Bad news for radio stations appears to be good news for properties.

Burdened by tighter marketing budgets and less appetite for risk, a growing number of stations are moving away from creating proprietary events. In addition to reducing competition for audiences and corporate sponsors, the shift means other properties are more likely to find local stations interested in partnering with them.

“Stations have realized they are not in a position to spend $100,000 to produce an event,” said Kevin Brelsford, sales promotions manager with Emmis Marketing Group Austin, a division of station owner Emmis Communications Corp., which owns six stations in the market. “We’re not concert promoters, and proprietary events carry a significant amount of risk. There’s more of a focus on third-party events as the economy has turned and budgets have gotten cut.”

While radio stations have not dropped proprietary events entirely, many are focusing on just one or two key events instead of numerous projects, he said.

Another factor fueling increased interest in sponsorship by radio stations: Desire from advertisers for 360-degree marketing platforms that include spot ads, experiential marketing, digital and other components.

“We call consumers today the ‘catch me if you can’ consumer,” Brelsford said. “They’re online, using mobile devices and listening and watching traditional media. You have to hit them from all sides to be effective, and clients are being more demanding of that, especially in a down economy where they want their marketing dollars to be more effective.”

Other radio marketers agreed they have more interest in sponsorship as a go-to platform to build relations with advertisers.

“Sponsorship plays a tremendous role as a platform for securing new advertisers and incremental revenue from current clients,” said Jennifer Morelli, integrated marketing manager with CBS Radio Houston, a six-station cluster owned by CBS Radio Inc.

Although according to IEG’s latest property survey the number of rightsholders reporting sponsorship from at least one radio station posted a significant decline in ’09, that number should rebound next year given the positive attitude expressed by radio execs regarding the medium.

In the annual survey, only 20 percent of properties reported having a sponsor in the radio category, down from 28 percent in ’08 and 31 percent in ’07.

Typically, radio deals do not include cash. Instead, stations provide advertising time and promotional support in exchange for sponsorship benefits and the right to sell sponsorship packages.

Radio station sponsorships are usually structured in one of three ways:

  • The station secures the right to sell and retain sponsorship revenue from several categories
  • The station receives the right above, and also is granted a cut of ticket and/or concession sales
  • The station secures the right to sell all sponsorship categories and shares revenue from those sales with the property.
Below, three trends in radio sponsorships:

Trend 1: Growing Popularity Of Lifestyle Events Versus Music Properties
While music-centric properties remain the core of most radio station sponsorships, the vagaries of the live music business have prompted some stations to put more emphasis on lifestyle events.

For example, CBS Radio recently signed a partnership with downtown Houston’s 12-acre Discovery Green park, a public-private venture that hosts a range of events catering to different audiences. The cluster’s HOT 95.7 FM is sponsoring and providing DJ services to the park’s Cool Tunes, HOT Ice skating events, while another station will sponsor an eight-week outdoor movie series.

In addition to sponsoring third-party events, CBS Radio Houston is creating two proprietary events for next year. The cluster’s sports radio station will create and produce a new Fanfest event, while its adult contemporary station will create and produce Glam Jam, a confab for women.

Trend 2: Local Interest In Integrated Marketing Platforms
Radio stations continue to tap sponsorship to access benefits that allow them to create integrated marketing packages that include radio spots, on-site visibility and promotion, digital assets, etc.

What’s new is that while national sponsors have long looked for such packages, local sponsors are increasingly getting into the act, said Kevin Russell, interactive sales manager for Greater Media, Inc.’s two stations in Charlotte, N.C. “National companies have lead the charge with multifaceted campaigns, but it’s trickling down to local clients.”

For example, Greater Media secured Web-based air- and water-filtration supplier Filters Fast LLC, which is headquartered in Monroe, N.C., as a sponsor of next April’s Bark in the Park, a new event that will be produced by the Mecklenburg County Park & Recreation Dept. The company’s package includes sponsorship of an on-site photo station for dogs and their owners; consumers will go online to retrieve the photos.

