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From Records to Radio: Bill Wilson's Journey to Leading a Digital Media Empire · The World According to Boyar

• 0:05
  Jonathan Boyar: Welcome to the World According to Boyar, where we bring top investors, bestselling authors and business leaders to show you the smartest ways to uncover value in the stock market.
• 0:15
  Jonathan Boyar: I'm your host, Jonathan Boyer.
• 0:18
  Jonathan Boyar: I'm really excited about today's special guest, Bill Wilson, CEO of publicly traded company Townsquare Media.
• 0:25
  Jonathan Boyar: Prior to joining Town Square, Bill was president of AOL Media from 2006 to 2010.
• 0:32
  Jonathan Boyar: Before working at AOL, bill started his career in the record industry, where he worked under the great Clive Davis.
• 0:39
  Jonathan Boyar: It's especially exciting to have Bill on the show today as, in full disclosure, I personally, as well as my clients, own shares in Towns quare, and Bill and his team have done a fantastic job, both operationally and in terms of capital allocation, which I want to discuss with him.
• 0:55
  Jonathan Boyar: We also recently featured Towns quare in our March 2024 Substack Report, stating that, in our opinion, it is intrinsically undervalued.
• 1:05
  Jonathan Boyar: Without further ado, bill, welcome to the show.
• 1:08
  Bill Wilson: Jonathan, thank you so much for having me on the show.
• 1:11
  Jonathan Boyar: As I said, I'm really excited and, before digging into Towns quare, just love to talk a little bit about your early career.
• 1:17
  Jonathan Boyar: You started in the record business after finishing your MBA.
• 1:21
  Jonathan Boyar: What was that like?
• 1:23
  Bill Wilson: Well, I think I was very, very fortunate.
• 1:24
  Bill Wilson: Early on in my life I had a very distinct perspective on what I wanted to do, which is rare.
• 1:29
  Bill Wilson: I have two children now, one graduating college and one just in college as a freshman, and when I was in middle school.
• 1:35
  Bill Wilson: I grew up in Teaneck, new Jersey, which I think also influenced my career and who I became as a person, because it was the first town in the United States to voluntarily desegregate in 1965.
• 1:47
  Bill Wilson: And my parents moved there in 1968.
• 1:49
  Bill Wilson: So it was a very diverse community which I think helped form who I am today.
• 1:54
  Bill Wilson: But in junior high school I read Clive's autobiography.
• 1:58
  Bill Wilson: I think it was a biography at the time.
• 1:59
  Bill Wilson: Clive Davis, that is, he had just started Arista Records after leaving Sony and I was a big music fan.
• 2:08
  Bill Wilson: My family, I was never a musician in terms of capable skills in music, but I loved music and my family always listened to music and that had a profound impact on me.
• 2:16
  Bill Wilson: So I remember reading that biography and saying one day I want to run an entertainment business, particularly a record label at the time.
• 2:23
  Bill Wilson: So fast forward, graduating with my MBA at Rutgers University for literally two years, Jonathan, I wrote everybody who got promoted in the record business.
• 2:35
  Bill Wilson: There was a trade publication called Billboard and there was a section called the Executive Turntable, and no exaggeration, for two years I would go to the public library because it was a very expensive subscription so I couldn't afford it at the time and I would literally write a letter to everybody who got promoted, if you were from mailroom to mailroom manager.
• 2:51
  Bill Wilson: And one of the people who got promoted was Jack Rovner.
• 2:54
  Bill Wilson: He had left Sony and joined Arista and I interviewed with Jack Rovner for about a year and I was fortunate enough to be hired as Richard Sanders assistant, who was an incredible mentor.
• 3:05
  Bill Wilson: I would not be in the position I am today without Richard Sanders' help.
• 3:08
  Bill Wilson: And it was a dream come true.
• 3:10
  Bill Wilson: I always wanted to work for either Clive Davis, who was at Arista, or Mo Austin at Warner Brothers, and I kind of manifested it and it happened.
• 3:17
  Jonathan Boyar: That's amazing and shows the value of persistency.
