Wake up and smell the flowers! – The misdirected dreams of advertising revenue development by UK community radios

The following is an article written by Henry Loeser, a prominent EU community radio consultant and lecturer with twenty years of commercial advertising experience. We welcome opinion articles which challenge current thinking and generate (sometimes controversial) conversations.

Introduction

In the United Kingdom, much of the community radio sector mistakenly covets the commercial advertising paradigm, whilst overlooking the real keys to their own success. Should these operators reexamine their mission, goals and strategy, they might find the local radio landscape a much more hospitable environment.

While having much in common, commercial and community radio broadcasters are different animals and should be equally recognized as such. Technical similarities are apparent, such as FM transmission, local coverage areas, and studio facilities. Externally, listeners hear news, entertainment, some opinion, and similar presentations from both provider types. The chief difference lies in the differing missions of community versus commercial: one to serve, the other to profit. But even in this context, similarities exist. Obviously commercial broadcasters exist only for the money, but every broadcaster needs money to survive and prosper. In countries where advertising is allowed, such as in the United Kingdom, the overlap of interests occurs in the form of competition for advertising revenue.

Not Commercial

Some would argue that commercial radio broadcasters have the right of protection in their markets against new competition from community radio. This is a contentious issue among all broadcasters, and often becomes the dominant point of disagreement in regulatory discussions. That however, is usually a mistake. With the exception of a precious few, community radios in the UK are not effective advertising vehicles in the same sense as commercial radios. Commercial local radios are usually high power FM transmitters with larger coverage areas compared to lower power community radios. Community radios seldom attract large audiences, and do not subscribe to audience measurement services common to commercial broadcasters. They can’t deliver a ‘cost per thousand’ result to advertising buyers, do not belong to ‘unwired’ networks, and also do not usually have an internal control system to fulfill scheduling and reporting requirements. The result of these operational differences is that community radios are not seriously considered as a viable option when national, and even large local advertising buyers spend their money. Community radios also seldom have the resources to deploy an effective advertising sales operation, further limiting their competency in local as well as regional and national markets. Community radio is simply not designed or equipped to effectively compete with professional competitors in this advertising marketplace.

The Difference

Those businesses that would support community radio with advertising, sponsorship, or donations simply view it in a different light than standard advertising in commercial media. They see community radio for its non-profit ethos, commitment to community, alternative to the mainstream, reaching underserved groups, and supporting local arts & culture (Lewis & Jones 2006). Advertisers spend money on community radio because they believe it’s an investment in their community, an investment that will improve the quality of life for their customers and employees, thereby improving the opportunities for business success in the long term. In this context, even while dealing with the same business clients, community radio broadcasters are completely separate from their commercial radio brethren, and should embrace this difference as a real opportunity. Understanding the needs and wants of the customer is paramount for a successful enterprise, so community broadcasters would do well to recognize that. Local businesses advertise with commercial radios to “move product”. They spend money on community radio to improve the community first, and improve sales second.

Surveys

When I often hear community radio broadcasters complain that they can’t develop revenue because they aren’t a part of commercial audience surveys, I tell them to be careful what you wish for. Audience surveys can often be a negative influence on radio broadcasters, confusing the market process and ultimately subverting the buyers’ priorities. Firstly, participating in audience surveys puts community broadcasters squarely in line with their commercial ‘competitors’, where we already know they are ill equipped to compete. This also effectively reduces their unique status as a community organization with high value above and beyond any commercial enterprise. Most community radios, given the actual results of an audience survey, probably wouldn’t be pleased with what they learned anyway. Community radios aren’t designed for mass appeal, and likely won’t make much of a showing in a survey that doesn’t drill down to reveal hyperlocal and/or qualitative data. When a community radio makes a sales pitch offer that is all about audience numbers, and its numbers are smaller than most, then what might it expect as a result? Even if a community radio audience figures are ‘competitive’, most buyers will go with their traditional commercial radios and established networks that are easy to buy and require much less effort. To create demand for community radio, I would argue that a better strategy is to never count your audience. The perception of a community radio as effectively reaching a specific audience can be as effective in creating demand as the actual audience research data. Among a great number of potential business supporters of community radio, audience size is not the top priority. Other attributes are equally or more important. Consider it like a beauty contest: talent, personality, charm, intelligence, poise, and commitment can be very attractive. And you don’t need to star in the bikini contest to win the crown.

