It is often valuable to have a grasp of history when looking to the future.  Too often those that don’t have a historical perspective think that everything is new when in many cases what is new is a refurbished version of a past success model. 

The other day Clear Channel Communications announced that a station it owns in Dallas, KZPS, was going to stop airing 30 and 60 second commercials.  Instead of running lots of commercials, the station will have advertisers sponsor an hour of programming.  During each hour the DJ will spend about two minutes speaking about the sponsor or the sponsors products in a personal, conversational way.  This compares to the usual commercial load on radio stations of 12 to 16 minutes of 30 and 60 second spots.  In addition, sponsors will have category exclusivity.  The station has sold four sponsors, Southwest Airlines, AT&T, Coors and Guitar Center, and will therefore not have any other airlines, phone companies, breweries or music retailers on their air.

The impetus for this major change is the radical changes in the media landscape that have occurred in the past few years.  Radio has long been an out of home medium, listened to predominately in cars — that’s why radio stations call their version of prime time, drive time.  Radio was serving a captive audience of people stuck in traffic.  Now with the advent of commercial free satellite radio, CDs and iPods, drivers have commercial free choice.  Whenever I drive and I am listening to the radio, the second a commercial comes on I hit one of the preset buttons to find another station, looking for music somewhere else[if I am not listening to a CD]..  So this commercial format change on KZPS is an acknowledgement that if they want to hold on to listeners, they need to do away with the commercials.

This is not a radical idea.  75 years ago most radio programs were single sponsor programs, usually with the sponsor’s name part of the title of the program.  This model migrated to Television in its’ early days.  The Camel Cavalcade of Sports, Kraft Music Hall, the Colgate Palmolive Variety Hour, and of course the Dinah Shore Show with Dinah belting out “See the USA, in your Chevrolet” at the end of every program.  The commercial load was much less as the sponsor had the ‘sole voice’ of the program from an advertising standpoint.  This model did not change until a transition period in the late 1950s into the early 1960s when the price of television advertising was becoming so expensive that advertisers decided to stand down and run fewer commercials per program.  This transition also shifted the balance of power from the advertisers to the television networks, something that is only now beginning to fracture. Audiences have fragmented so much that it is now economically feasible for advertisers to once again ‘own’ a program.

Some of you may know that in the early 1990s, in partnership with media guru, futurist and good friend Jack Myers, I created a company, Television Program Partners, to essentially reinvent the old model from the early days of television.  We created a group of ten network advertisers that each had category exclusivity in all the programs we produced or acquired.  We felt that this was going to allow advertisers to gain back some of the control they had lost and at a time when the marketplace was moving in their direction.  While Television Program Partners is no longer, the model it created is essentially a model that is alive and well in this age of conglomerated media buying services.  Advertisers are now becoming full sponsors of programs, are becoming title sponsors of events and of course are having stadiums and arenas named after them.

Radio, led by KZPS, will probably have to move to this sponsorship model to survive.  The strategy in radio will be to hold onto listeners by removing advertising clutter.  I am sure it will work to some degree, though it is clear, as it is in Broadcast Television, that ratings will continue to down trend because of the explosion of media choice and competing technologies.

There are now more than 100 advertiser supported cable networks in the U.S. and of course tens of thousands of advertiser supported web sites, thousands of which have video content and commercials. This means that as the audiences in these two mediums get sliced into smaller segments, they also get more targeted and are therefore more attractive and affordable to advertisers that want to own them by becoming sole sponsors.

In the future you will experience ad supported media where there is one or two sponsors of a program, or a time period.  Sponsors are looking to connect with viewers, listeners, readers and visitors on a more emotional level, to establish an engagement with the viewer that will hopefully result in getting new customers.    We are being bombarded by an ever increasing number of ads and commercial messages every day.  Ads are showing up in the containers at airport security and in elevators because there are captive audiences for short periods of time.  In the future, the only way to stand out will be for sponsors to ‘own’ programs and franchises to establish an engagement with their target customers.  Dinah Shore, meet American Idol.