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Monday, April 18, 2005

Less Proves Higher CPMs For Clear Channel, But Fewer Radio Ad Dollars

MediaPost Publications Home of MediaDailyNews, MEDIA and OMMA Magazines
LESS APPARENTLY DOES MEAN MORE in radio advertising -- more CPMs. Clear Channel Communications, which embarked on a controversial plan to reduce the amount of commercial time on its radio stations, boosted the price of its ad time during the first quarter, its top executive confirmed in an interview with Reuters on Thursday. "Advertisers are paying more for 60-second spots with us than they did last year, and more than they did the previous month," John Hogan, CEO of Clear Channel Radio, the nation's largest radio broadcaster told the newswire service, adding that radio advertisers are also relying less on the medium's traditional 60-second ad units and more on 30-second spots.

That was the goal of an ambitious plan launched by Clear Channel this year that it claimed would be a win for both its listeners and its advertisers.

"We're scaling back... less commercials, less station promos and even shorter breaks," the company proclaimed in promos touting the new format, which began in January. The company said the move was in direct response to feedback from radio listeners, but also is a tacit acknowledgement of outside pressures - everything from satellite radio services to Internet podcasts - that are making terrestrial broadcast radio sound cluttered by comparison.

"Clutter is a major issue in our industry and our decision to limit the amount of commercial time and length of breaks, while reducing promotional interruptions, will benefit listeners, advertisers and the industry as a whole," Hogan said when he announced the plan last summer. He noted that "specific ceilings" would be applied to every Clear Channel station and would vary by format and daypart.

While media buyers applauded the plan to reduce the overall clutter of Clear Channel's stations, some balked that the real strategy was to get advertisers to pay more for less by converting the medium's traditional 60-second units into :30s.

While Hogan says advertisers are beginning to wean off of radio :60s, it's unclear whether the broadcaster has been able to close the price gap between the two commercial formats.

On Thursday, Hogan confirmed that the strategy has slowed overall advertising revenues in the short term, and has driven some advertisers to competing radio stations.

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