Radio networks are leading a throng of media companies elbowing their way into the promotion business. Are they providing clients with a new menu, or is it just the flavor of the month?
A RADIO BUY WAS IN THE CARDS when General Motors sought to drum up students last fall for a promotion touting its entry-level Alero on Western college campuses. Spots that ran mostly on CBS Radio-owned stations told listeners how they could throw dice with the “Alero” letters and the GM Olds logo. If the name and logo came up, the player would drive back to the dorm in a new sports coupe.
Students at 20 campuses hopped into cars to roll the bones in a built-in tray. GM got 6,000 people to “put their hands on the car” and collected 1,500 names, says Tim Young, director of promotions and events for the West region of GM’s RWorks promotion division.
CBS’s role in GM’s campus fete wasn’t limited to delivering the targeted listening audience, though. The network’s eight-month-old sales promotion division – Infinity Promotions Group (IPG) – dreamed up the contest and ran the event. “They came to us with the idea,” Young says.
Young estimates that RWorks’ West region will spend up to $300,000, with more than half going toward non-media services. And he’s thinking of pitching the idea of a national college tour to the other regional promo divisions.
“We were able to get full service from one company. I didn’t have to go to one company for the promotion, another to manage the event. They even handled the database for the names we captured,” Young says.
“The one thing I made clear from the start was that the program might not include their media,” he adds, noting that GM’s in-house media buyers purchased airtime in San Diego, where CBS doesn’t own any stations.
Nickel to dime
Earning the “nickel” isn’t enough for radio stations anymore. Major networks have jumped into the sales promotion business to gain more than radio’s traditional single-digit share of marketers’ budgets.
Driven by clients on the lookout for new sales ideas – and competitive realities within the radio industry – radio groups such as CBS’s Infinity Broadcasting and 440-station AMFM, Inc., are spending money to set up marketing services networks.
Though radio has a long track record in promotional events, it is hardly the only form of traditional media eyeing incremental revenues from marketing services. Time Warner’s Turner Broadcasting System created the Turner Marketing Solutions Group and Global Client Solutions units five years ago. More recently, News Corp. started News Corp. One, and in October ESPN and ABC Sports unveiled ESPN ABC Sports Customer Marketing and Sales, a New York City-based business offering advertisers sports-marketing concepts and execution.
These divisions of giant media and entertainment conglomerates claim to offer programs that integrate media assets and services to help clients navigate the fragmented media market and drive their sales.
“Traditional media companies have to see themselves as more than providers of commercial inventory, because marketers are looking to them for promotional campaigns with brand-building capabilities,” says Jack Myers of The Myers Group, a New York City market research firm engaged in a multi-year project funded by major media companies.
A recent Myers Group survey found that 85 percent of senior brand and ad executives “have already initiated marketing relationships directly with media companies.” Those execs are looking for integrated marketing ideas, multiple-media opportunities, brand building, Internet tie-ins, and audience reach building, as well as research on advertising effectiveness, the report says.
Media’s claim to turf in the realm of marketing strategy and promotional execution raises two key questions: Do these companies have the staff and resources to perform at the same level as dedicated promotion agencies and marketing services firms? And if so, will they present clients with solution-neutral ideas? In other words, will an Infinity promotion plan have to include a CBS Radio ad buy?
Jon Kramer thinks media organizations are just putting a new face on the merchandising services they’ve been offering for years. “I think we are going to see the same value-added stuff we’ve always seen,” says the president of J. Brown/LMC Group, Stamford, CT, a co-marketing agency that makes extensive radio buys.
This media initiative is playing out against seismic rumbles in the relations between clients, ad agencies, media buyers, and media. The trend of ad agencies spinning off media-buying divisions into separate companies divorces agency strategy-making from those who presumably will be ordering up the new services.
“There is a huge disconnect between the people who are responsible for developing the promotions and the people who are buying the media,” says Kramer. “Media buyers are really not that interested, nor do they understand, the core equities of a brand. (The new marketing divisions) don’t have access to the brand people,” says Kramer.
