More For Less: Clear Channel Declares Victory Against Ad Clutter

Clear Channel Radio CEO John Hogan delivered another blow to ad clutter. In an internal memo circulated Tuesday, he declared the broadcaster's "Less Is More" ad initiative a success, while promising similar reforms in the near future. The push to cut down on ad clutter by limiting the number of ad pods and ad length remains controversial in the industry.

For Hogan, the proof is in the numbers.

In the first quarter of 2006, revenue was up 5% on a year-over-year basis, second quarter was up 6%, and third quarter was up 5%. Fourth-quarter results haven't been made available. For comparison, according to the Radio Advertising Bureau (RAB), total revenue remained flat, with 0% growth for January-November 2006 compared to the same period last year.

Hogan acknowledged the rough reception that greeted "Less Is More" when it rolled out over two years ago, warning: "We will be criticized for trying new things."

In 2005, for example, revenue was down 6% from the previous year, raising investor eyebrows and prompting Clear Channel Communications CEO Randall Mays to reassure investors that an improved ad environment "always results in better radio. That will, in turn, provide us better cash flow."

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By the end of first quarter 2006, by contrast, Hogan could boast: "We are now selling north of 35% of our inventory in shorter-length commercials." In the company's second-quarter investor conference call, Hogan said: "They are employing :30s, :15s and even shorter-length commercials... All of those are gaining traction with advertisers and helping us increase the overall yield."

In his year-end memo, Hogan noted that "overall revenues are up" and "overall profitability is up," with CCR outpacing the industry as a whole.

But are the ratings benefits of "Less Is More" beginning to dwindle?

During Clear Channel's third-quarter conference call, Bank of America analyst Jonathan Jacoby noted a drop-off in listening in some markets, asking: "Are we hitting perhaps the end of the ratings benefits?"

Hogan dismissed the idea that "Less Is More" had run its course. "There are many factors which go into the ratings, and... the settling that you're seeing in some of these numbers is not attributable to LIM, it is more attributable to a number of other competitive factors... We believe that LIM continues to be a huge benefit for our listeners."

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