RAB President/CEO Gary Fries: Why Is This Man Smiling? (02/02/04)
By Reed Bunzel
As the radio industry slogged through a three-year downturn that finally appears to be ending, Gary Fries weathered perhaps the industry’s slowest period in decades. Named president and CEO of the Radio Advertising Bureau (RAB) during the depths of the last recession in 1991, Fries is no stranger to economic stagnation. In the 13 years since he was tapped to lead the radio industry’s advertising arm, he crafted the RAB from an organization that was hemorrhaging members — and dues revenue — and built it into a trade association whose membership today is at an all-time high.
By empowering the RAB to develop an aggressive array of training, research, outreach and marketing tools, Fries has helped to raise the profile of Radio within the advertising and buying communities. His (and his staff’s) efforts also have assisted radio groups and stations of all sizes — and in all size markets — to carve off a slightly larger slice of the overall advertising pie. Despite three years of declines in industry revenue, Fries has steadfastly worked to ensure that the RAB provides top-flight products and services to its members while working to establish radio as a primary medium in the minds of advertising and agency decision-makers.
The past three years, however, have been nothing if not challenging. The RAB has been faced with tightened group budgets, a near-emaciated industry, and shifting priorities, all of which have caused the organization to reassess its priorities. While acknowledging that the RAB’s goal is “to provide the mechanisms to support and enhance service, training, information, and national marketing,” he notes that there has been a recent need to “increase the national marketing as a priority, because there’s no one else doing it right now.”
Some of those needs, of course, have emerged in the form of pressure from the largest consolidated groups whose large membership blocks have become exceedingly valuable to an organization that derives the lion’s share of its budget from dues. Thus far, Fries appears to have done all the right things to satisfy both the Davids and the Goliaths, and he seems determined to maintain this sometimes-precarious balance through his current term at president/CEO, which expires in 2006.
Prior to joining the RAB in 1991, Fries had served as president of both Unistar Radio Networks and Transtar Radio Networks. He previously was president/COO of Sunbelt Communications’ Radio Division, and vice president at both ITC Communications and Multimedia Broadcasting. He began his career in Lincoln, NE, where he worked as a part-time salesperson at Stuart Broadcasting’s KFOR Radio while studying for his degree in business administration at the University of Nebraska. By the age of 24, he landed his first management position at KRGI in Grand Island. From there, he moved on to manage stations in Springfield (IL), Omaha, Little Rock, Phoenix and Albuquerque.
Fries is a member of the Arbitron Radio Advisory Council, the National Association of Broadcasters’ Radio Convention Planning Committee, the Executive Committee of the Broadcast Foundation; and he is a member of the board for the Ad Council. He is chairman of the John Bayliss Foundation, co-chairman of the Radio Creative Fund, which produces the annual Radio-Mercury Awards, and co-chairman of the Radio Ad Effectiveness Lab. He also has been named one of the “Most Powerful People in Radio” by Radio Ink every year since 1996, and is a member of the Nebraska Broadcasters Association Hall Of Fame. He currently divides his time between his office at RAB headquarters in New York and his homes in Breckenridge, CO, and Phoenix, AZ. He and his wife, Linda, have three sons — one with a career in Radio — and six grandchildren.
In conjunction with this year’s RAB2004 conference in Dallas, Radio Ink sat down with Fries to get his observations on both the state — and fate — of the radio industry.
INK: It seems as though the fourth quarter sneaked up on just about everyone in radio and decked them. Were you surprised at how poor business was at the end of last year?
FRIES: There’s absolutely no question that November was the low-water mark. That was obvious even before we got to November. While November was the culmination of many elements, we’re beyond that now. In fact, I’m very optimistic about the outlook for this year. However, I’m also cautious, because if we compare first-quarter 2004 pacings against those of last year, we have to understand that we are comparing them against a geopolitical situation that had an effect on when business was placed. Because of the on-and-off, delayed start of the Iraqi war, and then the residuals of the ongoing effect after it was over, pacings can be a little bit misleading.
What are you seeing that gives you reason to smile?