“These media companies are offering enhanced added value (for media buys). They are not offering integrated marketing,” says a senior media analyst at a major New York City ad agency.
“Most of the media companies say, `This is what I have. How can I get you to exploit it?'” says the analyst, likening one manufacturer’s recent cross-platform buy with an industry giant to a media “garage sale.”
But the analyst did find something to like at one company during a recent presentation. AMFM’s two-year-old Chancellor Marketing Group “said, `What can I do for you?'” he says.
Sexy sells
Chancellor claimed revenue of $23.3 million in 1998 through marketing services for clients such as Alberto-Culver and Chi-Chi’s, Inc. When Chancellor’s Dallas-based parent, AMFM, completes a planned merger with Clear Channel Communications, Inc., San Antonio, this year, the fledgling marketing group will be backed by the nation’s largest radio network – some 830 stations.
Both Chancellor and CBS’s IPG unit maintain they are not delivering souped-up versions of the same old value-adds, but rather are building ground-up plans by leveraging their traditional strengths of local promo savvy and market knowledge. If the client wants to make a radio buy to deliver precisely defined audiences in major cities and secondary down-market burgs, so much the better.
“Before, we were waiting in the back room for the ad agencies to call us after the media buy. We never had the power or the sex appeal to go directly to clients and their ad agencies and work with them at the strategic-process level,” says Jimmy de Castro, vice chairman of AMFM, Inc. and ceo of the AMFM Radio Group.
“We can move the needle for Coke or Motorola or Pizza Hut without compromising the brand message by tying their promotion needs in with the radio buy. We bring a combination of great ideas, local hands-on execution, and equity-building media,” says de Castro, who started with six stations in 1988 and built a network under the Chancellor Media Corp. banner. (The name was changed to AMFM, Inc. last May.)
Watts happening
The radio business changed drastically in the ’90s when regulators allowed greater consolidation within markets. “We had to go and find out what the customers wanted,” says de Castro, whose mission for non-traditional revenue began with the 1998 hiring of Alison Glander, who had been showing radio stations how to create marketing solutions as head of her own consulting business. Glander today runs Richmond, VA-based Chancellor as ceo and president.
De Castro predicts Chancellor will begin earning money this year with a marketing network comprised of 15 offices and a staff of 250 dedicated employees nationwide. The division is staffed with people from both the client and agency sides who have brand-management and tactical-exection backgrounds, and is supported by Creative Resources, a Tulsa-based creative think-tank, he says.
AMFM’s stations deliver 65 million listeners a week, 15 million of them women aged 25 to 54. “That’s larger than the audience of any of the major women’s magazines and the viewership of top TV shows,” boasts de Castro. The merged company – which will go by Clear Channel Communications – will claim a weekly audience of 100 million.
Chancellor marketers have to reach client and ad agency decision-makers at the “strategic-process level” in order to succeed, de Castro says. “We have worked hard to partner with ad agencies because they are trying to figure out the best use of media and promotion dollars for the client, and in most cases are coming to us,” he says.
Chancellor’s Minneapolis office helped KB Gear Interactive launch its JamC@m digital camera by staging demos in Wal-Mart stores. The program coincided with cable TV network Nickelodeon’s “All That Music and More Tour,” for which KB Gear was a sponsor.
“We challenged them to come up with a creative way to bring this to one of our key retail partners. They drove the concept, managed it, and brought in the local radio,” says KB Gear director of marketing and promotions Pete Stoddart.
Chancellor’s stations helped the program unfold in 24 markets with ads and on-air giveaways that preceded the Nick tour. Radio station vans did remotes from Wal-Mart lots, and Chancellor staffers helped the 20-employee KB run the demos.
“We made a radio buy through Chancellor to run ads for the camera on stations where the Nick tour was coming through,” says Stoddart. “Wal-Mart was excited because we helped drive traffic to their stores. It was a terrific way to introduce a new product.”
