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For Bonneville’s Drew Horowitz, Radio’s Strength is Untouchable (11/19/07)

By Editor-In-Chief Joe Howard

Chicago is famous for a lot of reasons. The Windy City is where some legendary Blues musicians found their voice, where more than a few recipes for great pizza were created, and where the Sears Tower — for a time the world’s tallest building — scrapes the sky.

It’s also one of radio’s largest markets and most competitive markets. Bonneville International’s Drew Horowitz — who once again lands on Radio Ink’s Best Managers in Radio list — has been in the Chicago radio market for over 30 years, working his way up from account executive to his current post as regional senior vice president, where he oversees the Chicago, Seattle, St. Louis, and Phoenix markets. He’s also overseeing the company’s HD Radio efforts.

Along the way, Horowitz has learned some hard lessons about the reality of the radio business, but he maintains an optimistic outlook. “You always want to beat the competition,” he says. “Well, the most direct way to do that is to hurt them by taking their clients and moving them to your side of the ledger. At the end of the day, I think it’s just part of the DNA of our industry. And it’s not just our business; if you look at automotive or pharmaceutical or banking, it’s just part of the normal business cycle.”

However, he believes the opportunities that exist in digital and online media could alter the playing field. “All the Bonneville stations have done a wonderful job creating excellent environments on their websites, customizing web programs and sponsorships for clients that are interactive with listeners and then become sticky for us,” says Horowitz. “We’re creating interactivity with our listeners, and generating sponsorships and sales opportunities.”

Horowitz also believes radio must adapt its business practices to meet the needs of an increasingly demanding advertising sector. “They’re challenging us to come up with more innovative, creative ways to help them sell their products,” he says. “I don’t think they’re being unreasonable; they’re feeling their own pressures to get more for less within their sectors and within their companies, and they’re challenging us to help them do that. I don’t sense an adversarial situation. And most of us on the radio side are saying we need to crank this up to another level of intensity.”

Horowitz is confident, however, that the industry is ready to meet the challenges. “Everybody wants to write radio off as the smokestack industry. It is not. It is innovating, creating, and partnering with the new technology sector. It’s a process, and we’re all learning, but we still have a ways to go.”


RADIOINK: What are your key tactics for motivating staff?
DREW HOROWITZ:
It depends where a station is on the food chain. If your station tends to be toward the top of the food chain — it’s retaining share — growing share is probably not a realistic expectation in this environment. The goal in this environment is to retain your share or minimize erosion.

If you’re a mid-pack player, it’s trying to move the needle and feed off of the top-tier stations, and grab a couple tenths or half a share point of revenue in the market, based on pricing or group deals or whatever may be happening in the market.

If you’re at the bottom tier, it becomes more of a survival mode, staying on the bicycle. I’ve got a station at each level, and I tell the staff to take this window of opportunity and get us back on the bicycle. Once you’re on the bicycle with different clients or agencies, it’s easier to move rate, because there is ratings growth or growth of the radio station. So, I preach a little bit of a different goal to the different tier-level stations.

RI: What trends are you seeing? Which categories are strong, and which are weak?
DH:
The only drastic change we’re seeing is on the automotive side. Obviously the automotive industry has had some challenges. As we go forward, we’re seeing them being a little more demanding, maybe not spending as much money as they did, or needing to get more for their dollar. As we talk to some of the larger accounts about ‘08, we’re hearing, “We’re going to be reallocating dollars.” New media is an area some of the automotive people are looking at. They’re trying to get more of a web interactive presence so they get more bang for their dollars on traditional radio by shifting some dollars to an alternative. But if we can meet both of those needs, we can at least retain a good share of the automotive dollars.

Retail has been OK — not great, but holding its own. The big box goods and big retailers are still spending, but maybe not as aggressively. It’s not an avalanche where you’re saying “My God, what’s happening!” It’s just been a slow erosion in consumer categories that we’ve seen over the last year. They’re just not spending as much money as they did a couple of years ago.

RI: Is that money also going online?
DH:
Some of it is going into alternative media and some they’re just not spending —they’re taking a more conservative bent. When things were really good and the consumer was doing well over the last couple of years, it was great. But this past year and the latter part of even last year, you started to feel some hesitation on the consumer side; people were beginning to get a little nervous. Now they’re saying maybe we better be careful. We’re still moving forward, but maybe not going forward as fast as we did.

RI: What are you hearing from advertisers regarding 2008? What are your expectations for the year ahead?
DH:
I’m positive. Overall, when you talk to the retailers and the people in the consumer sectors, they’re optimistic. There may be a short-term hiccup because of the gloom and doom of the whole sub-prime issue and credit crunch, and maybe people aren’t going to buy the new oven or refrigerator or don’t have access to that money in the home equity sector. But if jobs stay healthy and there’s no inflation, people feel that we’re still in pretty good shape.
You just have to be careful that you don’t read too many negative things and don’t watch too many negative shows — or if you do, balance it out with the positive sides of the economy. Overall, we’re a solid B/B+. Is it excellent? No, I don’t think we’re in an excellent environment. But is it horrendous? No, absolutely not. Challenging would be the word I would use, on both the sale side — for the retailer or car dealer — and on our side — for helping them be more effective.

