all of 2003, according to data from the Radio Advertising Bureau. Radio ad revenue was projected to climb this election year as demand spilled over from local TV because of politicals, with the effect of tightening the demand for radio time.
A recent study from J.P. Morgan found that some radio shows, particularly morning and afternoon news shows, air as much as 22 minutes of advertising an hour, notes a story in today's Wall Street Journal.
According to the study, radio overall averages 15 minutes of commercials per hour, as compared with 12.5 minutes for television. That’s compared with the 10 to 12 minutes of advertising considered the norm for radio a decade ago.
Accordingly, Clear Channel has seen its stock fall 25 percent since the beginning of this year.
By cutting back on ad clutter, Clear Channel hopes to halt listener flight to non-commercial music formats such as CD players and iPods.
It also hopes the ads that do air will have a greater impact on listening audiences, thereby increasing the value of commercial spots to advertisers.
The specific limits imposed on Clear Channel stations will depend on its format and the time of day.
For example, in the morning Clear Channel’s country music broadcasters will be allowed no more than 12 minutes of commercials an hour, with 4 minutes and six commercials allotted to each commercial break.

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