978-0133506884 Chapter 12 Lecture Note Part 2

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Broadcast Media: Radio

The reason advertisers like radio is that it is as close as we can come to a universal

medium. Most every American listens to radio in some form either over the air or

streaming from Internet-based services, such as Pandora or Spotify. Virtually every

household in the United States (99 percent) has at least one radio, and most have multiple

sets. And almost everybody listens to radio at some time during the day.

Radio’s audience continues to increase. Weekly listening has grown in the 2000s from

224 million to 242 in spite of the economic downtown and the new patterns of

electronic listening. In spite of its popularity, however, the $17.4 billion radio

advertising industry isn’t growing much in revenue.

Radio’s biggest advantage is that it is tightly targeted based on musical tastes (for

example, rock, country, and classical) and special interests (for example, religion,

Spanish language, and talk shows).

Broadcast media messages—both radio and television—are fleeting, which means

they may capture attention for a few seconds and then disappear, in contrast to print

messages, which can be revisited and reread.

Radio is a talk, news, or music-driven medium where advertisements can also engage

the imagination to create stories in the mind. In terms of our Facets of Effects Model,

broadcast media are often more entertaining, using drama and emotion with audio to

attract attention and engage the feelings of the audience.

If done right, radio can engage the imagination more than other media because it

relies on the listener’s mind to fill in the visual element.

The radio listening experience is unlike that of any other media, creating both

challenges and opportunities for radio advertisers. It can be a more intimate

experience because we tend to listen to it alone, particularly for people wearing

headphones.

In cars, where many people listen to radio, it offers advertisers something close to a

captive audience. And it’s relatively inexpensive both to produce commercials and to

buy airtime. Check out the Radio Ranch website at www.radio-ranch.com for a look

behind the scenes of radio commercial production.

The Radio Industry

There are more than 10,000 commercial radio stations, and most of them, except for the

new Internet stations, serve a local market. In recent years the industry’s growth has been

slow.Radio is tightly targeted based on special interests (religion, Spanish language, and

talk shows) and musical tastes. About 85 percent of the radio stations are focused on

music. Program formats offered in a typical market are based on music styles and special

interests, including hard rock, gospel, country and western, top-40 hits, soft rock, golden

oldies, and non-music programs, such as talk radio and advice, from car repair to finances

to dating.

Traditional radio stations are found on the AM/FM dial and most serve local markets.

Other options for radio listeners include public radio, cable and satellite radio,

low-powered stations, and Web radio. Stations with a broadcast range of

approximately 25 miles are considered local stations. Regional stations may cover an

entire state or several states.

In addition to digital forms, radio stations in the United States broadcast signals in several

formats:

Cable radio Launched in 1990, cable radio technology uses cable television

receivers to deliver static-free music via wires plugged into cable subscribers’ stereos.

Satellite Radio can deliver your favorite radio stations, regardless of where you are in

the continental United States. For a monthly fee, the system allows you to access

more than 100 channels.

Low-Power FM If you’re a college student, you probably have a low-power FM

station on your campus. These nonprofit, noncommercial stations serve a small

market, with a reach of three to five miles.

Web Radio provides audio files downloading or streaming through a website called

netcasting. This makes it possible to broadcast radio (and television) online. If the

receiver is an iPod or other type of portable media player, the reception is called

podcasting. Podcasting is possible because of the convergence of three technologies:

an audio source (the radio station or music source, such as Spotify or Pandora), a Web

connection, and a portable media player or cell phone.

Public Radio Stations are usually affiliates of National Public Radio (NPR) and carry

much of the same programming, although they have to buy or subscribe to the NPR

services. For that reason, some local public radio stations might carry a full range of

NPR programming, while others that are less well funded may carry only a partial list

of NPR programs.

oPublic radio stations are considered noncommercial in that they rely on

listener support for most of their funding. In recent years, however, they have

slowly expanded their corporate sponsorship messages or underwriting,

which has increased along with the audience size.Public radio is one of the

few media that can deliver an audience of well-educated, affluent consumers.

Radio networks are groups of affiliated stations. The network system produces

programs and distributes them to their affiliates who contract with the system.

Radio Advertising Media planners use radio to deliver a high level of frequency because

radio commercials, particularly jingles, which are commercials set to music, lend

themselves to repetition.

There are three types of radio buys: network, spot, and syndicated. Local advertising

revenues account for approximately 75 percent. Network revenues are by far the smallest

category, accounting for approximately 5 percent of total radio revenues. National spot

advertising makes up the remainder.