RI: Are advertisers looking at new media opportunities and putting the screws to radio?
DH:
I don’t feel like they’re putting the screws to us, I think they’re challenging us to come up with more innovative, creative ways to help them sell their products. I don’t think they’re being unreasonable; they’re feeling their own pressures to get more for less within their sectors and within their companies, and they’re challenging us to help them do that. Talking to my guys in the different markets, I don’t sense an adversarial situation. It’s still very productive and there’s still a lot of positivity, but it’s like, “Hey guys, the days of me just dropping this here and just buying spots are over. I need to get more creative and innovative thinking from you guys.” And most of us on the radio side are saying we need to crank this up to another level of intensity, to meet the challenges. Anybody who’s sat back and thought this was a transactional, just-sell-spots business for the last four or five years hasn’t necessarily been realistic. If you look at all the companies on the broadcast side, at different levels and different timeframes they’ve all been taking a much more aggressive stance on new media and creative selling.

RI: What are some of the creative things you’re doing at Bonneville to satisfy those needs?
DH:
We’re working on a couple of initiatives. We’ve had a web director and a web presence for eight years, so we were a little ahead of the curve here at WTMX in Chicago. But all the stations within Bonneville have done a wonderful job creating excellent environments on their websites, customizing web programs and sponsorships for clients that are interactive with listeners and then become sticky for us. We really have done a tremendous amount; creating our pet page, real estate pages, financial pages, and consumer-friendly sponsorships. We’re creating interactivity with our listeners, and generating sponsorships and sales opportunities. Such as couponing immediate response opportunities; going in and getting a dollar off on a McDonald’s special today if you’ve got the interactive number that is on the website or that we’ve text messaged you.

Texting has become a big thing for us. A few years ago, people were wondering whether desktop or mobile ultimately win the Internet web and interactivity war. Within the next five years or so, I think you’re going to be able to do everything through your mobile telephone. You’ll see interactivity in web and Internet capabilities voice commanded in your car. And that’s going to open up tremendous opportunities on our terrestrial stations.

Radio is in a great position. Everybody wants to write radio off as the smokestack industry. It is not. It is innovating, creating, and partnering with the new technology sector. It’s a process, and we’re all learning, but we still have a ways to go.

RI: How do you manage sellers through this process?
DH:
It’s an ongoing process. You can’t expect immediate results and you need to be patient. We were at the front edge with our Chicago stations because we had a web director eight or nine years ago. About four years ago we were generating very good alternative media revenue streams. Our salespeople were focused, and we made it a priority by incentivising them and working with them. We brought in outside trainers and speakers. The idea was that we have to stay true to our core business, but this is going to be the future, so we slowly indoctrinated them to a mindset change.

In Chicago, starting about three or four years ago, we hosted an alternative media seminar for all the Bonneville people to share ideas of what we were doing in the new media sectors

Now, rather than training in the traditional sales technique, it’s all new media focused. Depending where our salespeople are in their life cycle, we go back to more traditional training, but for anybody who is a mid- to upper-level player who’s been with us for a while, we focus on new media training. Sales and general management are both focused on the new media platform. We’re in the multiple millions of dollars a year of revenue generation in that area right now, so we’re beginning to get some good traction.

RI: Does that make up some of traditional radio’s shortfalls?
DH:
It’s not going to make up significant shortfalls in the traditional media sector, but it takes a little of the sting out if GM or Ford is spending a little less money. If they are remaining healthy, then this is a little additive income for us, so it covers multiple areas as far as creating new revenue streams.

RI: Is there as much cannibalization in this new world as there has been in traditional media?
DH:
In the new media sector you see less cannibalization taking place because it is your own creation and your own ideation that you develop. It’s hard to say “We’ll do that better than [our competitors] will” because they don’t really know what we’re doing and conversely, we don’t know what they’re doing or what their intentions are.

In the traditional media sector, it’s the same. I would love to believe that at some time in the future it will change, but I’ve been doing this a really long time and it’s never going to change. At the end of the day, I think it’s just part of the DNA of our industry. And it’s not just our business; if you look at automotive or pharmaceutical or banking, you always want to beat the competition. Well, the most direct way to do that is to hurt them by taking their clients and moving them to your side of the ledger. It’s just part of the normal business cycle, and I think it’s silly to believe that’s ever going to change.

RI: When you bring in a new seller, what message do you tell them to impart to advertisers about the radio business?
DH:
The focus we like them to take out into the street is that we are a direct-response industry that has the ability to move people into action. TV and newspapers are sedentary businesses; the beauty of radio is the mobility of it, that it can have an immediate response: Someone can be in their car and hear a Home Depot ad on the radio and say, “Gosh, I’m really close to Home Depot and they’ve got an extra 30 percent off for one day only.” Well they’re already in the car, so they can respond and stop at the Home Depot. That’s what we try to preach to our people. Radio has been around for a long time and the basic tenets remain the same: It’s mobile, it’s interpersonal, people feel like radio is talking to them on a one-on-one basis, and it motivates people to take action. I’ve been in this for a while, and I don’t see any medium doing a better job at that. Some may be doing as well as we do, but I don’t see anybody doing a better job at motivating the consumer into action. We let our people know that’s why we’re such a wonderful medium.

