Yesterday at Radio Ink's 2012 Forecast there was a lot of discussion about the new collaboration between Cumulus and Clear Channel. The deal has also spawned a lot of questions. Will there be other companies joining iHeartRadio? Will iHeartRadio morph into a radio portal, a point of entry for all of radio in the dashboard? What other collaborations will we see between rival radio companies?
There's been a loud cry for the radio industry to speak with one voice in order to gain more advertising dollars, to do a better job telling the radio story. Can an industry that slams its radio brothers on the air and in front of advertisers ever really speak with one voice? Is this Cumulus Clear Channel deal the start of something new or a one hit wonder?
Cumulus CEO Lew Dickey says it makes a lot of sense to have an industry standard. "Wouldn't it be great if iHeartRadio were the preferred aggregator in all cars, in all of the devices? We wanted to enlist our support to help make that a standard. We think a standard would benefit the industry."
Cumulus will soon add all of its radio stations to iHearRadio. In turn Clear Channel will help promote the Cumulus daily deal program called SweetJack. The new partnership is across all markets, not only the existing 16 markets in which SweetJack is currently up and running. Dickey would not reveal if the deal was simply a trade in services or if there was some sort of revenue sharing arrangement. He said "the deal is very symmetrical in terms of what each party brings to the other. They continue to own and run iHeartradio, it's their service. We continue to own and run SweetJack."
Dickey says "Groupon and Living Social control 76% of a growing 3.5 billion business. He says "90% of merchants still have not done a daily deal so there's a lot of green field in that space. These two companies scaled very quickly. The other 5,000 companies have not been able to achieve anything remotely close to that kind of scale. In order to not be one of those, we really need to have the power of scale to be able to go up against them and compete. This puts us in 200 markets over the next 6 to 8 months. It gives us the power of 10,000 local salespeople to leverage. And we have an ad campaign, between the two companies, valued at $100 million per year to promote this."
Clear Channel sales reps will not be selling SweetJack, however, according to Dickey, they will be referring advertisers to SweetJack ad reps. Cumulus sellers do not sell SweetJack either. Dickey says with Cumulus sales reps are able to refer anywhere between 4 and 8 dozen leads. When you do that across 10,000 sellers you've got a lot of leads. Dickey calls SweetJack an on ramp for advertisers onto the web who can do flash sales, e-mails, loyalty programs, a lot of different things we can provide. We think this is an excellent opportunity to create a platform company to service local merchants. Keep in mind the radio industry has about 100,000 customers. Google has 2 million customers."
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