• 3:21
  Jonathan Boyar: For those who have been living under a rock.
• 3:22
  Jonathan Boyar: Persistency for those who have been living under a rock, you know, Clive Davis is legendary, discovered Whitney Houston, helped with Billy Joel, Bruce Springsteen, Aerosmith, basically anyone who's been in the music business over the past 40, 50 years.
• 3:36
  Jonathan Boyar: Were you able to work with him at all?
• 3:41
  Bill Wilson: Yeah, directly with him.
• 3:42
  Bill Wilson: So you know, the book I read was published in 1975.
• 3:47
  Bill Wilson: It was called Inside the Record Business and it was fascinating.
• 3:48
  Bill Wilson: It's still on Amazon they're charging $50 these days but definitely worth reading.
• 3:51
  Bill Wilson: He's actually had a more recent autobiography and a movie on Netflix for those interested.
• 3:55
  Bill Wilson: But not only did I work directly with him, it was probably my earliest influence of a leader running a company.
• 4:02
  Bill Wilson: The first thing that happened is SoundScan came about in 1991.
• 4:06
  Bill Wilson: And if you're familiar with the music industry, Soundscan was the first time it was actually tracking sales of records accurately.
• 4:12
  Bill Wilson: Before they would just ship them out and there would be some qualitative conversation on the phone how many of these did you sell by Sam Goody or the Wiz and so forth?
• 4:19
  Bill Wilson: And then SoundScan came out in 1991 and it was to the copy of how many CDs, how many vinyls were being sold.
• 4:25
  Bill Wilson: And I joined the company in 1992.
• 4:28
  Bill Wilson: And in the marketing department as an assistant, I started obviously at the bottom and working for Richard Sanders who was running marketing, and Clive would track everything you know visits to radio stations, visits to record stores, promo tours, concerts, and there'd be reports about every artist.
• 4:45
  Bill Wilson: And I had a economics background and I actually taught econometrics as an undergraduate at SUNY Stony Brook and so I started talking to Richard about hey, we can actually look at all these variables and come up with cause and effect.
• 5:00
  Bill Wilson: So if an artist went on a promo tour or if they went to a radio station, did it have an impact and we could correlate that to the market.
• 5:07
  Bill Wilson: They did that in and the sound scan.
• 5:09
  Bill Wilson: And so I started creating a report and I gave it to Richard and Richard a lot of people in these days wouldn't have done that he put my name on the report.
• 5:17
  Bill Wilson: He could have easily put his name on the report and sent it to Clive.
• 5:20
  Bill Wilson: So he's like hey, just call it the Wilson Report.
• 5:22
  Bill Wilson: So to Clive.
• 5:30
  Bill Wilson: So he's like hey, just call it the Wilson Report.
• 5:30
  Bill Wilson: So I called it the Wilson Report.
• 5:30
  Bill Wilson: And after two or three weeks I get a call from Clive's assistant, Rose, and she's like Clive would like you to come up.
• 5:33
  Bill Wilson: And she's like I come in and he's like what is this?
• 5:34
  Bill Wilson: How are you doing this?
• 5:34
  Bill Wilson: How are you calculating these variables and these cause and effects?
• 5:37
  Bill Wilson: And I walked him through a model that I had created and he was fascinated.
• 5:42
  Bill Wilson: He gave me so much attention and in essence, every week he started distributing it to all of his leaders in the company and he has a very infamous luncheon meeting every week.
• 5:52
  Bill Wilson: It was every Thursday, started at one o'clock and it would literally go from one until he was done and he would go through every artist on the label and he started to use, obviously, some of the information that I provided, but obviously a lot of other information.
• 6:04
  Bill Wilson: So, going back to your original question, I had direct contact with him on a daily basis and it helped his level of detail, as you said in the introduction, from Whitney Houston to Sarah McLaughlin, to Kenny G, to Aretha Franklin, Carlos, I mean, the list just goes on and on and on.
• 6:18
  Bill Wilson: When I was starting out, I was working with really small artists a band called Spiritualized out of London and what really struck me, Jonathan, is he cared just as much about an artist who was selling 20,000 copies as he did about Whitney Houston and he gave that the attention.