Let’s review the categories of national radio buys:

Network Radio Advertisingcan be bought from national networks that distribute

programming and advertising to their affiliates. A radio network is a group of

local affiliates connected to one or more national networks through telephone

wires and satellites. The five major radio networks are Westwood One, CBS,

ABC, Unistar, and Clear Channel. The largest network by far is Clear Channel,

with more than 1,200 stations. Many advertisers view network radio as a viable

national advertising medium, especially for food and beverages, automobiles, and

over-the-counter drugs.

Spot Radio Advertising—Both Local and National Spot advertising lets an

advertiser place an advertisement with an individual station rather than through a

network. Spot radio advertising makes up nearly 80 percent of all radio

advertising. In large cities, 40 or more radio stations may be available. Local

stations also offer flexibility through their willingness to run unusual ads, allow

last-minute changes, and negotiate rates. Buying spot radio and coping with its

non-standardized rate structures can be cumbersome.

Syndicated Radio Advertising This is the original type of radio programming that

plays on a large number of affiliated stations, such as the Paul Harvey show,

which is broadcast on some 1,200 stations. Program syndication has benefited

network radio because it offers advertisers a variety of high-quality, specialized,

and usually original programs. Both networks and private firms offer syndication.

Advertisers value syndicated programming because of the high level of loyalty of

its audience.

Dayparts Advertisers considering radio are most concerned with the number of

people listening to a particular station at a given time. Radio audiences are

grouped by the time of day when they are most likely to be listening and the

assumption is that different groups listen at different times of the day. The typical

radio programming day is divided into five segments called dayparts:

Morning Drive Time: 6-10 a.m.

Midday: 10 a.m. – 3 p.m.

Evening Drive Time: 3-7 p.m.

Evening: 7 p.m.- midnight

Late Night: Midnight – 6 a.m.

The 6-10 a.m. segment is called morning drive time and it is the period when the

greatest numbers of listeners are tuned in to radio.

Broadcast Media: Television

Television has become a mainstay of American society. Television approaches the

universality of radio with 98 percent of American households having one or more

television sets. In over half of U.S. households, the TV is on “most” of the time. The U.S.

television audience, however, is highly fragmented, tuning in to 100 or more different

channels.

Television is primarily an entertainment medium with its drama and emotional

impact as well as its moving images. In-home theaters with their large-screen

televisions are popular with viewers from all income level.

Through video streaming, programs can also be seen on computers, tablets, smart

phones, etc. Television’s use expanded with the introduction of the Wii, which

makes the home television screen a facilitator in exercise programs as well as

games. As computers begin to use television screens to project their content, this

cross-channel merger will open up entirely new uses for home televisions.

The economic model of broadcast television is generally based on an

advertising-supported approach, at least for the traditional networks. The model

relies on producing programs that attract a large audience advertisers want to

reach. Advertising, plus revenue from the programs that are syndicated after they

go off air, has supported network television since its beginnings, although that

model is in serious trouble with the development of cable and the splintering of

the viewing audience.

Television advertising is embedded in programming, so most of the attention in

media buying, as well as in the measurement of television advertising’s

effectiveness, is focused on the performance of various shows and how they

engage their audiences.

In the 1950s and 1960s, the three networks virtually controlled the evening

viewing experience, but that dominance has shrunk in recent years with the rapid

increase in the number of cable channels.

Structure of the Industry

Considering TV’s structure and programming options helps to better understand how

television works. The main types of television delivery systems include network,

subscription (cable and satellite), pay programming, local and public television, and

syndication.

Broadcast network is a distribution system that provides television content to its

affiliated stations. Currently, there are four national, over-the-air television

networks in the United States: the American Broadcasting Company (ABC), the

Columbia Broadcasting System (CBS), the National Broadcasting Company

(NBC), and Fox Broadcasting.

Network Television dominates the television landscape with its $9.15 billion in

advertising revenue, and 150 affiliates. The networks sell commercial time to

national advertisers for placement on programs that play throughout the network.

Some time is left open for affiliates to fill with local advertising. Affiliates pay

their respective networks 30 percent of the fees they charge local advertisers. In

turn, affiliates receive a percentage of the advertising revenue (12 to 25 percent)

paid to the national network. Advertising is the primary source of affiliate

revenues.

In addition to local affiliates, independent stations not affiliated with networks

are found in local markets. Costs for local advertising vary, depending on the size

of the market and the demand for the programs carried. Most advertisers are local

retailers, primarily department stores or discount stores, financial institutions,

automobile dealers, restaurants, and supermarkets.