It’s the People

As a veteran of commercial radio broadcasting, I’ve spent more than 20 years in the business of selling radio advertising. The most important lesson I can impart to community radio practitioners is that financial sustainability is not about your audience size, your morning show, or your coverage map. Success in radio advertising sales is all about using best practices to maximize customer relationships. My mantra has always been to sell “beyond the numbers”, because experience proved that advertising buyers can easily use those same audience numbers against the sellers. Of much greater value to a buyer is her relationship with the seller, one that allows for special consideration of social values beyond the numbers. Remember, people buy from people they like. It is extremely rare to find a community radio with an advertising sales operation that rivals their commercial counterparts in quality and effectiveness. Yet, as a social enterprise, they seek advertising revenue just like a profit enterprise, just without the profit. So what really is preventing these community radios from developing the people, systems and tools necessary to attain success in revenue development? Perhaps the old adage applies: “There is none so blind who will not see”.

Market conditions

Economic conditions can also be misconstrued as an obstacle to community radios, when in fact the current difficult economic climate may indeed present real opportunities. Commercial broadcasters, in an effort to reduce costs, are consolidating operations into more regional and centralized programs, thereby reducing local content and commitment. For the astute local community radio, this could well be an opportunity to reinforce its position as an important link to local communities, no longer prioritized by commercial radio. Also, as government cutbacks threaten public funding sources, more resources and expertise can be deployed to “super-serve” a local base of constituent business advertisers. Once again, it takes a community radio team with vision to see through the difficulties and find the opportunities. If they insist on a short-term approach and fail to construct an effective sales organization, then they’ll have difficulty to take advantage of the opportunities for long-term sustainability.

Changes

Technological changes to transmission platforms may offer the possibility of more opportunities for community radio broadcasters to improve their financial positions.

As commercial operators migrate to muliplexes, their ability to be truly local as compared to community radio is compromised, due to the large and identical coverage footprint mandated by the multiplex (O’Neill, et al 2010). Community radios remaining on the FM band could leverage this difference by focusing on local programming, and local advertising opportunities. Similar opportunities could come from the rise in acceptance of user generated content. After all, isn’t community radio already an expected source for content that is less “commercial” and more “social”? Audiences and advertisers are more readily accepting content that is closer to the source, local, and linked to the community. What once was thought to be a disadvantage – non-professional content, now becomes another clear advantage for community broadcasters over the more tightly controlled “corporate” commercial radios. Can community broadcasters take advantage of this new paradigm and convert it to value for their business advertisers? If they have an effective sales organization, the answer could be, and should be yes.

Conclusion

Community radio in the United Kingdom is not the same as commercial radio. It’s different in many ways, and in fact better in some. But community radio broadcasters seem either unwilling or unable to embrace these differences, and take advantage of the opportunities they present. Certainly it requires a combination of vision and strategy, mixed in with a commitment to organizational development, but the opportunities exist. Community radios are not just charities; they are social enterprises with a responsibility for effectiveness and sustainability. The way to achieve those ideals is to be an effective organization building strong relationships with local businesses to develop reliable advertising revenue streams. Furthermore, additional revenue streams from new ideas and technologies are opportunities waiting to be developed for the astute and well-managed operators. Community radio in the United Kingdom needs to stop dreaming about audience research, and start concentrating on people, systems and tools that will lead to their success. The keys are located right in their community, and indeed, right inside their own building.

Henry Loeser, Director

www.radioexpert.org

Next time: “29 Crazy Revenue Schemes for Community Radio”

References

Lewis, P. and S. Jones. 2006. From the Margins to the Cutting Edge: Community Media and Empowerment. Creeskill, NJ: Cumulus Press.

