Is There a Market in the Hole?

At a format study presentation over twenty years ago, a savvy executive asked, “Sure, there’s a hole in the market, but is there a market in the hole?” She meant, of course, that while our study identified a format opportunity in the market, could the new station build a big enough audience and sufficient revenue to be a good value for the company? At the time, when PUR levels very nearly equaled the market population, it was a provocative question. But, given the reality of today’s competitive audio media landscape, it reflects the way station managers must think now.

Programmers used to have the luxury of talking about audience metrics in shares. Conversations on the floor at any radio convention are peppered with memories of the meteoric rise of some long-ago insurgent station, quickly eclipsing the incumbent. When numbers are used in those stories, you never hear about the actual rating for the station, it’s always AQH share. AQH share, where the denominator is among the AQH listening being done in a daypart or in a demo – or both. In AQH rating, the denominator is the population in the demo – a much more meaningful number if it’s your job to sell the advertising inventory on the station.

Today, programmers need to be steeped in the ratings for their station(s) and market(s). AQH ratings. Cume ratings. With so many people finding their way to audio media beyond broadcast radio, it’s critical to know what percentage of people within a demo and/or daypart are shown as listening to radio in the ratings methodology that’s currency for the market. When staking out which stations you consider as competitors with your own station(s) – the market segment for your station(s) – you need to decide if that market segment is large enough to be worth your resources.

When we ran analyses for the screens of some recent station strategic studies, we found a few instances where the combined cume rating for the client station and a minimum of three directly competing stations included in the sample screen totaled only about a quarter of a demo. If they could chase their three main competitors out of their respective formats, our clients were still looking at a maximum cume rating of about 25% as the only game in town, so to speak.

Knowing the cume rating for your market segment overall – and by each demo cell within your overall demo – is mission critical. If the overall rating is too small for your aspirations, you may want to reevaluate which stations you consider to be competitors. We’ve gotten too comfortable with the idea that stations compete within format-specific silos. But, listeners upend those assumptions all too often. We’ve seen callout screens for Country stations that specify most or all of the respondents outside the core listeners for the client station be core listeners for the other Country station in the market – even though PD Advantage might show an AC or a CHR station as the dominant P2 choice.

Every programmer must know the total AQH rating for all listening for each demo cell in their market. The time-honored battle plan for launching an insurgent CHR against a bloated incumbent was to aggressively target teens and 18-24s with the launch and, after generating big shares with the young demos (and embarrassing the incumbent), gradually start inching your new station into 25+ dominance. Today, however, you’d face much smaller numbers cuming radio or generating AQH in those young demos. Today, you’d want to consider a vastly different strategy – or you’d want to launch in a different format.

Radio remains a great business with tremendous possibilities. Even with a rapidly changing competitive environment, it often remains the best audio media option for many people. It’s up to those of us in the business to find the best opportunities for stations.