National advertisers sometimes buy local advertising on a city-by-city or

station-by-station basis, using spot buys. They do this to align the buy with their

product distribution, to “heavy-up” a national schedule to meet competitive

activities, or to launch a new product in selected cities.

Other forms of television service include the following:

Subscription television is a delivery system that carries the television signal to

subscribers either by cable or satellite. People sign up for television service

and pay a monthly fee.

Cable television is a form of subscription TV. It has grown into a national

network of channels that provide highly targeted special-interest programming

options. The impact of cable programming has been to fragment the audience

and make it difficult to reach a large, mass audience. Cable has become a

significant threat to the financial health of the networks.

Satellite television is similar to cable in that it’s a competing delivery system.

In addition to cable channels, it also carries superstations such as

WTBS-Atlanta and WGN-Chicago.

On-demand programmingis available to subscribers for an additional

monthly fee. This type of programming offers movies, specials, and sports.

Pay networks do not currently sell advertising time.

Online Video Traditional forms of network television are challenged by their

online counterparts. Netcasting works for television. The television network

or station broadcasts programs, many times these are previously run episodes

of hit shows, online to a computer, tablet, or other type of portable media

player.

Public television is still considered to be commercial free by many, but this is

not the case. The FCC allows the approximately 350 Public Broadcasting

System (PBS) stations some leeway in airing commercial messages, called

programunderwriting.

Syndicationprovides an important revenue stream for networks and cable

channels. As in radio programming, television syndication refers to content

providers that sell their programs to independent firms and other cable

channels to replay as reruns.

Television Advertising

Television is used for advertising because it works like the movies—it tells

stories, engages the emotions, creates fantasies, and it can have great visual

impact. Because it’s an action medium, it is also good for demonstrating how

things work. It brings brand images to life and adds personality to a brand.

Principle: If you are going to use television, design a message that takes

advantage of its visual and emotional impact.

The first decision in designing a television ad is determining its length, which is

usually 10, 15, 30, or 60 seconds. The most common length is 30 seconds because

for most advertisers the 60-second spot is considered too expensive. The

10-second ad is like a billboard and simply announces that a program is “brought

to you by…” the advertiser.

Long-form ads, which are of various lengths, are seen on late-night TV as

“infomercials,” when the cost of broadcast time is much lower than at other

times of day. The actual form of a television commercial depends on whether a

network, local, or subscription service schedule is used.

The price of a commercial is based on the rating of the surrounding program (note

the rating is for the program, not the commercial). The price is also based on the

daypart during which the commercial is shown. The following table shows the

Television Standard Dayparts. The most expensive time block is prime time.

Standard Television Dayparts

Early morning M–F 7–9 a.m.

Daytime M–F 9 a.m.–4:30 p.m.

Early fringe M–F 4:30–7:30 p.m.

Prime access M–F 7:30–8 p.m. M–S 8–11 p.m. Su 7–11 p.m.

Late news M–Su 11–11:30 p.m.

Late night M–Su 11:30 p.m.–1 a.m.

Saturday morning Sa 8 a.m.–1 p.m.

Weekend afternoon Sa–Su 1 p.m.–7 p.m.

Note: All times are Eastern Standard Time

Although these time slots are important to media planners, they are vulnerable to

consumers who not only change channels but also change viewing times using

time shifting and zipping and zapping.

Avoidance of television advertising is easy to do with your remote control.

Time-shifting using a DVR such as TiVo, allows users to record favorite

television shows and watch them whenever they like. The technology

makes it possible to record the programming, letting users pause, do

instant replays, and begin watching programs even before the recording

has finished.

With DVR-recorded programs, consumers can zip past (fast-forward

through) commercials completely or zap them by changing to another

channel. These practices are forcing advertisers to rethink the design of

their ads, recognizing that they only have a few moments win the attention

of viewers.

Advertisers and television executives are alarmed over the increasing popularity

of time-shifting and zipping and zapping. The DVR industry estimates that

viewers zip past about 6 percent of television commercials—an estimated waste

of some $5 billion in ad spending. A Nielsen study, however, found that viewers

are not zipping through commercials as much as advertisers feared.

TiVo has also announced that it is considering a service that will provide

second-by-second data about which programs the company’s subscribers are

watching and which commercials they are skipping.

Satellite television networks and networks are battling over the ad-skipping. The

Auto- Hop feature available on Dish and other DVR systems is seen as copyright

infringement by the networks.

Principle: The television audience has become very good at avoiding

commercials unless the ads are intrusive or highly engaging.

