Frank Flores

Frank Flores left perhaps the highest profile radio station sales job, selling Howard Stern at WXRK/New York, for the challenge and the oversight of SBS' radio stations. Little did he know what he was in for when Arbitron's PPM was launched. Not only did he have to deal with the longstanding disadvantage an ethnic station has against general-market powerhouses, but the PPM's initial lack of proper ethnic representation (which it is still addressing) on top of a faltering economy formed a triple-whammy on sales revenues. Undaunted, Flores has taken the lead in aggressively pushing for more and significant PPM improvements - even going to court to illustrate his dissatisfaction with the results so far. Here's his perspective on what it's like for a Hispanic broadcaster, selling in the trenches of the new PPM terrain.

You left WXRK for SBS in July of 2004. Was SBA - and Spanish radio overall -- at a disadvantage in terms of generating ad sales before the advent of PPM?

Spanish radio has always been at a disadvantage, as I believe Urban radio has. We are constantly discounted for our audiences and in terms of what people are willing to pay to advertise on our stations. That's been typical of this format for a long, long time. It has gotten better; what WSKQ has done to make a mark in the New York City metro helped open that up. Hispanic and Urban radio successes in the diary world, where some radio stations rose to #1 in markets like New York and Los Angeles, certainly helped get more attention, for the most part, to the size and strength of the Urban and Spanish-language radio audiences.

Before SBS, I spent 23-1/2 years at Infinity/CBS/Viacom, but I started my career in 1981 at a small Spanish-language station called WJIT in New York. By the tail end of that year, the owner sold it to a small start-up called Infinity. I stayed on at that station until 1990, when they flipped out of Spanish, but I stayed with Infinity and started a career in general-market radio with WXRK -- first as National Sales Manager, then Local Sales Manager and the last two-and-a-half years I was Director of Sales.

When I went back to Spanish radio at SBS, there certainly were challenges, but none that I hadn't experienced before while working at WJIT. I was very familiar with the Spanish marketplace, except that back in the '80s, there were only two Spanish AMs in the entire market. It was a pleasure to come back and see that SBS' two stations were totally established and entrenched in the market and in the buying community. I also inherited two radio stations -- one, Mega, that was constantly in the top 5 and had a morning show that eventually become #1 in the market once Howard Stern left WXRK.

Did you do anything different, or use your experience at WXRK to help the SBS sales team generate more revenue?

Not really. The only thing I did when I first came to these stations was to maximize our efficiency and build a potent message to motivate sales teams. I tried to put a more general market feel for these two stations.

For me? Quite honestly, here I was, after 13 years of selling Howard Stern in the market, which was like selling the Mercedez Benz in the car lot, moving on to inherit two stations that were doing rather well in the ratings. I could go to buyers and say, "Listen I know what I was getting from you for Howard. Now that he's gone [to satellite], I have the #1 morning show again, so, come on, let's talk!" I brought that kind of angle and hopefully, we managed to make it work for everyone involved.

At the time, SBS stations were doing quite well in the diaries. When you first heard from Arbitron about the PPM, could you tell right off it was going to hurt SBS and minority radio in general?

The minute the first PPM info came out, I believe it was in October 2007, and we saw the pre-currencies in our markets, we were floored. We started asking questions, but Arbitron had no answers, which naturally frightened us. And we weren't the only ones asking questions. It seemed that a very stark line was being drawn across the early markets; if you were had a Hispanic or Urban station, your ratings were compressed a lot more than the 30% they were predicting.

Which brings up another point: Arbitron did a really poor job of marketing this by saying that "70 equals 100." That basically told buyers that they should get a 30% discount right off the bat. That's bad enough, but when you add the extra loss from Arbitron undersampling Hispanic and Urban station listeners, buyers look for discounts of 50-60% from our stations.

So you were against the PPM right from the get-go?

No. What people don't understand -- and we try this to make this a major point -- is that SBS was one of the first radio groups to sign on to PPM. People ask why? I say the promise of what PPM should be is intoxicating for most broadcasters. Why is that? Imagine having a service that gives you, week in and out, information on your station that provides specific data on how well you're doing compared to the rest of the marketplace and competition.

Why is that important? Let's say you add a new member to the morning team, or started an outdoor campaign, or a mass direct or e-mail piece. You can find out quicker if there's a connection there. A well-run PPM should reflect those changes a lot better than a diary, where you have to wait four weeks just to get a trend, or 12 weeks out get a book. This is more immediate - and the thought of having that really was extremely attractive to us, but we never thought the "compression" they were talking about would leave us so far behind.

