The Vicious Circle of Low Revenue in Small Radio Stations, Especially Community Radios (LPFM)

I'm Ricardo Gurgel, an engineer with experience in both community stations and high-power radios in major urban centers. In this post, I aim to highlight certain patterns that hinder the performance and sustainability of low-power FM stations.

Pitfalls That Poison the Finances of Small Stations

1. Extremely Cheap Ads

After years of battling for a broadcast license and heavy investments, often accompanied by unnecessary expenses, there’s a rush to bring money into the station. However, in the early days of operation, there’s rarely an established audience. Rightfully, local businesses and service advertisers hesitate to invest significant amounts in a project that’s still building its listener base.

To overcome this resistance, many small stations engage in a “price auction,” driving ad rates down to unsustainable levels. The station can’t yet generate a return for advertisers, who then only agree to advertise at rock-bottom prices.

2. More Commercial Time, Less Music and Programming

It’s a paradox: a station running 12, 15, or even more minutes of commercials per hour is probably struggling financially. This leads to a downward spiral: they need more advertisers, drop their rates to attract them, and overload the programming with ads, which drives listeners away. With fewer listeners, advertisers notice the drop in influence and either demand even bigger discounts or leave entirely.

3. Decentralized Sales

This is often the root of most financial problems. Imagine your business competing against itself. That’s what happens when everyone at the station is allowed to sell advertising without centralized control. One salesperson pitches an offer to a business, and the next day, someone else offers an even lower rate to earn a commission.

This kind of “commercial cannibalism” happens whenever the sales department lacks structure, clear rate cards, or tight control over ad slots. It also opens the door to “pirate” ads — commercials that never hit the station’s books but end up in the pocket of someone who also controls the soundboard. Testimonials are the most common way this kind of scheme plays out.

4. Uneven On-Air Talent

A community radio should provide space and a voice to the public, but on-air operations require professionalism. Small stations aren’t expected to have top-tier talent, but even in small towns, capable people are available. Putting unprepared announcers on-air in a “let’s see what happens” style damages the station’s perceived quality and credibility, especially with advertisers, who are the primary financial backers. A good announcer should constantly work on voice delivery, content quality, technical handling, and audience interaction.

5. Weak Audience Metrics

Credible research institutes are out of reach for small stations and even large broadcasters are moving away from them. Why? Because digital platforms provide exact data: views, listening time, and many other indicators. Advertisers are drawn to this and prefer to invest in Instagram, YouTube, or TikTok.

An advertiser is the most attentive listener, they want to know where their money is going and expect clear ROI indicators. Without those, they’ll inevitably walk away.

6. Poor Transmission Quality

A station doesn’t need massive range, but it must reliably cover its intended city or community. Still, that alone isn’t enough. The audio quality, the ability to listen for hours without fatigue, must be a top priority. Bad microphones, makeshift studios, noisy mixers, unstable transmissions, and especially the lack of an audio processor kill audience engagement.

7. Poor Geographic Location

Topography is key for any FM station. You need to choose a location close to the target population and carefully plan the tower. Even with high power, a poorly executed project results in poor coverage. A well-placed tower with quality structure also makes maintenance easier, neglecting this can directly impact revenue.

LPFM - BRAZIL ( 87,9MHz )

8. Leasing Out Air Time

It’s tempting to rent out time slots in exchange for guaranteed monthly income, but doing so means giving up programming control and risking legal issues due to content that doesn’t reflect the station’s values. For many radios, leasing is a matter of survival, but it must be done with caution.

9. Don’t Hire Who You Can’t Fire

Programming mistakes often become permanent because management struggles to terminate staff. Many small stations don’t function like real businesses, emotional or political ties make it hard to let go of close associates. This blocks the necessary changes required to maintain quality.

Guidelines for a Financially Healthy Station

1. Avoid Rock-Bottom Ad Prices

It’s better to go months without any advertisers than to accept unsustainable rates. After all, the station likely survived for years without revenue. This approach helps “train” the market to accept fair rates. Over time, the audience builds naturally, attracting solid advertising interest.

2. Reduce Commercial Breaks

With balanced pricing and respect for audience value, commercial blocks become shorter. This improves programming and makes ads more effective. Advertisers who see results are willing to pay a fair price.

3. Centralize Sales Operations

A structured sales department with full control over ad insertions, testimonials, outdoor promotions, and digital media is essential. It prevents price wars and detects irregular ads, enabling the enforcement of the previous guidelines.

4. Only Hire People You Can Let Go

Flexibility to adjust the team is essential. Personal relationships must not interfere with the station’s health. This principle must be non-negotiable.

5. Raise Artistic Standards

Evaluating and tracking on-air performance is part of the job. A good host should communicate well, use jingles and sound effects appropriately, have general knowledge, and be capable of meaningful commentary. A radio station with an audience needs more than just someone playing songs.

6. Measure Audience Beyond the Dial

Your station must extend beyond traditional FM. Good metrics from streaming, YouTube, and social media boost credibility. High rankings on sites like Radios.com.br or RadiosNet also serve as silent endorsements for advertisers.

7. Invest in Transmission Quality

Investing in an audio processor, high-quality cables, efficient antennas, reliable mixers, good microphones, and proper audio interfaces is essential. This is the minimum required to ensure a high-quality sound experience that wins over listeners.

8. Strategic Location Choice

During the planning phase, choose the location of your tower and studio carefully. Mistakes here can take years and a lot of money to fix.

9. Leasing Time Slots

If leasing airtime is necessary to keep the station alive, prioritize weekend programming, especially Saturdays and Sundays. If you must lease during the week, aim for early morning (before 7 a.m.) or late evening (after 7 p.m.).