Talk Radio’s Advertising Problem

Wall Street Journal – by Hannah Karp

There are plenty of people listening to talk radio. But over the past three years, it has become increasingly difficult to make money off it.

More than 50 million people in the U.S. tune in each week to news-talk radio stations that carry advertising, making it radio’s second-most popular format, behind country music, according to Nielsen.

But many national advertisers have fled from such stations in recent years, seeking to avoid associating their brands with potentially controversial programming. As a result, advertising on talk stations now costs about half what it does on music stations, given comparable audience metrics, according to industry executives.  

Talk and news stations combined generated $1.5 billion in revenue in 2013, down from $1.6 billion in 2011, according to the latest numbers from media research firm BIA/Kelsey. Pure talk-station revenue fell to $205 million, from $217 million. The number of talk stations shrank to 510 from 546 over that time period, while the number of news stations increased by 150 to total 1,524.

Talk radio’s rankings hit a new low over the summer, drawing 8.1% of radio listeners in July, although its share rebounded to 9% in December before the holidays, according to Nielsen.

The shift reflects more than younger listeners flocking to digital media. Radio executives said the erosion of ad dollars from talk stations was driven in part by a series of organized social-media campaigns by liberal activists in early 2012 that scared away advertisers.

The social-media campaigns followed remarks by conservative talk-radio personalityRush Limbaugh , who called a Georgetown University law student a “slut” on the air after she had testified to lawmakers that her school should provide birth-control coverage to students despite its Catholic affiliation. Mr. Limbaugh’s spokesman Brian Glicklich said his comments were made “in satire, and decontextualized from his larger point.”

While few blue-chip national brands advertised directly on politically charged shows like Mr. Limbaugh’s, the incident spooked many such companies from advertising on adjacent programming.

Activists were encouraged to record the exact time that companies’ ads ran on Mr. Limbaugh’s show, and because stations occasionally broadcast ads at the wrong time, brands suddenly had reason to reduce any risk of inadvertent appearances.

A year later, brands including Lowe’s and J.C. Penney were warning media buyers not to air their ads on news-talk stations. Others, such as Clorox and Domino’s Pizza, forbid media buyers to run their ads near, or within 30 minutes of, certain programming, listing dozens of talk shows—some conservative, some liberal, some religious—as examples in their instructions.

Talk radio took off in the late 1980s, largely thanks to Mr. Limbaugh. In 1984 the former music-radio DJ pioneered a new style of radio talk show that was more about showcasing his personality than about answering callers’ questions. The show was syndicated nationally in 1988 and five years later it was broadcast on more than 600 radio stations across the country to an audience of about 17 million, spurring others to create similar shows.

The talk radio audience actually grew briefly after the 2012 controversy, drawing 11.1% of radio listeners in November 2012, its highest percentage since the radio industry started measuring listenership with digital monitors, according to Nielsen.

Still, the 2012 social-media campaigns on talk-radio gave advertisers the jitters, according to syndicators and media buyers. The brands, according to one radio executive, don’t want to risk being “Twitter-bombed.”

Radio stations “now have to consider what the fallout will be before taking” on talk shows, said one veteran media buyer.

Local and direct-response advertisers, such as flower-delivery and financial services, continue to advertise on conservative talk shows. But overall demand has tanked among national advertisers for anything else that could air on the same stations, putting some syndicators and stations in a bind on their programming.

As a result, syndicators are now focused on creating more sports and entertainment news programming that can air on music-oriented stations. Cumulus Media Inc., for example, has invested heavily in its country music brand, Nash, creating a country-music-themed morning talk show and a Nash News feed. Cumulus declined to comment.

IHeartMedia Inc. ’s syndication arm, Premiere Networks, sells the shows hosted by conservative personalities including Mr. Limbaugh, Sean Hannity and Glenn Beck . A Premiere Networks spokeswoman declined to say how the value of ads on these shows had changed since 2012, but said that Premiere had added 125 new advertisers since 2011. Seven of its top 25 talk-show advertisers have left since 2011, she added.

A year ago, iHeartMedia—formerly known as Clear Channel —moved Mr. Limbaugh’s show from its flagship Los Angeles talk station, KFI, to another of its Los Angeles stations, KTLK. KFI’s revenue had fallen to $39 million in 2013, from $48.1 million in 2011, according to Bia/Kelsey. An iHeartMedia spokeswoman declined to comment.

Angelo Carusone, executive vice president of Media Matters, the liberal watchdog group that organized the 2012 social-media campaigns, said the group didn’t intend to hurt the entire talk-radio format, but the radio industry wasn’t tracking ad placement carefully enough.

David Landau, who until 2013 served as co-chief executive of syndication company formerly known as Dial Global, said the campaign was so broad that it affected the industry overall even more than it affected its intended target, Mr. Limbaugh. Dial Global is now called Westwood One and owned by Cumulus.

“It was enough to change the paradigm for all of talk radio,” Mr. Landau said.

Write to Hannah Karp at hannah.karp@wsj.com

http://www.wsj.com/articles/talk-radios-advertising-problem-1423011395