When you drill into the content of the pacings, you see some very positive things. One of these is the significant strengthening of local business. Because 80 percent of radio’s business is local, it’s essential that the local business element be strong — and it does seem to be strengthening and growing. Still, it’s a little difficult to measure the true level of growth. Some indications suggest fantastic growth, but there are some caution flags that could dampen expectations. Are we going to see growth this year? Yes. Will it be positive, strong growth? Yes. But we don’t know exactly how strong, even though we could be looking at what could be an absolutely phenomenal second quarter.
Is radio adequately competing against other local media in the marketplace?
We’re making progress against newspaper, because newspaper’s share of advertising has been decreasing; and radio’s share in the local marketplace — which is 80 percent of our business — continues to outperform local television. Are we making the inroads that we could make? The answer is “no.” We mount campaigns, but most times they’re negative campaigns targeting the competing media. My experience has shown that the most positive situations are those where we do not attack the other media, but instead focus on pointing out the assets of the radio industry. This is an age-old situation, and our sellers on the street at the local level still have the tendency to look at short-term gains. You do not change the established thinking of an advertiser in one presentation, one call — it must be a continual effort. Basically, what you’re telling somebody who’s been using a different medium is that their traditional thinking has been wrong. People don’t wake up in the morning looking for someone to tell them they’re wrong.
Many local sales teams function as predators, going after other radio stations’ budgets. How can we stop nibbling each other to death?
That is probably the biggest flaw in most radio sales. The industry is equipped to stop this practice, but whether the individual leadership within the radio stations and in the market is equipped to do it are very much in question. There is a wealth of information that positions radio vs. the competitive media, but much of the local leadership simply focuses on taking share from the other radio stations in the marketplace. That might be easiest to do, but in the long term, it is the least beneficial for our industry. The battle against newspaper continues to be a strong one, and we continue to move forward as the general trends of the population and their media usage change. We also must be wary of cable, because local cable systems are becoming very aggressive with their advertising. We in radio must wake up to this. The RAB is very much aware of it, but we don’t find that these concerns are on the minds of local radio managers.
Is there a realistic way to get as much of the radio slice as possible without going after competing radio stations?
One of the biggest disappointments I’ve had with consolidation is something I thought would go away, and that is the internal guerrilla warfare. We used to throw spears and shoot arrows at each other; now we drop nuclear bombs on each other. It’s done nothing but escalate the magnitude of that type of competition. People spend more time tearing down their competitors. In my opinion, the strength and health of radio will never be any stronger in a marketplace than the weakest competitor. I have told people that, rather than tear down their competitors, they should work with competitors to raise the image of the medium.
Sounds easier said than done.
What radio salespeople need to understand is that they should not be competing for the allocation. They should be working on selling the assets of the radio industry so that when a decision is made, the percentage of allocation to radio will be higher. By the time salespeople get involved in the execution stage of an advertising budget, there’s no way to increase radio’s share. All they can do is get a higher share of it vs. the competing radio station. There is very little philosophical selling, and companies should direct their people to be selling the assets of radio. Quite honestly, that gets into why we’re so intimately involved in the planning stages with advertisers. The media buyer often has no choice, since he or she already has a budget allocated for radio.
How does an organization like the RAB effectively change the media buying community’s perception of radio?
In the minds of many people who make the media decisions, the radio industry is fairly well understood. These people have their opinions, and you can’t just go out and beat a drum and say, "Change your opinion.” You have to present a very strong case to them. You have to show them something that is relevant and that will support changing their opinion. This is why we started the Radio Advertising Effectiveness Lab (RAEL), which is designed to do needle-moving research. The first thing we formed was a research committee, but it was not just radio people trying to come up with research that they thought would be accepted by advertisers and agencies. Our committee had some radio people, but it also had a strong representation of key-level advertisers and agency media people. They crafted a research program that would be very meaningful and supportive of the continued usage of the radio medium in their advertising plans.
RAEL launched several years ago. What’s the status of this project?
Well, now we’re into the phase where we are actually fielding this research, and we will reveal the results of the first study sometime after the first quarter. A second study is being finalized now, and a third study will start in the third quarter of ’04. These are three very large and comprehensive research projects that will be needle-moving for the radio industry. They’ve already been signed off on by the advertising and agency communities; and they will not be done by “in-industry” research companies, but rather by companies that are considered to be the gold standard of the advertising and marketing community.