Trend 3: More Focus On Sponsor Activation
As their sponsorship sophistication grows, advertisers are seeking more activation support, and in many cases are willing to pay extra for it, contracting with their radio partners for agency-like services.

This is in addition to stations’ traditional role of approaching cosponsors and trying to persuade them to allocate some of their activation dollars to radio. For example, Emmis Marketing Group Austin this year leveraged its sponsorship of the South by Southwest Music, Film and Interactive confab to access activation dollars from local Miller distributors to support MillerCoors LLC’s sponsorship.

“We can go to the local level and secure dollars to activate and complement a national sponsorship,” said Brelsford, noting that MillerCoors’ activation included on-air mentions and text message promotions.

Similarly, the Emmis cluster leveraged its partnership with Austin City Limits Music Festival to access local marketing dollars from supermarket chain cosponsor H-E-B.

Tips on Forging Successful Radio Partnerships
Below, IEG SR offers tips for properties on structuring beneficial relationships with radio stations:

Be specific regarding which categories stations can sell. Properties should explicitly identify the sponsor categories they are responsible for selling, and which industries the radio partner is able to go after.

“I negotiate categories upfront, so we’re not stumbling over each other’s toes and calling on the same people,” said CBS Radio’s Morelli. “We establish an equitable division of pre-determined categories, and determine the property and radio assets available to both parties.”

Stations typically look to secure top performing categories (auto, wireless, etc.), although what constitutes a hot category differs from event to event.

To persuade a rightsholder to part with active categories, Emmis Marketing Group Austin is willing to reduce the advertising commitment it asks for from the property, Brelsford said. Another avenue to securing highly salable categories is to ask for the rights to be granted to the station if the property has not sold the category by a certain date.

“Our commitment to the event doesn’t change if we can’t have the rights to those categories, because we’re still committed to a full amount of marketing,” Brelsford said.

Properties also need to ensure there is ongoing contact about which companies each side has approached and what packages/benefits are in play.

“It starts to snowball when communication breaks down; each side needs to know exactly what they have to work with up front before they have conversations with prospective sponsors,” said Ryan Lieberman, general sales manager with Chicago’s WKQX-FM, an Emmis station.

Secure the right to promote event cosponsors in radio spots. Radio and other forms of media partnerships provide properties a major benefit: the opportunity to provide cosponsors with additional exposure through traditional media.

Properties must secure those rights upfront, noted Dave Rhody, president of event producer RhodyCo Productions. “When you make a deal, you absolutely want to get in writing the opportunity to promote sponsors in radio spots. That defines whether or not we will work with a radio station.”

Some stations look to reserve such rights only for sponsors they secure, he said. “That is a no-go. We define specifically in our contract that we have the right to include three or four sponsor taglines per spot; that’s a huge amount of additional impressions.

“Some properties miss the boat–they get excited about the on-air promotion. That promotion is good, but if you don’t secure the right to promote your sponsors, it’s a weak deal.”

Make it a partnership. To be successful, properties and radio stations need to treat the relationship as a partnership.

For example, Greater Media will sometimes recommend potential sponsors work directly with the property if a company only is interested in booth space and other types of on-site inventory, Russell said, noting that rightsholders similarly send prospects to him.

For example, Filters Fast first approached Mecklenburg County Park & Rec about a potential deal with Bark in the Park, but the department referred the company to Greater Media after discovering they were an existing advertiser and interested in a larger package that included media and on-air promotional spots.

“They realized Filters Fast could get more value from a sponsorship that included broadcast components,” Russell said.

Properties also need to provide stations with the assets and tools they need to make the relationship a success, and vice versa.

Know who to approach at the station/cluster. After identifying stations that target the same audience as the property, rightsholders should examine the stations’ ownership and decision-making structure.

When pitching individual radio stations, properties should approach marketing directors, business development directors or general managers.

Citadel Broadcasting Corp., Clear Channel Communications, Inc. and other companies that own multiple stations in a single market frequently sponsor on behalf of both multiple stations and individual ones. When pitching a cluster, properties should approach marketing or business development managers.