RI: Are you hearing anything from advertisers about electronic measurement and PPM and how that might affect the way radio will be sold in the years ahead?
DH:
The early feedback is that the advertisers feel much more secure with the data, that it’s a much more accurate representation of real listenership. As the comfort zone of that data continues to solidify and they feel it is accurate, there may be some short-term pain as we transition to this new measurement system, catching the buy side up with the sell side and the delivery side of the technology. Once we get through the few rough patches in that first year or so, I’m optimistic we may see more dollars allocated to radio because advertisers will be able to track results quickly and make adjustments for us on the product side if we need to and certainly on the finance side. I think as confidence rises, they’ll spend more money with us because they’ll feel good about it.

RI: You’re in charge of Bonneville’s HD Radio initiative. What are your goals, and why is Bonneville so supportive of this technology?
DH:
My responsibilities are making sure that we have a clearly defined vision for the company that is working in tandem with the initiatives of the HD Digital Radio Alliance. It’s like starting from scratch to build a new brand, and the consortium effort has been phenomenally successful. We’re all on the same page of helping build this HD brand, and with everybody sniping and trying to take the house from each other in the traditional sector, for the future of our medium we need to all help this grow effectively. It is a gratifying thing to watch happen. Alliance CEO Peter Ferrara and iBiquity CEO Bob Struble have done a great job in building brand, getting the automotive sector to support it, and getting the retail sector to carry the different HD products, and working on the manufacturing side of it. I think we have had wonderful successes in a fairly short window of time. Bonneville has been a big supporter of HD Radio.

The most important thing is putting a good HD product out. If someone goes out and buys an HD Radio receiver, there must be compelling content — “Oh, this is great, this is different than what I was listening to on WTMX. This is really cool, these are deep tracks, I really like this” — that’s the key. You want people to have something really wonderful to listen to. The technology is wonderful, but you need to have a reason to buy the HD receiver or put it in your car.

We’re still in the early stages of the development, and I think the future looks very, very bright, but it’s hard to be patient when you want it to happen yesterday. We have to have a realistic expectation on how long it’s going to take to really make a dent. Bonneville has been wonderful as far as supporting the consortium, and we’ve developed some good products and we’re continuing to work on new products. All the other companies in the Alliance have stepped up to make this happen. We’ve got some great plans rolling out, and it’s going to be a good year for HD in ’08.

RI: Are you finding that consumers are curious about HD Radio even though receivers aren’t yet widely in consumers’ hands?
DH:
The receivers are available, but I think the best platform is automotive. Radio and cars are just made to be together. A phenomenal amount of money has been allocated to building awareness to the product, and I think the awareness level is there; just look at the amount of promotional and commercial time that the consortium has given to the HD initiative in general and the manufacturers, suppliers, and retailers that are carrying the products.

Another positive experience has been the spotlight that the satellite merger has put on HD. People are saying, “But yeah, I can listen to HD instead, and it’s free.” It’s brought a much higher level of awareness of HD Radio to the public and to the industry as a whole. I haven’t gotten a sense of confusion with satellite; I get a sense of comparison. I think people fall out of love with satellite somewhat quickly if there is a lot of great radio in the market. It’s really incumbent upon us to develop and continue to look at developing new products for the HD spectrum to motivate people to come on board.

RI: Do you expect the side channels to someday stand on their own, or will they always be a younger sibling to the main station?
DH:
I don’t know if I can see that far down the road, with technology and delivery systems developing the way they are. I can’t even imagine. I would say that 10 or 15 years from now they will be self-sustaining entities that will be as valuable in their own right, though not more valuable. The value will be created in a different way.

RI: What do you say to the HD critics who think there are too many reception and power level-problems?
DH:
Those are technical issues, and if you give brilliant people who have the technology background and capabilities enough time to figure it out, they’ll overcome those challenges. Different markets may have different issues. I don’t think that will be the show stopper. The greater challenge is that we keep developing and delivering competitive and compelling content.

RI: From a broad perspective, what do you wish the industry would do in the short term?
DH:
We need to keep innovating and understand that it will take a lot of creative thinking within our industry to stay competitive. There’s been such a phenomenal change in the industry, in entertainment and in technology, even the last 10 years. What was once a sleepy mom-and-pop industry that nobody thought much about is now an innovative, creative industry. Today we’re in the content entertainment business. Our challenge is to have people in think tanks and ideation focus on our strategic planning and not just keep doing the same old, same old. I don’t think we are. I’m really proud of radio and it’s been fun to watch. I feel we’re on the right track. I think the industry overall is very healthy and will do very well; we’ll change and morph as needed with societal demands. I believe we control our destiny.



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