• 6:33
  Bill Wilson: And that struck me as a leader, that it's a responsibility.
• 6:36
  Bill Wilson: You have these brands and you're investing in these people's lives you have to put as much attention on each one of them and that stuck to me to this day.
• 6:49
  Jonathan Boyar: That's amazing.
• 6:49
  Jonathan Boyar: Besides that the attention to detail, because I'm always fascinated with what makes someone a fantastic leader what else made him great?
• 6:53
  Jonathan Boyar: He's known as the man with the golden ear, or whatever it is, but why was he so much better than everyone else?
• 6:59
  Bill Wilson: I think his passion, first and foremost, his passion for the music, his passion for the artistry.
• 7:04
  Bill Wilson: I've never seen an individual work as hard as somebody did.
• 7:10
  Bill Wilson: And I remember talking to him at times and he didn't view it as work, he viewed it as almost a calling.
• 7:13
  Bill Wilson: I mean, I remember when Whitney Houston would go up against Mariah Carey back in 1993, 94.
• 7:17
  Bill Wilson: He would start the meeting by saying you know how are we doing with Whitney's new single?
• 7:21
  Bill Wilson: And the head of R&B or pop radio promotion would say we're doing great, We've got 99 spins on this station, We've got 67 on these.
• 7:29
  Bill Wilson: And what also struck me, Jonathan, he never looked at any piece of paper and he said well, I don't understand how you could be pleased with 99 spins when Mariah, on that same station, has 102 spins for her song with Boyz II Men.
• 7:41
  Bill Wilson: How can you be pleased if Mariah Carey is on top?
• 7:44
  Bill Wilson: And literally, Jonathan, he would do this for like the top 15, 20 markets without ever looking at a piece of paper.
• 7:49
  Bill Wilson: And in this meeting we'd go literally from anywhere, the shortest four hours.
• 7:53
  Bill Wilson: Sometimes he'd have to order in dinner at six or seven o'clock.
• 7:56
  Bill Wilson: And I think it's that passion and that level of detail and he made everybody better in the room because they knew they needed to bring their A game every week.
• 8:05
  Bill Wilson: You couldn't walk into that meeting and not be prepared.
• 8:07
  Bill Wilson: So I think it's him as a leader, but also the culture he built of accountability.
• 8:12
  Bill Wilson: We have an accountability to these people's lives and profession and we're not going to take that lightly.
• 8:17
  Jonathan Boyar: For those of you who are not familiar with Towns quare maybe just give a brief background of what Towns quare is and what you do, etc.
• 8:26
  Bill Wilson: Yeah.
• 8:26
  Bill Wilson: So, Townsquare is a local media company focused on really the whole premise of the company originally was use radio as a Trojan horse to build a digital first company, and this was formed in 2010, originally with about 17 markets, 60 radio stations and one of the important things, Jonathan was, the premise all along was A build a digital company on the back of a radio company and two focus on markets outside the top 50.
• 8:52
  Bill Wilson: For two reasons One, radio means a lot more in markets outside the top 50.
• 8:57
  Bill Wilson: And we can go through some of the statistics that bear that out.
• 9:00
  Bill Wilson: And two, the digital competition for digital advertising and digital marketing solutions is going to be a lot less competitive in markets outside the top 50 versus New York, LA, Chicago and Nashville.
• 9:13
  Bill Wilson: So we're very proud of the radio business and, to me, we would never have had the success over the last 14 years in transforming into a digital first company without the DNA of radio.
• 9:25
  Bill Wilson: I grew up on radio.
• 9:26
  Bill Wilson: It's one of the reasons I decided to take this opportunity is, you know, my parents would be watching TV upstairs, I'd be having headphones on downstairs listening to New York City radio, living in Teaneck, New Jersey, and I just know that companionship, that connection is unparalleled.