Type of Television Commercials

Participations (network) are how most commercial are sold. In this situation,

network advertisers pay for commercial time during one or more programs. The

advertiser can buy any time that is available. This approach, which is the most

common one used in network advertising today, provides a great deal more

flexibility in market coverage, target audiences, scheduling, and budgeting.

One problem that media buyers must negotiate is the fact that the “time avails” for

the most popular programs are often bought up by the largest advertisers or

media-buying agencies, leaving fewer good time slots for small advertisers.

Spot Announcements (local) are slots that appear in the breaks between

programs, which local affiliates sell to advertisers who want to show their ads

locally. Commercials are sold on a station- by-station basis to local, regional, and

national advertisers. However, local buyers dominate spot television.

Sponsorshipsrequire the advertiser to assume the total financial responsibility for

producing the program and providing the accompanying commercials. The

Hallmark Hall of Fame program is an example of a sponsored program.

Sponsorships represent less than 10 percent of network advertising.

Sponsorships can have a powerful effect on the viewing public, especially

because the advertiser can control the content and quality of the program as well

as the placement and length of commercials. However, the costs of producing and

sponsoring a 30 or 60-minute program make this option too expensive for most

advertisers.

Several advertisers can produce a program jointly as an alternative to single

sponsorship. This plan is quite common with sporting events, where each sponsor

receives a 15-minute segment.

Public Service Announcements (PSAs) are spots created by agencies that donate

their time and services on behalf of some good cause. PSAs are distributed to

stations for local play based on the station’s time availability. If time is available,

PSAs run for free on radio and television stations.

Target Audiences and Viewers

Targeting occurs by matching the programs with information about their

viewership. Some programs are media stars and reach huge audiences—the Super

Bowl is a good example. Other programs reach small but select audiences, such as

The News Hour on PBS.

An overlooked television audience is the 50-plus boomer crowd. As younger

viewers move to online venues, these older folks stay loyal to their televisions,

remote controls, and shows like 60 Minutes, NCIS, and Blue Bloods.

The Latino market is another audience group that is increasing in size and

importance. Served primarily by Spanish-language programing through cable

networks such as Univision.A new development is the partnership between ABC

and Univision, which will create a 24-hour cable news channel that will broadcast

in English. It will offer a blend of hard news and lifestyle programming along

with an accompanying website.

Principle: Television advertising is tied to television programming and the ad’s

effectiveness is determined by the popularity of the television program.

New Television Technology

New technology is having an impact on programming options, as well as on

distribution patterns and systems. Innovations such as high-definition TV and

interactive TV expand advertising opportunities.

High-definition TV (HDTV) is a type of TV standard that delivers

movie-quality, high-resolution images. As stations upgraded their equipment and

moved to HDTV by 2009, the increased availability of HDTV programming made

it necessary for consumers to upgrade to HDTV sets.

Interactive television means you’re watching your favorite program and a

commercial comes on for a product that interests you. A button pops up on the

screen that you can click with your remote, and you are asked questions about

whether you want more information or a coupon or to give some other response.

The technology requires that advertisers give their ads to a DVR service, such as

TiVo, where codes are embedded. When the ad airs, the DVR boxes pick up the

coding and turn on the interactive component for that subscriber.

Several cable companies are experimenting with technology that provides viewers

with a remote control they can use to request samples or promotional offers to be sent

to their homes. It’s also a lead-generation opportunity and the cable company boasts a

high conversion rate tracking the number of viewers who click a second time to

actually make an order.

Addressable television uses a type of television that makes it possible for

individual homes to receive targeted and personalized advertising. The ability to

address ads to different homes through cable and other subscription services is

becoming more feasible, particularly for local video-on-demand programming.

Cablevision provides viewers with a remote control they can use to request

samples or promotional offers to be sent to their homes.

3-D Television. A number of researchers are testing the feasibility of bringing 3-D

television to living rooms by improving on current technology and its use of

special glasses. The logistics are difficult but 3-D may finally be on its way to

home television sets.

Streaming video is a process by which video programs—television, movies,

YouTube creations, even video games—are sent to computers and other electronic

devices, such as smart phones and tablets. This practice has created a nightmare

for television measurement services that have been scrambling to estimate

program viewing in these new media formats. In 2013, the ratings firm Nielsen

announced that it had developed the technology to begin measuring viewership on

these new broadband-enabled devices.

Movie Advertising

Movie theaters, sell time at the beginning of their film showings for commercials, called

trailers. Most of these trailers are previews advertising upcoming films, but some are

national commercials for brands, ads for local businesses, PSAs, or other forms of