O’Neill, B. et al. 2010. Digital Radio in Europe: Technologies, Industries and Cultures. Bristol, United Kingdom: Intellect Lt

8 Comments, Comment or Ping

  1. I found the whole article a little off beam. Is this an argument for or against revenue raising by advertising in community radio ? The summation of the article seems to be that if comunity broadcasters could get their act together and develop coherent sales strategies then the holy grail of financial salvation would be at hand. All well and good if the infrastructure was in place to provide national advertising to local community operators; it isn,t so we have to start from another platform. If we look at regional concepts, then would we be using regional providers? Maximising local audiences, or specific strands within it? And, at what cost? If we deal with local audiences and small usually 5km transmitters, then again, high loyalty, giving high audience reach and penetration may be an ad execs dream, but the headcount may not be high enough to generate the effort or finances neccessary. A station may provide higher levels of satisfaction, but on a much smaller scale. Look at the market today for most gold stations.

    There is a logic in extending the market, and an equal and opposite logic that says small scale innovative broadcasters, with a desire to expand listening horizons and opportunities to all especially as part of the social gain element would simply be unattractive to advertisers seeking a low cost mass market in which to extend their wares. Whilst it may be highly fragmented, it could also be sufficiently generic to attract some mainstream ads. Both arguments apply. There just may not be enough numbers there to attract reasonable rate card value, but high utilty, low head count may work. After all, public service adverts are carried by all. Is this the role of the community broadcaster? Sweeping up at low cost? What flowers? What dreams? What smell?

    To put some sense into it, various options exist, restricted in each case by local market conditions, licensing obligations and criteria contained within. It is not the fault of the advertiser: he wants the biggest bang for his bucks, and puts his trust in the agencies he hires to deliver it for him. The transmission mechanism isn’t in place, unless Community radio coverage is bolted on as a small percentage gain on every major sales house. Should national advertisers subsidise community radio? Whilst a1% levy could fund every small station in part, and certainly the rotation and trafficking of ads, it would mean that scheduling and rotation of ads would have to be a permanent feature in every license and broadcast. Ownership and control of the station’s output could be compromised. And, therein lies the rub. Local and community enterprises know their audiences and limitations and act within the boundaries of each. That is not to ignore the bigger picture; it is however to say that the tightness and cohesion of a well supported local enterprise whilst appearing fragmented to the outside world is actually doing rather well on a micro marketing level. There is a place for local ads serving a local community at a price and satisfaction level the local community can afford. And, after all isn’t that what community radio is all about? Local? Community ?

    It may be my own observations are wrong, but the writer seems to have a presumption somewhere that those stations that are licensed to advertise don’t do it awfully well, which is something they may wish to argue against, especially given the concise formulae regulating income by source in each license application that every applicant group is bound to and has to observe. By background, claiming to be a former radio sales professional with 20 years experience in the business, he is obviously coloured by the fact that most regional and national advertising occurred through agencies placed to deal with the business. Revenue had to be fought for on a cost per thousand basis compared with local press or TV rates, depending on the sector he would be selling into. Harder graft would be in competing on a (local) rate card set by jicrar and later rajar figures which may have had little basis in reality, being an extrapolation of perception of listening often against claimed audiences who may not be the target audiences an advertiser would desire. No matter how bad the printed word, it could always be read, and read, and re-read again. You can’t put coupons on the radio, but you can promote. Should you look for numbers in general, or audiences in particular? If arguing for the latter, then tight local delivery to, and of, a specific audience tuned in giving greater depth, and penetration and awareness is an ad execs dream. That was recognised by the former IBA licensing for example Classic Radio.

    Community broadcasters do not receive part of the license fee; Social enterprises still have bills to pay. Even the BBC as a public service broadcaster advertises its wares to cut its costs. And we need to be free enough to develop our own little niches, and satisfy our own little audiences if we are to hold our own and thrive against the very regionalisation the writer seems to rail against. Independence may always come at a price, and it may be the best of a bad job, but at least, it’s independence!!

    June 28th, 2011

  2. I can’t disagree with any of this. Commercial and Community radio stations are different beasts with different audiences and different attractions to advertisers. Indeed, few if any of the local advertisers on commercial stations around here would ever consider commercial radio advertising – the cost differences are considerable.
    So why are we still being hemmed in by a 50% limit on advertising revenue?

