Wal-Mart learns how to ‘live better’

The future of commercial radio: no ads

STEVE MAICH May 7 2007
Wal-Mart learns how to ‘live better’

The future of commercial radio: no ads

STEVE MAICH May 7 2007

The future of commercial radio: no ads

STEVE MAICH

Under siege from satellite services, podcasts and free music downloadable from the Internet, Clear Channel Communications, the biggest operator of traditional radio stations in the United States, is test-driving a new business model that takes the commercials out of commercial radio.

This week, KZPS in Dallas switched to an all-new format, playing classic rock and country without the usual breaks for ads from local car dealers and restaurants. Instead, KZPS is having advertisers sponsor an hour of programming, during which a DJ will occasionally mention the sponsor, working casual endorsements into the banter between songs. In a promotional sample sent out to announce the switchover, a DJ talks about the South by Southwest music festival in Austin, Texas, and finishes by urging listeners to fly to the festival on Southwest Airlines. “It’s the way I travel,” he says.

The advantage for advertisers is exclusivity—the ability to have their brand separated from the usual clutter of commercial radio. The stations, meanwhile, can better compete with their commercial-free rivals and give listeners the sense of a premium product.

The idea may be revolutionary, but it’s not exactly new, explains Sean Ross, vice-president of music and programming for Edison Media Research in New Jersey. “People have been trying for years to see if there was another model that could work,” he says.

In 1989, a Los Angeles station sold sponsorships rather than spot ads. A few years ago, three stations in the New York area tried the same thing. But in the end, it only created more clutter, as stations sold sponsorships on top of spot ads, lending to the perception that radio was nothing but constant slogans.

But now, the competitive picture has changed so much that radio must look for new ways to survive, and Ross expects others to follow Clear Channel’s lead. “People are looking forward,” he says. “A few years down the road, whether it’s 100 stations doing this or everybody doing it, it’ll definitely be more than there are today.” M