The Content Interview
Paul Jacobs

One of the more interesting subtexts from my recent columns on the strength of the music and the audience's passion toward it was the age-old sales/programming conflict rearing its head. The most honest comments on this subject came from KTCL/Denver PD Mike O'Connor, who specifically mentioned the issue of teen composition threatening the alcohol sales category. Several people followed up on this topic on the ARC website message boards. I decided to get some insight on this issue by talking with Jacobs Media sales specialist Paul Jacobs, who is on the frontline dealing with Alternative format sales issues every day at stations across the country.

ARC: How important are alcohol buys to the Alternative format?

PJ: At some stations, if they lose the alcohol buys, they are in deep trouble, which is really sad to say. For those radio stations, what it says is that they've had difficulty broadening out the appeal of the radio station to general market advertisers. The bottom line is that they are important to everybody, but for some stations they are the lifeblood. It certainly underscores the importance of becoming less alcohol-addicted and focusing on everything else, because demos are shifting; the format is getting a little bit younger.

ARC: Here's a simple question: How does the age of the audience affect an alcohol buy?

PJ: It's simple, but even for a guy like me who lives it, it is fuzzy. It's like fuzzy math. Every alcohol company has their percent quota of teens, and if you exceed that ratio in specific dayparts or hours, they allegedly can't buy you.

Where it gets fuzzy is that different alcohol companies, whether they be beers, the malternatives, the Mike's Hard Lemonades, have different ratios that they look at, and then there are those that work with stations to figure out ways to get around them. So its very fuzzy. Some beer companies, if you are 1% over in one book, you are done. Others will go to multiple book averages. Some will go to special dayparting. Things like that.

ARC: So you can work around it using the daypart angle?

PJ: I have stations who work it hour by hour. If they have one or two hours in afternoon drive where they come under, they just sell those.

ARC: And beer companies are open to that?

PJ: Oh yeah. As long as it's legal. That's what the beer companies care about. By the way, we should actually broaden it. The beer companies are important, but it's actually broader than that.

ARC: Do you mean to include nightclubs or just harder alcohol and things like Mike's Hard Lemonade?

PJ: Night clubs don't care. If you've got an I.D., and it was hopefully issued by the state, then you can get in.

ARC: Do you think the requirement to have a percentage of older listeners is good?

PJ: As the father of a 14 year old, there's that side of the equation. But I'm a libertarian at heart and for the consumers to be able to make up their own mind, but in the real world the alcohol companies have had to agree politically with these percentages. Otherwise, it's possible that congress would eliminate alcohol advertising, like they did cigarettes. So it's a tough compromise that eliminates business on some stations, but it certainly beats the alternative, which is a complete embargo.

ARC: What are we talking about in terms of percentages?

PJ: Again, it depends. Generally, it's somewhere between 25% and 40% teens. I hate to say this, but for a specific company, I'll be in different markets, and I'll be quoted different percentages, which is why fuzzy math keeps coming to mind here.

ARC: So if you're higher than that minimum level. . .

PJ: Then you can't be bought, unless you find a specific daypart or hour or something like that. The other way to go if you are a radio station with too many teens—by the way, I love how we get penalized for having too much audience—is that you then move into other things, like creating events, tying them to clubs, and selling sponsorships to events.

The sad thing is that the beer companies and the alcohol companies know that they need this format because this is their audience. So it's frustrating for them. Imagine a world, where they can't buy Top-40 or Alternative stations, and they are left buying Classic Rock or Active Rock where they have median ages of 30 and up. Or, god forbid, they spend their money on newspapers.

In some ways, the alcohol companies that play it straight are the smart ones. Because anybody who fudges on this, then, in the worst case scenario, nobody is going to win.

But, you know what, the fact that we've spent this amount of time talking about the importance of beer and alcohol to the format exposes the underlying problem, and that is the format's dependence on the category.

ARC: Ideally, what percentage should this category be for a radio station?

PJ: I honestly don't know, but I know that if it's running at 15%, then the radio station should do everything they can to move it down to 10%, and if it's running at 10%, then they should do everything they can to move it down to 5%. Because, assuming the dollars are the same or growing, it means they are growing the other parts of the business, which over the course of time will be more important.