    June 28th, 2011

  3. I certainly disagree that the majority of advertisers on community radio do so to support their local community – in my experience for the majority, their primary motivation is to raise awareness of their product/service and drive sales. Also a little like advertising in the parish magasine, they probably think their business will win a little local kudos for advertising on their little community station.

    Small local businesses are the key target in my opinion. They don’t have sufficient funds to advertise on ILR stations. Why would they anyway – most listeners are miles away and would never cvome to their shop/pub etc. Local newspapers are also relatively expensive for them – so step forward the local community broadcaster! I see this a part of the social gain CR gives – they open the opportunity to local businesses for radio advertising that otherwise they are denied.

    I do agree about the audience measurement part though – if it were possible, then most/all community broadcasters would look extremely expensive on cost per 1000 basis. Nevertheless, CR fills a niche. Even if the local greengrocers could afford to advetise on the local Heart FM franchise, how many listeners in the other side of the region will travel to that greengrocers? That is to say it’s about more than the number of listeners, but also about their propensity to become a loyal customer of the advertiser – so for a small business keep it local – 100 locals targetted with tehir advert is probably better than 10000 random people across an ILR region. (obviously not if they are an internet business aiming at national/global markets!).

    50% revenue rule – for heavens sake remove it and let CR stations manage their own destiny rather than relying on hand-outs. The ILR stations should not be worried – CR/RSL stations target different advertisers.

    July 1st, 2011

  4. This was Nick’s contribution from Canalside Community Radio

    Phil n’ all

    I bet you just new I’d pop out the water and take the maggot…“Good evening and welcome to this weeks edition of Mastermind, in the Black chair first, we have Director Henry Loesser answering questions on ‘THE BLEEDIN? OBVIOUS?!?’”

    I’m not arguing with Henry, he writes some interesting stuff, however, he has missed the point. The real point. Restrictions are there to restrict, and they have been a success. They restrict, thwart, cock-up the progress of Community Radio.

    Could Henry please tell me what he would do with the guy from the local business who wants to give us £2000 but wants people to know about his new washing machine invention? He likes what we do, but really he is only interested in selling his washing machine as charity starts at home. The restrictions prevent us from delivering what he wants. And we lose two grand…by losing two grand, we then lose the opportunity to deliver our social / community ventures and then it is back to the drawing board. And so the merry-go-round starts again.

    Perhaps Henry could come and spend a month with me and I’ll show him all the pitfalls, all the arguments but most of all the REALITY wake up and smell the flowers indeed we say coffee in Bollington by the way!

    After Henry’s visit to Canalside, perhaps he could invite me to his pad for a month? I’ve just looked up the postcode…It says NODDYLAND! Interesting stuff nonetheless Henry many thanks.

    July 11th, 2011

  5. Nick,
    Thx for your comments. Re: your local advertiser who “only is interested in selling his washing machine” I suggest he’s not right for you anyway. You’ll have more long-term success to find businesses who support community media because they believe it improves the community, and makes it a better place for business. The businesses that “smell the flowers”.
    Actually, I’d welcome the opportunity to visit your Canalside community and learn firsthand about your challenges.
    Caution: I’ll also want to see how your marketing and sales operations fully maximize the revenue opportunities in your community.
    Best, Henry

    August 15th, 2011

  6. Henry

    I am not looking for an argument, as you are possibly a very nice chappy :) however, your comments, though extremely interesting (mostly correct) (but obvious) do not add up

    The bottom line is this …….. whether a guy / gal / local business / regional or national company is interested or not interested in our ‘ethos’ it is only relevant if they dip their hand in their pocket and give us some lolly. They can still like what we do, even though they haven’t given us anything in monetary terms …… trouble is, they won’t be liking it much longer as we will have sadly gone ‘tits-up’ !

    You simply cannot in the same sentence enlighten moi’ that this washing machine chap is possibly not for me as his view on the general basic pricipals of ‘community’ is not for us and then pass comment that you would like to see our sales and marketing stratedy it doesn’t add up and it is a contradiction.

