Cumulus turns over ad sales to Clear Channel

Katz is one of the companies that Clear Channel swept up during their acquisition orgy back around 2000. Katz is the only remaining significant “national rep” firm – they handle the details of placing orders for ads, making sure the ads are played per the contract terms and that the radio station gets paid.

There used to be a 2nd national rep firm, but it declared bankruptcy and vanished the day the FCC made up a law that it was illegal for a national advertiser to say “I don’t want to spend my money on black and Hispanic radio”. Since the FCC has no ability to fine advertisers since you don’t need an FCC license to advertise (yet), it had to implement their rule by forcing radio stations to sign a statement that they would not accept ads from national rep firms that permitted advertisers to choose which types of stations to advertise on for the wrong reasons. Note that there is no rule against boycotting Conservative talk radio.

So unless you have enough clout to have your own national sales force, radio stations are left in the awkward position of having Clear Channel selling your advertising – knowing all the details of who your customers are, how much they’re paying, what stations they are advertising. This is about as anticompetitive an arrangement as there could be. The hope is that they operate at arm’s length and Clear Channel doesn’t abuse that power.

Cumulus just signed a deal with Katz and it seems to be based on new technology similar to an idea Google tried briefly and then withdrew. The basic premise is that “availabilities” [time slots set aside for commercials] will be sold in near real time to the highest bidder. So if WABC has an ad slot for 30 seconds at 8:13 AM on Friday, the ad will be sold to whichever company is willing to pay the most for it, or if there is no interest, the ad rate drops as low as market forces demand

http://www.fmqb.com/article.asp?id=2827483

Just released advertising estimates are that radio revenue fell 3% year over year.

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