Gaskell Media Management

Gaskell Media Newsletter
Volume 19, Issue 5
Fall 2005
The future of radio
While TV has seen a drop in viewers, radio listeners have remained fairly constant at 94 percent percent of the population or 230 million weekly listeners. But the industry cannot afford to be complaisant. Traditional radio and its advertisers must contend with a rapidly changing market fueled by new technologies that are chipping away at audiences.
A technology like Apple's IPOD or the MP3 player puts control in the hands of the listener. A recent study conducted by Arbitron and Edison Media Research found that 11 percent of consumers own at least one on-demand recording device. In addition to downloading music, the devices allow you to download a pre-recorded audio file or broadcast. Forrester Research estimates that 25 percent of consumers will own an IPOD or MP3 player by the end of 2006. Not surprising, early adopters are young people, the very group that commercial radio advertisers want to reach.
Another challenger to traditional radio is satellite radio. It has nearly 5 million consumers and the industry projects 8 million by the end of the year. Fee-based and commercial free, satellite radio receivers are now an option for new car buyers.
Internet radio listeners already outnumber satellite radio subscribers. Like satellite, Internet radio listeners can choose from a variety of programming to suit their individual tastes and interests. Internet radio is not commercial-free, but scheduling is less intrusive than on traditional radio, with three to five stand-alone spots per hour.
Radio advertising revenue 2004
Terrestrial Radio
$21 billion
XM Satellite Radio
$8.4 million
Internet Radio
$4 million
Sirius Satellite Radio
$906,000
The technology is certainly driving change, but the real story is content and control. Consumers of radio are looking for something new, and they want control over when and where they consume it. To compete with satellite and Internet, traditional radio must embrace new technology. Content is a much bigger challenge: static playlists do not create loyal listeners.
Time Warner Cable tests TV to PC
9,000 subscribers to Time Warner's Road Runner service in San Diego, are being offered free access to over 75 cable channels from their computers. RealNetworks is working with Time Warner to deliver comparable quality TV programming to computers connected to TW's hybrid fiber/coaxial cable system. Time Warner is not using the Internet to deliver the video, but instead relies on RealNetworks technology that equips a computer to receive TV signals. Other cable operators will be watching with interest. If the trial is a success with subscribers, and that will depend on the complete execution, this will give cable companies a big advantage over theiir DBS competitors.
Electronic billboards
Revenues from outdoor advertising increased by 2.9 percent in the first quarter of 2005, following 18 months of sustained growth. Industry forecasters predict revenues will surpass 5 percent this year. That's healthy growth for a medium that's often overlooked by advertisers. New electronic billboards have the potential to increase outdoor revenues exponentially if large advertisers sign on, and there's little doubt that they will.
Lamar Outdoor is leading the industry in the deployment of electronic billboards. The company has installed electronic billboards in dozens of markets over the past couple years. Clear Channel Outdoor, the nation's largest outdoor advertising company, recently launched electronic billboards in the Cleveland market. Another competitor, Viacom, plans a launch in San Francisco later this year.
Lamar launched a 10-sign network in Pittsburgh last year that has a daily effective circulation of 350,000, equivalent to the combined daily circulation of the two local daily papers.In its Cleveland implementation, Clear Channel Outdoor is selling packages at $40,000 to advertisers whose ads will share an eight second rotation on seven billboards in the market area.
This new business model has similarities to broadcast television in the way it is sold. Advertisers purchase dayparts, sharing the billboard space with other advertisers as the ads rotate throughout the day. Advertisers will be able to change messages from their office computers, introducing a flexibility never before possible in outdoor. the outdoor industry believes this ability to change copy at will, and tailor messages, will attract new advertisers, particularly those in the retail sector, who have avoided outdoor because of its static nature.
Nielsen measuring sports sponsorships
ESPN has signed on with the Nielsen Sports Sponsorship Scorecard service. The new service tracks and measures sponsorships placed in televised sporting events and offers post-buy assessment of all sales activity. Nielsen Sports has signed agreements with media companies, advertising agencies and sports teams, since the service was launched.
Podcasting the local news
Always looking to reach new markets, television stations across the country are exploring podcasting as a way to reach a young demographic. Podcasts are downloadable audio files that can be played on Apple's IPOD or similar devices. Once content is downloaded from a Website, the IPOD owner can replay it anytime and anywhere. Apple has sold over 10 million of the devices and sales are still strong. Most users download music or radio programming, but stripped of its video content, television news and informational programming is now being made available by some stations. Surprisingly, some smaller market stations took the lead in podcasting. KFVS, a Missouri station, was the first in the nation to podcast. WBAL in Baltimore podcasts its morning and early news shows. WCVB in Boston makes only features available, bypassing news because of its short shelf life. ABC News and NBC News announced they will make segments of their newscasts available as podcasts. The cost to the stations is minimal; they are just repackaging content that already exists on their Websites.
Nielsen to measure VOD audience
Nielsen will phase in measurement of the on-demand viewing audience starting in January 2006. Two new reports will be made available to Nielsen subscribers: live ratings for DVR playback use within 24 hours of broadcast, and live ratings plus playback use within seven days. Later in the year Nielsen will add measurement of VOD use for movies, pay-per-view events, and older TV programming.
Newspaper circulation down
The Newspaper Association of America reported a 1.9 percent decline in average daily paid circulation, in the most recent six month period, for 814 newspapers reporting data to the Audit Bureau of Circulations. The Wall Street Journal's circulation declined by 0.8 percent. The New York Times had a modest increase of 0.24 percent. The Los Angeles Times and the Chicago Tribune fell 6.5 percent and 6.6 percent respectively.
Cable set-top data may provide better measurement
Industry insiders complain that Nielsen's methodology cannot produce reliable data on smaller cable networks. Nielsen bases its ratings on the habits of a fraction of viewers. Critics charge that Nielsen's modeling system is invalid when used to measure audiences for niche cable channels because their sample is too small to be statistically significant. Some are exploring the use of cable set-top data as an  alternative. In real time, set-top boxes in the homes of 56 million cable and satellite subscribers record and store every channel tuned to, and changed, by those viewers. if the cable and satellite providers were to make this data available to Nielsen or a competitor, accurate measurements of niche cable networks would be possible. One drawback to the set-top data, however, is the lack of demographic information. Advertisers and media agencies want to know who is watching. Data on how many are watching is far less useful.
Urban, Hispanic radio formats a force
From Los Angeles to Chicago to Philadelphia, Urban and Hispanic format radio is bypassing the market leaders in ratings. In New York, WSKQ's morning show, hosted by Luis Jimenez, passed Howard Stern on Infinity's WXRK-FM among all persons and adults 18-34. Stern also lost his top slot to Univision's KSCA-FM morning show with Eddie Sotelo among adults 25-54 in Los Angeles. In Arbitron's winter survey, at least one Urban and/or Spanish language station is among the top five highest rated stations in the top 10 markets.
Forrester study: better measurement = $$$
A study commissioned by the Radio Advertising Bureau's PPM Task Force, and conducted by Forrester Research, found that advertisers and agencies would put more money into radio if the industry replaced its diary system with one that would produce timely and accurate audience measurement. 484 local, regional, and national agency and advertising executives participated in the study. Critics (who tend to be advertisers) charge that diary data is unreliable, and want the industry to switch to a passive electronic system like Arbitron's portable people meters. Forrester estimated that the radio industry stands to gain $414 million a year, a 3 percent increase, by adopting a new measurement system. Arbitron is testing their ppms in the Houston market. The study results will surely give their system a needed boost toward acceptance in other markets.