I really want to make one thing clear: We're still believers in electronic measurement. But the fact is that in a great majority of the markets where the PPM is currency, the diary is still the only MRC-accredited form. We're not saying the PPM is wrong because it's simply hurting us; the MRC, the watchdog of the industry, still says they need to fix it in all but three markets.

Bottom line - and we stand behind the PPM Coalition with this - if they get MRC accreditation for all of their markets, we'll go away and you won't hear from us again, because we'll feel a lot better about the data we're getting.

Have you been able to talk to the MRC about what the problems with PPM really are - or are you forbidden to contact them until all is said and done?

I'm not a member of the MRC, so I can talk freely about it. I can just tell you we've had some frank conversations with some members of the MRC. We [the PPM Coalition] whittled down our concerns with the PPM to about 13 key issues. The MRC said they had many more. They're the watchdog of our industry on whether to give a green light to ratings services ... and they have a lot more concerns than we do!

The MRC has accredited three markets so far. Isn't that a light at the end of this tunnel?

Houston has been approved the longest; Minneapolis doesn't have much of a minority audience to speak of, although Riverside does. The question should be why haven't all these major markets ... New York, Philadelphia Chicago and L.A ... which have had PPM currency for as long - if not longer - than Riverside and Minneapolis, not been accredited yet. The answer might be that Arbitron didn't generate their samples like they did in Houston. And the reason Arbitron doesn't do it the way they did in Houston is purely financial. It would cost them too much. I understand they have to run a business, but their business is to provide accurate ratings, and there's no guarantee we're getting that in the great majority of markets.

In more than one of its monthly PPM conference calls to clients, Arbitron has produced data which shows that certain Urban and Hispanic stations have actually seen their ratings rankings go up since the PPM. That hasn't convinced you that you can re-program your stations to get better numbers?

Another fallacy floating around, perpetrated by Arbitron and pro-PPM parties, is that the only reason Hispanic and Urban stations don't like the PPM is because we don't like our ratings. Then they cite isolated instances where a Hispanic station in Houston or Miami is doing better in the rankings than it did in the diary and use that as proof that there's no problem. Our point is -- what good is ranking success if the data isn't reliable? Plus, being rated higher in a market doesn't mean you can charge more for spots, when your actual numbers are still less they were than when you used the diary as currency.

They use these isolated cases as examples of better ways to program your station, but since when did a ratings service suddenly become a programming service? Isn't Arbitron's purpose to deliver an accurate assessment of how you're doing - and not tell you what to do just to get better on their ratings system? If the measurement is flawed, and you're tweaking your station to get better numbers on a flawed system, what good is that? That's like a teacher teaching you how to take a test without you actually having to really learn the subject matter. Just because you just got the right answers to win at PPM doesn't mean you know how to engage more listeners.

When Arbitron offers ways to win at PPM, it drives me crazy. They shouldn't be in the business of helping you get ratings. They should just be in the business of providing accurate, reliable ratings - and according to the MRC, they're not there yet.

Still, every month Arbitron comes out with new data showing that they're closing in on their goals to get appropriate minority and target demo representation its sampling and response. Don't the improving trends behind these numbers alleviate some of your concerns?

Not yet, because those aren't its only problems. Another issue I have with the PPM - which is something few people if any have brought up - is in how the PPM has impacted morning drive ... across all markets and formats. And the only way to perfect this methodology, I'm afraid, is to plant a PPM encoder chip underneath someone's skin. As it is now, the PPM, if it's sitting in its docking station, won't pick up your radio listening if you are listening to the radio in a room different than where it's docked. So, the 90 minutes or so one would take to get up, take a shower, get dressed and eat - all while potentially listening to the radio - won't get picked up by the PPM.

Plus, not everyone puts their PPM docket by their nightstand. I put my Blackberry downstairs in the kitchen to recharge. When I wake up in the morning, it might take me 90 minutes to get downstairs to pick up my phone ...and I may be listening to the radio the entire time I was upstairs getting ready for work. I don't think I'm the only one who does something like that. What's more, what happens to a PPM user who inadvertently leaves his PPM in his coat and places his coat in the trunk while driving to work?

There are a lot of unanswered questions here - and they all could be the reasons we're seeing depressed morning show numbers as compared to the rest of the day. You're now looking at stations whose morning show ratings are actually less than middays or afternoons - and not just us. Most formerly highly rated morning shows seen their ratings fall below later dayparts. The PPM is changing the business model.

And finally to answer your question about the "improving trends" that Arbitron keep alluding to, please remember that these are "their" metrics and self-imposed targets and they have hardly anything to do with the way we are measuring their progress.

That may be one reason why so many high-salaried, heritage morning shows are being replaced. Still, if you have to charge less for mornings, can't you make it up by charging more for the later dayparts?

