Radio Stations change formats all the time. If Alternative Rock isn't cutting it, then maybe a switch to Latin Pop will produce the ad $ they so desperately need. Well, KZPS in Dallas is taking this to the extreme. Apparently the switch from classic rock to a "Texas-inflected rock-country hybrid" format was not enough this time. They are going to drastically revamp the ad model as well.
Instead of selling 30-60 second ads as radio normally does, they are going to a time-based sponsorship model. According to an article in todays NYT:
Instead, advertisers sponsor an hour of programming, during which a D.J. will promote its product conversationally in what the company calls integration.
For example, the D.J. will identify Southwest Airlines, one of the station’s first advertisers, as the sponsor at the beginning of the program. In a prototype provided by the station, the D.J. later discusses the South by Southwest music festival, a popular annual event held in Austin, and concludes, “You know, the best way to get down to Austin for South by Southwest is Southwest Airlines. They have tons of flights. It’s the way I travel.”
The product-themed chitchat will account for about two minutes peppered throughout the hour, in contrast to the 12 minutes to 16 minutes of commercials that most stations broadcast each hour.
Clear Channel is clearly using this station as a proving ground for new ideas and I like the experimentation. The belief behind this seems to be that consumers hate ads and will favor a station that plays more music and less "SUNDAY, SUNDAY, SUNDAY" ads that scream at you like your an idiot.
I have two main concerns about this model:
- Advertisers will really need to adjust their mindset on reach and frequency. For years radio stations have been preaching high freq and now this strategy (a total 2 minutes of ad content per hour) says frequency doesn't matter.
- Since they are cutting their inventory down to ~1/8 of normal levels, they will need to raise rates significantly in order to maintain current revenue levels. Even if the audience doubles as a result of this move, they will need to raise rates by 4x in order to stay flat. That will be very tough.
I may be over-simplifying the economics of radio (and showing some ignorance as well) but this is going to be tough and I wish them luck.
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