    So, come on Henry me ole’ mucker, let’s av’ it plain and simple.
    Are we selling or are we not selling ? are we just community without the selling ? or are we selling without the community ? or both ?
    We try our hardest to be both, and in fairness we have been reasonably successful over the past 4 or 5 years …… BUT and this is where it all goes ‘off-piste’ as I have pointed out, the community malarky with SOME has gone out the window …. they are not interested in this current climate as they see their charity starting at home …… they want to see some sales from their donation. The CMA – the Government – Ofcom – Uncle Tom Cobbley n’all can fantacise and talk till the cows come home …….. this is the reality ………….. I knows it coz I grows it …. we live it, breath it every week and we have been there and worn the T-Shirt.

    The restrictions ‘restrict’ it is not a level playing field and we get kicked to death by the commercial radio circus.

    I notice at the moment that the local community TV bandwaggon is now being rolled out, it is flavour of the month and Mr Hunts new train set….. Mr Hunt and all his cronies seem to be pulling out every stop possible regarding Placement and spot advertising / sponsorship of news and travel, weather sponsorship etc …… and yet here we are, 4 – 5 – 6 – 7 years in, battling with the same old tired, unproven, antiquated, commercial radio paranoia garbage …………….. Mr Hunt and his band of merry winers and diners need to get the bloody community RADIO sorted out first, before he starts faffing around with television.
    The whole debacle has now decended into a joke (er actually) it’s gone beyond a joke all we want to do is to be permitted to run one advert per-hour so Mr H Dumpty can selling his Washing Machine and then with the donation / advertising money / Sponsorship (it’s all the same) can be then spent on our community project ……………….. the only restriction we need is the one whereby we are not-for-profit and all monies are spent solely on the project no profiteering by individuals.
    Can someone explain to me why then we still have this shambles.
    Mr Hunt has been communicated with twice … he still hasn’t responded, and Mr Vaizy told me a multitude of rules and regulations that I knew already ……. furthermore, his spiel was extremely patronising.
    I may be a plain old Northern lad, but I’ve got more common sense than the pair of them put together.

    These guys that we are dealing with live in the Ivory Towers, they do not understand reality and furthermore don’t seem to care …………. they make excuses for their incompetance. Labour / Liberal / Conservative they’re all useless and don’t seem to have the brains they were born with.

    Get rid of this nonsense now, treat us with some respect and the same as everyone else …… we will then survive on our own and put our winnings to good use in the community.

    Simples ! I’m signing off now, before I start offending people, which to be honest is all some of them deserve …… they have turned something that is truly wonderful (community radio) into a trudge for people who don’t deserve to have their voluntary efforts insulted ….. we shall continue the fight and the whinging, however, we have drawn a line in the sand …… once we step over that then we will break the law, (we’ll play one advert per-hour if it helps keep us afloat) we will have no other option. We will not roll over and die without a fight. As I have said many times before …… the law makers mustn’t be that cock-sure that they will win, there are plenty of loopholes … trust me, I am now an encyclopedia on it ! We have been good little boys, we have played the game, we have been nicey nicey —- it’s got us absolutely nowhere except laughed at ……… pirate stations have been licensed though ……….. geese and ganders spring to mind.

    All I am saying is this ………. it is a balance a bit of sales and commercial, mixed with a huge helping of Community result = successful enjoyable community radio it is what we spend the money on that matters and NOT how we get it.
    One final comment ….. by not being allowed to run a little 15 second advert, I have lost the opportunity of £6,000 in the last 2 months ……. say no more !
    This is totally unacceptable !

    regards

    Nick Wright CCR 102.8fm possibly soon to be renamed Breach fm

    September 1st, 2011

  7. Dear All

    I notice that my comments have now gone for moderation …… do not moderate anything for my sake. I have no worries, I’ll say my piece and you can av it in plain simple English ……. I have no shame or remorse for any of my thoughts or comments. What you see is what you get.

    It’s about time a few others got up off their backsides and stood up to be counted !

    When this project of ours starts being treated with the respect it deserves then I’ll treat others with the same respect …. untill then nothing will change. We are tired of dealing with unreasonable nonsense.

    regards

    Nick

    September 1st, 2011

  8. Hello Nick
    As a general policy we moderate all comments on the open part of the website and all first posts by new members on the forum. This is to stop spam postings.
    Eleanor

    September 5th, 2011