NAB reports (Mar-Dec 1933)

group of stations in the South that are working on that right now. They had a very simple, loose organization, entirely outside of the National Association of Broadcasters, had a common interest in being connected with one chain, and they are getting together on their own hook, trying to work it out. * * * The motiop was put to a vote and carried * * * CHAIRMAN CARPENTER: The next topic for discus¬ sion, and the last, is “Importance of Business Statistics,” by Herman S. Hettinger, University of Pennsylvania. MR. HETTINGER: First of all, I do want to say this: Let us all understand what we mean by statistics, because I want to treat them in a broad light. I would rather call it the importance of business facts. As far as the general question of business facts is concerned, we are up against this very definitely. We have seen it in the discussion all day. Somewhere within the industry there must be a clearing house for these facts and for these problems; there must be some sort of, if you' want to use the term, a permanent secre¬ tariat to take care of bringing all this together, helping the dozen-odd committees that were appointed today and tying the whole thing up. There are in addition to the general question of a clearing house of commercial and trade data and promotional data, some rather definite problems of business statistics and busi¬ ness facts which have to be approached immediately, over and above the things that have been discussed so far. So what I want to do for the next few minutes is to take that one particular segment of the whole problem, remembering it is only part of the problem, and to discuss it. I want to start by briefly asking two questions and outlining the situation as we can figure it out today in advertising. IMPORTANCE OF BUSINESS STATISTICS By HERMAN S. HETTINGER What can the N.A.B. do to improve the economic position of its member stations and of the industry as a whole? This, in turn, involves two major questions: (1) What can the N.A.B. do to assist stations in more effectively selling radio broadcasting as an advertising medium? (2) What can the N.A.B. do to improve the business operating efficiency of its membership ? The best way to begin a discussion of the problem at hand is to review the economic situation facing the radio broad¬ casting industry at the present time. Here several factors stand forth clearly: 1. Radio broadcasting has emerged from its first pe¬ riod of rapid growth, and has taken its place as an estab¬ lished advertising medium. The rate of growth of broadcast advertising, as reflected bv expenditures for time over national networks — this is the only index which we have — has been decreasing annually. The 1930 growth over the previous year was 43%, the 1931 in¬ crease 34 % , the 1932 rise in volume 9.3 % . The first quarter of 1933 is 32.6 % behind that of the previous year in volume of network business. The “novelty” days of radio broadcast advertising are definitely over. 2. Though it has become an established medium, radio broadcast advertising still has to achieve any measure of stability. Radio broadcast advertising grew during a severe depres¬ sion. Consequently industries, which, in less disturbed times could have profited from broadcast advertising, were pro¬ hibited from attempting the new medium. With the resump¬ tion of business these industries must be sought out and sold the value of broadcast advertising. Moreover, a number of industries have just recently discovered radio broadcasting. An example is found in the gasoline and oil industry, which increased its national network expenditures 100% over the first quarter of last year, and which is just awakening to the fact that broadcasting as a whole, and summer broadcasting with it, is a so-called “natural” when it comes to meeting their distributive problem. There are other industries which remain to be convinced that radio meets their needs to the extent to which it really does. 3. Because radio broadcasting is no longer merely a novelty, but an established advertising medium, it will meet, and already is meeting more severe competition from other advertising media than at any previous period. The radio-newspaper controversy in recent months is a symptom of this competition. The prominence given in news¬ papers to news of companies discontinuing broadcasts, and similar features, also are examples to point. 4. It is highly improbable that the huge advertising expenditures of 1927-1929 will soon be repeated. This will further intensify the competition between advertis¬ ing media. In this competition radio is the newest and least experienced of the major advertising media — for all its phenominal growth. In 1932, national advertising volume had declined 37.4% from 1929, according to money expenditure estimates pub¬ lished by the A.N.P.A. Newspaper revenue from national advertisers declined 38%, magazines 44%, outdoor advertis¬ ing 56 % and car cards 59 % . Radio increased 105 % during the period, as far as national network expenditures were con¬ cerned. The annual national advertising volume in 1932 was estimated at $345,000,000 as compared to $553,000,000 in 1929. There are numerous reasons for believing that advertising volume will come back slowly. The advertising volume of 1929 contained waste which the budgets of 1933 and 1934 cannot allow. The demand for lower distributive costs, the tendency to concentrate upon the most profitable markets in terms of these costs rather than to achieve widespread distribution, increased efficiency in the use and placement of advertising, and the tendency toward the curtailment of excessively com¬ petitive effort under the Industrial Recovery Bill, all will tend to act as a brake upon increases in advertising appropriations. It must also be remembered that consumer markets cannot ex¬ pand greatly until the re-employment of workers and in¬ creased wages on the part of those who have faced severe cuts during the past several years rehabilitate mass purchas¬ ing power. This process will necessarily take some time. In the meantime, restricted markets will mean restricted adver¬ tising. Restricted advertising will mean, in turn, a fiercer battle between media for the advertiser’s dollar. The severity and nature of this competition can be gauged by a brief analysis of the position of the various media dur¬ ing the first quarter of the current year. Recently my at¬ tention was called to an AP story stating that during April newspaper advertising lineage had increased 25%, while radio broadcasting volume was 39 % below April 1932. Later I noticed the same comment in the June 1933 Survey of Cur¬ rent Business, published by the Bureau of Foreign and Domes¬ tic Commerce. Both statements were correct in substance but misleading in connotation. The actual situation is better for radio, in some elements, and worse in others. During the first quarter of 1933, news¬ paper lineage, as reflected in 52 cities, was 39 % less than for the same period of 1932; magazine expenditures 29% lower than the previous year, and radio 32.6 % lower than in 1932. The newspaper report had taken the figures most favorable to their media, and least so to radio. But here is a legitimate cause of concern for national net¬ works at least. During April, newspaper lineage in 52 cities increased 19 % over March, while magazine expenditures rose 7 % — as against an 18 % decline in network revenue as com¬ pared with the previous month. The normal seasonal decline is 10 % from March to April in radio. In the principal industries which have supported broad¬ casting, this same severe competition is in evidence. Foods, drugs, toilet articles, and cigarettes in 1932 comprised ap¬ proximately two-thirds of total national network revenue. During the first quarter 1933, network food expenditures de¬ clined 27 % over the previous year, drugs and toilet goods the same, and cigarettes and tobacco 58%. Magazine ex¬ penditures of the food industry declined 5 % during the same period as compared with 1932, drugs 18 % and cigarettes 18%. No newspaper figures are available. There is no doubt that radio broadcast advertising is head¬ ing for the most severe fight for business in its history. For this fight it must be prepared — with every weapon at its dis¬ posal. It must organize its forces as efficiently as possible, so that it may hold the ground already gained, and add new territory. Radio is being challenged to prove its economic Page 158