How will you present the research to the advertising community?
We are gearing up our staffing with more marketing offices in major marketing centers, and we’ll have people taking this information one-on-one with the advertising community. These projects will definitely make a very strong case for radio, but their most important aspect is documentation of why radio is a strong marketing decision. It’s not as simple as it used to be: “Have you ever thought about radio?” That is not the way to move the advertising dollar, because there’s an accountability issue that’s critical in the advertising agency media plan chain. You need research to document how the consumer reacts to and is influenced by the medium, and we think the case for radio will be extremely strong.
How does the new ad campaign featuring Dick Orkin’s spots fit into this overall project?
The Dick Orkin campaign, along with the Radio Mercury Awards, the RAEL research, and the other things that RAB National Marketing is doing on a daily basis, all fit together. You never really know which single element is the one that makes the difference, but if we approach everything with a broad-based and positive approach, that’s what it will take to make a difference and put radio out in front. The Dick Orkin campaign is extremely beneficial in the local advertising community, because that’s where stations actually achieve the one-on-one relationship with the person spending the money.
Last fall, the RAB and the AAAA developed a new glossary of advertising terms to clarify the buying process. How critical was this project?
It’s very important. Somewhat to the surprise of the RAB and the AAAA, we found that, almost without exception, there was no universally accepted definition of most of the words of a transaction. We have to realize that transaction people span the whole range — it’s not just what the media buyer thinks the transaction word is, or what the advertiser thinks it means. The most revealing part of this process was finding that the general manager might have a certain definition of a buying term, but the person of execution — usually the traffic director — had a different definition. Traffic directors often have never been schooled in what the words mean, and they don’t understand that, at the end of the total process, there is an advertiser who is spending money and who has been told he or she would get something for that money. We found tremendous gaps.
Did this confusion contribute to advertiser reluctance to buy radio?
At this particular point, radio is not perceived as being as accountable as other media. That doesn’t mean we’re not; it just means that the perception is not there. These terms put everything on a level playing field, and it is essential that the foundation of that playing field be very solid. However, this is just the beginning of trying to establish radio as one of the most accountable media out there. My goal is to lead this industry into being thought of as the most accountable medium, and our initiatives right now are starting to create that perception.
Virtually every advertiser today demands results for his or her media buy. How important is accountability to the buying process?
To show that a flight of spots actually ran as ordered is basic. I don’t think there’s a radio operator in business today who does not agree that the advertiser is entitled to that, and the desire is for that to happen. Whether it executes that way remains to be seen, because the real implementation is delegated to the person who actually puts the spots on the log or the carts and pushes the buttons. Accountability has many appendages; and one is that advertisers today, in honing their systems of knowledge, have a tremendous ability to know exactly what is happening, when it’s happening, and who it’s happening with.
What are they expecting from radio?
What they really want from radio — and this has become very important — is accountability. At first, this may be viewed as something of the advertising agencies, and the media buyers are just demanding more. What it really boils down to is that it’s part of the advertisers' environment right now to be totally accountable within their company about how their money is spent. The agency or media buying service wants to be able to answer the advertisers’ questions and ensure that the performance, the scheduling, and the execution of the order is done with impeccable credentials — and never is in question.
Are managers today as aware as they should be of the sophistication of an advertiser’s buying strategy?
Not really. There are fast-food chains where people sit in national headquarters and count the type of hamburgers that are selling, right then. The meter runs by the minute, and they know what is selling and what isn’t. When they make a decision to use radio, they have researched the stations they’re buying. They have bought specific target times, and radio must execute their marketing plan precisely, as opposed to executing it at their whim — and maybe in not as precise a method as the advertiser has ordered. If advertisers cannot find entities to do that, they will not continue to place money on those radio stations.
The accountability cycle — which gets into electronic invoicing and reliance on electronic and precise ratings — is essential. We must move into a level of accountability and precision that is adequate to the sophisticated advertiser today. That includes the ratings cycle — our ratings are not at the level they should be.
Which brings us to the Portable People Meter. How critical is it for radio to adopt a new electronic-ratings methodology such as the PPM?