• 9:41
  Bill Wilson: There's nothing like that from watching a local newscaster on TV or reading a journalist, and so I really felt like harnessing that power of radio to build a digital connection and make sure people who joined radio to inform and entertain their communities were relevant for decades and decades and decades, no matter what happened with the radio audience, and thankfully, over the last decade we've transformed the company from a successful radio company to a digital-first company that also owns radio stations, with now over 50% of our revenue and 50% of our profits coming from our digital divisions.
• 10:16
  Jonathan Boyar: Can you talk a little bit more about the hyper-local importance?
• 10:20
  Jonathan Boyar: Why is that so important in today's day and age?
• 10:25
  Bill Wilson: Yeah, I mean you think about what's happened.
• 10:26
  Bill Wilson: We call them news deserts, right.
• 10:28
  Bill Wilson: So going back almost six, seven, eight years now, the newspapers, particularly in our size markets but I think across the US, but particularly in markets outside the top 50, have really been decimated.
• 10:40
  Bill Wilson: There's close to 2000 newspapers that have been folded in the last decade and the pandemic and COVID really accelerated some of those challenges.
• 10:48
  Bill Wilson: So it's a great business for us, but it's also, we feel, like a calling to make sure that these smaller markets are informed and have trustworthy journalists.
• 10:57
  Bill Wilson: You know a lot of our hires over the last five years have actually come from the local newspapers.
• 11:01
  Bill Wilson: As they shed jobs and focus more on national content.
• 11:05
  Bill Wilson: We've actually picked up those reporters to serve that need and we have them on the air.
• 11:10
  Bill Wilson: But we also have digital-only reporters creating content that if you go to any one of our 300-plus local websites, I think most people would look at them as almost like a local newspaper.
• 11:20
  Bill Wilson: They wouldn't recognize that a radio company was behind them.
• 11:24
  Bill Wilson: So we think it's incredibly differentiated.
• 11:27
  Bill Wilson: We reach one in two adults listening to the AM FM stations of ours because they're so local.
• 11:33
  Jonathan Boyar: Can you explain that again?
• 11:34
  Jonathan Boyar: That statistic is unbelievable.
• 11:37
  Bill Wilson: Yes, so on average we're in 74 markets.
• 11:39
  Bill Wilson: On average we own four FM radio stations and two AM, so six markets in a station on average.
• 11:44
  Bill Wilson: When you look at those six markets on a weekly basis, we reach one in two adults just through the AM FM broadcast, so 50% of the adult population.
• 11:53
  Bill Wilson: You go back to asking about how I got from AOL to Towns quare earlier.
• 11:57
  Bill Wilson: That was Stephen Prices who at that time was the CEO.
• 12:01
  Bill Wilson: Stephen Prices and Stu Rosenstein were the co-founders of the company, had the vision early on.
• 12:05
  Bill Wilson: Stu's not only a co founder but also our current CFO.
• 12:08
  Bill Wilson: And Stephen's kind of pitch to me was if I just walked into a room and told you that you could market for free to 50% of the adult population and you can go out and create any digital products over the next five to 10 years, would that be compelling to you?
• 12:28
  Bill Wilson: I'm like, yeah, of course, if you can mark the 50% of the adult population, it goes.
• 12:30
  Bill Wilson: Well, that's what we can do and we can do that through our AM FM radio stations and we have the benefit of a great cashflow business that we think is going to be relatively stable for the next five to 10 years.
• 12:35
  Bill Wilson: And, to your point.
• 12:37
  Bill Wilson: It's incredibly eye-opening.
• 12:38
  Bill Wilson: In the top 50 markets say New York City, where you're sitting the number one market share is probably about 20%, so reaching obviously two in 10 adults.
• 12:46
  Bill Wilson: So, our company reaches one in two adults.
• 12:49
  Bill Wilson: So that, in essence, is one of the reasons we've had so much success with our digital products is because we can market to free for 50% of the adult population.
• 12:59
  Bill Wilson: And if anybody who's listening to your podcast knows, radio overall has been a great reach medium.
• 13:05
  Bill Wilson: It's actually now the number one reach medium in America because TV and cord cutting over the last five years has accelerated so much that TV used to be the number one reach medium.