“We have a long history through our radio upbringing of making things happen, getting consumers to act. We are experts in field execution,” says Glander, characterizing Chancellor as a “hybrid” company. “We will buy whatever needs to be bought in order to make the promotion work, yet we absolutely believe that radio is the best medium out there for driving a grassroots promotion,” she adds.
A radio purchase wasn’t even in the picture when Chancellor developed sombrero-topped Volkswagen Beetles and a sweeps that gave away the cars to build awareness for 15 Chi Chi’s restaurants in the northern New Jersey and Philadelphia markets.
“`They came up with an idea that fit our concept and positioning,” says Chi-Chi’s senior vp-marketing Laurie Katapski. “We liked the size of their organization and their ability to go out and about in our markets. They became the field marketing extension of our marketing department.”
Infinity and beyond
The IPG office in Los Angeles that helped RWorks show off the Alero is one of 25 offices set up by Infinity Broadcasting to provide sales and promotion services for advertisers.
IPG, which has a dedicated staff of more than 100, was built on a few local offices that have operated for several years under different names, such as the former WINS Promotion Group in New York City. The division hopes to sell programs with regional and national scope, tying in with Infinity’s 160 radio stations, says Greg Janoff, a WINS Promotion vet who heads IPG as vice president.
“Radio by its nature has been in the business of solving marketing problems. It was a logical extension to expand our service capabilities,” says Infinity Broadcasting co-chief operating officer David Pearlman. “We have a full menu of ideas we can bring to the table, and offices across the country to implement them.”
IPG might strategize with CBS Plus, a Black Rock-based unit charged with cross-platform selling of assets including the TV network and cable stations.
Though AMFM can’t match the size of CBS’s media stable overall (Clear Channel’s assets will include 425,000 outdoor displays and 19 TV stations), it does have plans to exploit the Internet with a new AMFMi division headed by de Castro.
AMFMi will create Web sites for about 400 radio stations, “transforming loyal listeners into active Internet participants,” the company says. Programs such as membership affinity clubs will drive consumers to the sites, where AMFMi will provide e-commerce opportunities by driving traffic to client sites – and earning a percentage of any sales, says de Castro.
“They are formulating a much better proposition for advertisers. The goal here is to sell products, not advertise,” says Mitch Owens, senior vp-director of media futures for McCann-Erickson Worldwide. “Radio connects in a very personal way. The Web sites can mirror the personality of the radio stations,” Owens adds.
The rap sheet
Clients and their ad agencies are the arbiters of media’s initiatives. Media promotion shops will have to shed certain baggage to make these new ventures work, say marketing observers. Typical knocks include:
– The emphasis is not on the client, it’s on the broadcaster.
– Media has a bottom-line focus that encourages the sale of unnecessary, high-margin media and short-changes clients on the promotion side.- Clients c an’t immerse media properties in their business because media can’t provide exclusivity and confidentiality.
– They lack the ability to execute. “They are trying to get an intern to do the work that a paid project manager would be doing for a sales promo company. These interns didn’t get into broadcasting so they could put up POS for a sales promotion division,” says one observer.
– They offer tactics without strategy or understanding of the brand.
If the trend of clients building long-term partnerships with media properties continues – Simon Property’s agreement with Turner Broadcasting to feature Turner entertainment properties in its malls is one salient example (see Hot Properties) – many of these concerns might evaporate.
The Myers survey found that 41 percent of senior-level marketers were “greatly interested in developing long-term marketing-based relationships” with media firms. Their top five partnering choices: America Online, Time Warner, Turner Broadcasting, Discovery Networks, and ESPN Networks.
Myers projects that by 2006, 50 percent of media buys will be “marketing and value-based,” deriving from marketing partnerships. Today, 95 percent of buys are commodity sales.
Radio’s success will be based on how it can build off the medium’s historical strengths in grassroots marketing, and if it can produce results for clients. “We want ultimately to be rewarded and compensated based on the success of the campaigns we create,” says de Castro.
Could he actually be thinking like a results-oriented promotions manager rather than an image-conscious media mogul?
Tune in tomorrow.
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