It is essential. Having the most up-to-date, precise ratings system of all media is without question an essential element in obtaining the confidence of the advertising community, and in the overall growth of this industry. The diary was fine, but people have awakened to the fact that there is a better product in the People Meter. I am a strong advocate and proponent, and I express it to Arbitron on a regular basis. We must get beyond the minutiae of the People Meter and talk about an implementation program. As an industry, we’ll have to work together with Arbitron to make this happen.
That said, must Arbitron do more work on the Portable People Meter before it becomes the measurement standard for radio?
Yes. Even Arbitron will tell you they need to do more work. Arbitron has not successfully convinced the industry that, in its current form, the People Meter will work. However, an RAB task force and I have been meeting with Arbitron regularly, bringing these issues to the table and asking them to respond. The bottom line is that the People Meter is not yet ready for prime time. At the same time, the radio industry is viewed as having a somewhat antiquated measurement system. In order to be perceived as a world-class medium, we must have a state-of-the-art methodology. Arbitron is well aware that the industry has called for many things, including an economic impact study, before radio will embrace a change in measurement. And that’s what we’re working for.
Like Arbitron, RAB needs to balance the needs of such groups as Clear Channel and Infinity and those of smaller organizations. How do you do that?
We are very sensitive to this area. There’s no question that the larger groups have the resources to provide such things as training or sales assistance to their people, so sometimes their needs are different from the grassroots groups. We provide a broad a la carte menu that will work for any radio station, large or small. That’s our goal, that’s our sensitivity, and that’s what we try to do. Of course, often what one large group uses, another won’t use as extensively, but the key is to have Class A information and services available so that the stations’ needs can be met regardless of what those needs are.
Of all RAB products and services, what is your priority?
Our goal, of course, is to provide the mechanisms to support and enhance service, training, information, and national marketing. We have seen a need to increase the national marketing as a priority, because there’s no one else doing it right now. In the past, more national marketing was done by the stations in a market and by the national rep companies, but that has shifted. Now, the RAB has a charter to move this forward, and my priority would be to increase our efforts in this area, because the main goal of the RAB is to increase radio’s share of the advertising pie. But you can’t do that without also continuing to support the local salesperson, to augment the training, to continually give information and direction. They all have to fit together — it can never be that you do one at the expense of the other.
We’re hearing criticism that the radio industry’s leaders are mostly old, and mostly men. Is this unfair, or is there some truth to this?
That perception is there, and there might be some truth to it. It’s very difficult to categorize what an old man is. But when you look at our board of directors, you see a major turnover of people every year, and it represents the leadership of the industry. I believe we have some younger leaders taking charge as captains of the industry. I don’t believe age is much of a problem today, and it probably will be less of a problem tomorrow. The nature of business is that the young, up-coming people always rise to positions of authority within the industry.
Are you at all concerned that the next generation of media users might not turn to radio the way other generations have?
It’s very much a concern. Technology is very attractive to younger people, and the competitive elements of the new technology have fragmented the media usage of this particular age group. Now, the radio industry will probably withstand it, but we haven’t done a lot as an industry to reinvent ourselves. In addition, these young people do not have traditions. They use the newest and latest technology available, and the competition for their media time is extraordinary. Still, radio is a tremendously resilient medium, and it is very good at looking inside itself and finding its strengths and weaknesses. Any time I’ve seen a weakening in any aspect of the radio industry, I’ve seen it rally. There is no question that there has been a growth of competitive, new media. Other media have felt a tremendous audience erosion, and I feel fortunate that so far we have been resilient to much of the attack. New programming ideas and new marketing methods will be born. Innovation will be there, and radio will meet that challenge.
Do radio people today hold that same spark, that same passion for radio remembered in the past?
I believe our industry has started to lose some of the innovative spirit that has made us strong. We’re also losing some commitment to the future. We wouldn’t be where we are today if people before us had not made commitments. People should not only perform their jobs, but also they should be investing as citizens in this industry. People must remember that the camaraderie, the enthusiasm, the passion of being in this business has made it what it is today. If that does not continue to flow, and if people do not become committed with that passion, it will eventually hurt the business.
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