• 13:13
  Bill Wilson: Now radio is.
• 13:15
  Bill Wilson: The challenge for the radio industry at large is time spent listening has been decreasing.
• 13:19
  Bill Wilson: For Towns quare that's not the case.
• 13:22
  Bill Wilson: So our reach is rock stable 50% of the adult population and our time spent listening is rock stable.
• 13:28
  Bill Wilson: So that's one of the reasons we're generating so much free cash flow because we have a relatively stable, what I call a traditional cash cow.
• 13:34
  Bill Wilson: It is a declining business over time but it has so many great characteristics: A the 50% adult population and the 30% margin in terms of cashflow.
• 13:45
  Bill Wilson: It gets lumped into the rest of the industry which has struggled, when you're lumped into an industry that three of the largest players iHeart, Odyssey and Cumulus have either all been in or are currently in bankruptcy in the last three or four years.
• 13:58
  Bill Wilson: We kind of just got lumped into that.
• 14:00
  Bill Wilson: I appreciate your time and research on the company because when you peel back and start to look at what we've actually done in terms of the transformation and what our plans are over the next three to five years you start to see the intrinsic value of the company, which as you noted in your piece and we believe is tremendously undervalued at the stock price that is today.
• 14:07
  Bill Wilson: That's why we've been very aggressive in doing share buy backs because we recognize that when people look up in three to five years the price is going to be much higher.
• 14:27
  Bill Wilson: Let's take off what we can at this point with the cash on hand we have.
• 14:31
  Jonathan Boyar: So why are your stations doing so much better than other ones, let's say, not the ones that are in the top 50 in the country, but why are your stations doing better than other kind of small and mid-sized markets?
• 14:46
  Bill Wilson: Yeah, I think it's a combination of a couple of factors.
• 14:48
  Bill Wilson: First of all, what you said when you look at all the other major public radio companies, there's really nobody at scale public or private who focuses on markets outside the top 50.
• 14:57
  Bill Wilson: That's true not only of radio, but when you think about newspaper, if you think about television, there's nobody else with this strategy in local media, that's, that discipline not going into the top 50 markets.
• 15:08
  Bill Wilson: So that is a, I'd say, important reason to our success.
• 15:11
  Bill Wilson: The second reason is because we've had this digital success and this digital growth consistently year over year, it's allowed us to invest in local content and the fact that I can hire a DJ and they're going to do a great on-air show that's going to be hyper-local.
• 15:29
  Bill Wilson: But they're also creating content for all of our digital platforms.
• 15:33
  Bill Wilson: We call them the original social influencers, 360 degree content creators.
• 15:38
  Bill Wilson: So when they're posting articles to our websites, we're obviously able to draw a big audience.
• 15:44
  Bill Wilson: So, I just shared with your listeners that through our AM FM broadcast, we reach one in two adults.
• 15:50
  Bill Wilson: Through our local websites, we reach 70, seven zero of the adult population, so even more than our AM FM broadcast.
• 15:58
  Bill Wilson: And that's because we are creating credible, original, entertaining and informing local content for our website.
• 16:04
  Bill Wilson: So I want to encourage your listeners to go to any one of our websites to see that.
• 16:07
  Bill Wilson: So with that business model, it would be very hard for a local broadcaster and nobody in the industry has the digital percentage of revenue we have.
• 16:16
  Bill Wilson: We're over 50% and no one's close to that.
• 16:19
  Bill Wilson: So it has afforded us to continue to invest in local content where others don't have the wherewithal to do that because they don't have this digital growth engine to be able to do that.
• 16:30
  Bill Wilson: And I think that's a fundamental strategic competitive advantage for Town quare and I think that only continues to widen as we look forward over the next three to five years.
• 16:41
  Jonathan Boyar: So, I know you're trying to at least from the stock market narrative, pivot away from being a radio station, but it's still a good business and it helps obviously grow the digital footprint.
• 16:54
  Jonathan Boyar: So, you have 370 radio stations or so across the country.
• 16:57
  Jonathan Boyar: Correct.
