T-Notes

I've been back in Minnesota for the last week, and every car I get into had talk radio on. Namely, the 100.3 K-Talk station that plays Rush Limbaugh, as well as Hannity and I can only assume Glenn Beck. Although I hear a lot about the amount of money these guys make, I never really thought about the economics of this.

First off: We in New York and San Francisco don't really listen to talk radio. A lot of us don't have cars or have jobs that are close enough that a long, radio-listening commute isn't necessary. Outside of the coasts, and maybe a few other places, most people drive over an 1-hour each way to work and/or have jobs where they regularly have to drive to clients, etc. Overall, this creates a huge amount of potential listening time. In NY, our commutes, although on average shorter, have the same issue, but whereas our listening time is Podcasts or newspapers (as we can take our eyes off the tracks and read), at least in Minnesota (and most of the country) radio is still the primary medium for work-time commutes.

So, I was speaking to a guy out here in the advertising industry about how radio, when other old mediums like newspapers are struggling, is thriving. Well, actually it's not all radio, its only talk radio. Talk Radio is immensely profitable while music-based radio(think Clear Channel and their competitors) is slowly dieing.

Why the difference? Well, as it turns out, Talk Radio is basically an infomercial style business model. In between the rants, there are few, but significant advertisements that aren't like music-based radio. They are infomercial style, with hosts like Rush Limbaugh or Glenn Beck, actually talking about the product. Or alternatively, commercials with similar sounding advertisements to the actual radio broadcast content. Lets take a look at a few of the ones going on K-Talk:

• Gold Vantage - Gold Vantage is a bullion and antique gold coin purveyor, similar to the better known Goldline. Their commercial is set up as a mock radio show with an interviewer and expert talking about the advantages of gold. I don't know who the interviewer is, but given that its radio, its tough to tell whether this is a famous person or just an actor. This commercial comes on almost every break that Rush takes.
• LifeLock: LifeLock is a scam, from what I can tell. Its basically a service to protect against identity theft that the BBB doesn't think works. It takes non-tech people for a ride, while providing no service (their CEO has had his identity stolen multiple times after publishing his social security number).
• Esteem: This is a earing aid that Rush apparently has and promotes on the radio show. Its him speaking the ad himself.

These methods of sales are very familiar to internet marketing techniques and those most associated with infomercials. Even though for many these seem odd and unassuming, they are very excellent sales methods that have been perfected over 30 years.

Given Talk Radio's focus on a single performer and with their audience creating strong "expert" style credibility, they are able to very successfully market products to their audience. This is a strong advantage over music-based radio, where its performers do not have the credibility and its marketing, I can assume, is much less profitable.

Pair the above with a large, mostly captive audience, you end up with a very profitable industry that will be around for a long time in one form or another.