ARC: Still, the reality appears to be that a significant number of Alternative PDs are being asked to target older than they want in order to rescue alcohol buys. Do you have a specific position on that situation?

PJ: No, but I can tell you that when Dave is meeting with programming and management, and it comes up, both of us get involved in helping craft a strategy. There are some situations, like I described at the outset, where if the teen composition got too high, the station would be in real trouble. As a result, Dave and the program director have to make adjustments to do that.

But, you know what, that is less common than you think. It happens, and it is a very painful thing when, all of a sudden, the programming strategy is being dictated by a category, but, in a couple of these cases, it is the reality.

In the rest of the world, the sales staffs have developed to the point where they have come up with alternative mechanisms to generate revenue, like events and festivals and things like that, or they are strong enough with a broader general market advertising base, that if they are losing some of this money they are making it up elsewhere or certainly trying to.

ARC: I would think that if there was a danger of losing a whole category there would be some intense conversations in the GM's office no matter what the situation.

PJ: Yes, and it happens in some cases. Again, Dave's job is to make sure the station is executing the right strategy for its market and its situation, and my job is to help them convert it. Welcome to the age old conflict between programming and sales.

You know what? Having that dynamic in our company puts us in an even better position within the radio station. We can truly look at the station as a total entity and have not only a ratings generation strategy but one that can cohabitate with sales.

It's a tough situation, but, again, my job is to sit down with the sales staffs and break them of their alcohol addiction. I'm like alcoholics anonymous here. My job is to make this a less important part of their revenue mix, and there are a lot of stations where these conversations don't even happen, because they are in a much better financial position.

ARC: Is it realistic to take the whole category and move it from spot revenue to other NTR revenue sources.

PJ: Probably not. Not everybody. Some of them, absolutely. A lot of them have to do with state liquor laws. In some markets you can put together co-op advertising with nightclubs and filter the money that way.

ARC: That's what I'm talking about—creative bookkeeping!

PJ: Hey, you're playing within the rules, and if that's what you have to do, there's an automatic filter of 21 and over coming through the door of the nightclub. If that's what you have to do, it's within the rules. It's not fudging the rules.

ARC: But that's not realistic for the entire category?

PJ: Not for the entire category. First of all, you can only do so many events. Again, a lot of alcohol companies aren't set up to do events the way stations want to. Others just want the spots. So it's a tricky thing, and you take each one individually.

ARC: Are there any other creative ways you have seen stations get around the teen comp limits?

PJ: No, that kind of fits it. There are some Internet things, but, believe me, you're not going to make up a quarter million dollar spot buy with an Internet promotion.

ARC: Have you witnessed the results when push comes to shove and programming has to make changes to address a burgeoning teen composition, perhaps unwillingly?

PJ: In one case I've seen it where it has actually worked. I haven't seen any cases where it hasn't necessarily worked. But, that said, I think you have to step back and also look at the factors that are causing this.

Ten years ago, when the format really accelerated, the base was generation X. That generation is 46 million people. Today, many of those folks have aged out of the format. Their orientation was to U2, Jane's Addiction, and Pearl Jam. They've been supplanted by Generation Y, who are 13 to 23 years old, and there are 62 million of them. So for every one Gen Xer who is aging out of the format, you are replacing them with 1.3 Gen Y. You can try to age the thing, but the fact is that there are more on the younger side than there are on the older side.

Keep in mind that a 21 year old, who is a legal beer drinker, was 9 when Nirvana broke. So it's a real tough thing to try and hang on to the upper end original listeners of these radio stations because, frankly, they don't relate to System Of A Down or Godsmack. So you can try to age these formats, but it's real tricky.

To me this is not a programming problem. It is a sales problem. I don't even know how big of a problem it is. I know there is tension within some radio stations, but when you cut through it all, it's not programming's inability to deliver a certain amount of legal age drinkers. This format attracts who it attracts. It is the failure of some sellers or sales managers or sales departments to broaden out the advertisement base so they're not as hooked on the alcohol money.