Not necessarily. Traditionally, radio stations have charged considerably more for mornings than they do for other dayparts - and for good reason. More people are listening closer to radio on their way to work because there's less competition from other media. They can't drive and watch TV at the same time, nor can they work on their computer when they're behind the wheel. However, the computer is a major competitor for one's attention at many places of work and especially at home. The same can be said for TVs at home. Because of the increased computer and TV usage, buyers aren't going to pay as much for later dayparts than they will for mornings.

But is PPM data actually inaccurate, or does it accurately capture "exposure listening," which is comprised of, according to Saga head Ed Christian in a previous Power Player interview, "a lot of Dairy Queen and dry cleaner listening"?

I bring up this example, which I've used in so many meetings it has almost blurred my memory, but it's a true observation nonetheless: I go to a dentist on 57th Street ... and most of his staff is comprised of younger Hispanic women. One time, I had just been given Novocain and I was back in the waiting room, waiting for it to kick in, reading a magazine, when a Hispanic girl in her mid to late-20s came into the office humming a Barry Manilow song. She caught herself doing that and cursed at herself in Spanish. I asked what's wrong. She says, "Look at me. Do I look like someone who would like Barry Manilow? But he [the dentist] plays Lite FM all the time." I asked her what she really listens to, and she says Mega.

How many people are like her, who work in a professional or retail business where they're forced to listen to whatever their superior wants to play? Not to mention the clientele to these places, who may not like or listen to whatever they hear there, either. What if a certain number of these people get PPMs ... how would that impact the data? What good is data that includes people who listen to stations they don't like? It's obvious to me that I would rather reach people who actively like my station - and I would want the ratings to reflect that.

After successfully dealing with buyers and advertisers for over 25 years; you must have good insight into their mentality. Please explain why they would endorse a ratings service that, at present, essentially provides exposure listening data, but not a representation of an active, interested audience who would be more inclined to listen to the commercials on their favorite stations ... thus generating better results for the buyer's clients?

I understand the buyers'mentality; their job is to buy whatever they can for as cheap as they can get it. They solely negotiate the best rates and package plans for their clients, the advertisers. I don't blame them for that. My job is to get a fair price. What you say has a lot of logic, but it has no place with the buyers.

This is what they believe and how they got to their current position: First, they discounted the diary system. Nobody believes a pencil-and-paper beauty contest anymore; we needed to get into the 21st century. Okay, fine...so we started looking for some sort of electronic, scientific way to measure our audience - one that's totally impartial so we can believe those numbers.

Third, out comes the PPM, but from day one its numbers gave buyers a discount.. If they're getting 70% of what they expected, why should they pay more than 70%? You add a crappy economy on top of that and you have a perfect storm that walloped radio. Arbitron says our problems are more tied to the economy - look at the car business. Yes, but our ratings are even worse that the norm. We can't oversell our ratings to buyers, because they just look at the situation and think about much cheaper they can buy our packages.

So who gets the blame when the buyer's cheaper ad buys don't produce the desired return for their clients? It looks like the stations become the fall guys, not the buyers.

Right. The biggest point in this is that the when the ratings aren't stable, reliable and accurate, then whatever changes you make to your rates to reflect your ratings could make things worse. Clients get less effective schedules on radio, their ROI gets worse ...and they blame it on radio, not only what they actually bought. For instance, if you're not buying as many morning spots, but are concentrating on nights and weekends because the PPM data says you get better value there - and that's faulty information - what happens next is an incredible cause-and-effect that can be truly scary. If were trying adjust our business on a faulty system, we might be fixing things that aren't broken to begin with. That's why the PPM really has to done right.

As of today, with the encoding case being argued in the courts, which could take a while to resolve, what does SBS do to maintain and grow its business?

It's difficult. We did stop encoding a bit, but not enough to affect those ratings ... and even though we can't see those ratings, most of our radio stations are very well established and the formats have been very successful. We're not fly-by-night stations with a great week one week and a bad one the next. Buyers know we're very stable; they understand that SBS has been around for a long time and that we stand behind our product. In all of these different marketplaces, our reputation speaks for itself regardless of what the PPM ratings might be.

In a way, this situation could be good for us to help ourselves to negotiate with our clients. At the end of the day, we know that if we give good service and our advertisers get results from our ads, they will not go away. They'll become repeat customers and that's the lifeblood of our business.

At the tail end of this, I'm still hopeful we can reach an accord with Arbitron. I'm hopeful that SBS and Arbitron will have a meeting of the minds and will work things out. We've thrown a lot of stuff at each other for the past 18 months, but in the end we both need each other. We need a good product and they need to provide a good product to the industry. There's no substitute for anything less. I'm a firm believer in us getting this done.