• by Michael Shields , October 5, 2004

Less may be more in Clear Channel's vision of the future, but the radio giant Monday announced plans to provide something more to advertisers and agencies to help them make less. Clear Channel Radio officially unveiled the Clear Channel Radio Creative Resource Group, a new unit aimed at weaning Madison Avenue off of the highly cluttered medium's 60-second advertising unit in favor of shorter 30-second spots.

While they reacted optimistically to Clear Channel's "Less is More" pitch, radio buyers were nonetheless skeptical whether the broadcaster would be able to implement all it intends to while expressing fears over potential price gouging. The radio behemoth, which dominates many key markets, in July set a self-imposed deadline of reducing the amount of commercial inventory on its stations by 19 percent by January. Remarkably, it is asking its advertisers to pay more for less ad time. At about 75 percent of the cost of a :60, the cost - and revenue yield - of Clear Channel's commercial air time would inflate 25 percent if it is successful at convincing advertisers to convert to :30s.

Economics aside, the goal of the new Creative Resource Group is to help agencies and Clear Channel's local stations produce better, more engaging ads in the 30-second format, which the broadcaster asserts will reduce advertising clutter benefiting listeners, advertisers, and of course, Clear Channel. Think: win, win, win.

"Reducing the number of ads and promotional clutter is only part of the answer," acknowledged John Hogan, chief executive officer of Clear Channel Radio in a statement. "We, as an industry, must also do a better job of using the power of our medium to engage and enchant listeners with better creative."

That also means more 30-second ads, which are typically not the unit of choice among advertisers, despite being more commonplace on radio outside of the U.S. and being the standard advertising unit for TV within the U.S. Most stations have discouraged the sale of :30s offering :60s at the same price, or charging only modestly more for them.

"Thirty-second spots will be more effective because we will focus on single messages, rather than competing against ourselves in-spot with multiple messages, " stated Jim Cook, senior vice president in charge of the new group. "The results should be more effective spots for advertisers."

Buyers contacted by MediaDailyNews liked the idea of less clutter, but most doubted Clear Channel's new policy would be enacted exactly as planned.

"In theory they are trying their best. It's going to be very difficult," said Kelly Cadotte, senior vice president-director of strategic services at PHD. Cadotte said the logistics of buying and selling under these new guidelines, including pricing, pod-positioning, and inventory loads, are a long way from being worked out, and would probably not really be explored until 2005 negotiations occur. "We haven't really seen the complete effect," she said.

Part of that effect may be a looming price war. Mark Lefkowitz, executive vice president at Furman Roth Advertising, offered that Clear Channel's new moniker "Less is More," may actually refer to more revenue for the broadcaster despite fewer ads.

"I don't believe they are going to let themselves give up revenue," he said, adding that Clear Channel is likely to establish a variety of premium ad positions while charging in the neighborhood of 75 to 80 percent of the cost of a 60-second spot for a 30-second spot. Effectively, he said, the strategy would actually generate more revenue with less inventory.

Cadotte agreed, saying, "Someone is going to be paying somewhere."

Both buyers also had doubts about how many advertisers would be able to run shorter spots, particularly local advertisers in categories that might require heavy disclaimer copy in their ads or co-op messages.

"It's very difficult to put parameters on creative," said Cadotte.

The current advertising recovery, which has yet to bolster the radio business, also makes this a tough time for Clear Channel to make this announcement. On Monday, the Radio Advertising Bureau released data showing that radio advertising sales declined for the second consecutive month in August, though the bureau said indicators were beginning to improve.

"If the market continues to be soft. I don't think they are going to have an easy time of it," Lefkowitz said, adding that if Clear Channel's competitors do not reduce clutter and offer more competitive rates, it will be difficult for the company to maintain the stance.

It is clear that going forward, there are a lot of unknowns. "I don't think anybody fully appreciates what is going to happen," said Lefkowitz.