• 16:57
  Jonathan Boyar: Yes, how many out there besides those that you own?
• 17:01
  Jonathan Boyar: Like, how big can you get in terms of radio, because it seems like it's the return on investment would be fantastic.
• 17:08
  Bill Wilson: You're exactly right and listen, we're not trying to pivot away from radio.
• 17:11
  Bill Wilson: We just don't want to be perceived as a radio only company and, as your piece in March noted, our multiple is actually less than other public radio companies at a six times multiple.
• 17:23
  Bill Wilson: So we're not pivoting away from it.
• 17:25
  Bill Wilson: We embrace it, we love radio.
• 17:27
  Bill Wilson: We wouldn't be where we are without it.
• 17:29
  Bill Wilson: But we are not a radio company.
• 17:30
  Bill Wilson: We're a digital first local media company and therefore we think we should be valued on a multiple of traditional radio at six times and digital businesses at 10 to 12 to 14 times.
• 17:40
  Bill Wilson: So that's really the story we're trying to continue to gain understanding of.
• 17:45
  Bill Wilson: But, going back to your question, there's so many regional smaller players, mom and pops there's hundreds to be able to be acquired, if not over a thousand.
• 17:56
  Bill Wilson: We actually recently did an acquisition, Jonathan, a small scale company called Cherry Creek, coming up on two years ago, so it was June of 2022.
• 18:04
  Bill Wilson: And, we bought that at call it, five and a half times, six times multiple, but they had no digital business.
• 18:11
  Bill Wilson: So, when we look at acquisitions, we look at leading market share.
• 18:14
  Bill Wilson: So, we want stations and brands that are in the top five, beloved by the community, with great local leadership, great sales teams, so they had their ingrained in that community and, obviously, markets outside the top 50.
• 18:26
  Bill Wilson: But we knew when we bought Cherry Creek that we'd be buying it let's just call it a six times multiple and that within five years that would be the two to three times multiple because of the growth in digital and I actually was just doing our first quarter financial review yesterday and the growth in Cherry Creek in the last two years has been exactly as we expected.
• 18:46
  Bill Wilson: So, there is a lot of opportunity for acquisition and taking what I would call traditional radio companies and building digital businesses alongside them, which is how Townsquare has done it for 14 years.
• 18:57
  Bill Wilson: And there's also the opportunity for organic growth.
• 19:00
  Bill Wilson: Even without acquisitions, we expect to be a high single-digit revenue growth driver and mid-single-digit profit driver over the next five years.
• 19:09
  Bill Wilson: Acquisitions would just be on top of that.
• 19:12
  Jonathan Boyar: Does the government prohibit you from growing to a certain percent, or are you free to keep on buying radio stations?
• 19:19
  Bill Wilson: Yeah, so, I was actually the executive chair of the National Association of Broadcasting.
• 19:23
  Bill Wilson: On the radio side they represent radio and TV, an amazing organization led by Curtis Legette.
• 19:28
  Bill Wilson: I just came back from the conference in Vegas, second largest conference outside of CES out there, and unfortunately, my views are the FCC is antiquated in their rules.
• 19:39
  Bill Wilson: The quadrennial rule 20 years ago has a cap where we're restricted from owning more than four FMs and two AMs in any of our markets.
• 19:47
  Bill Wilson: And 20 years ago you didn't have Meta and you didn't have Google and you didn't have you name, your device or your platform that competes for people's attention and we're limited and I think that's unfair.
• 20:04
  Bill Wilson: I expect at some point those limits will be taken away and it'll be very accretive for us because we can add more distribution, more content, more AM FM signals with really the infrastructure we have already of a sales team and a market president.
• 20:14
  Bill Wilson: But we're not limited from going out and acquiring additional markets, we're just limited to having more stations in the market.
• 20:20
  Bill Wilson: We are so, Cherry Creek we were able to add a number of markets that we didn't have, which is going to shape up quite nicely because we have a good presence in Montana, which is going to be a great political year for us.
• 20:30
  Bill Wilson: And then we picked up a station and a market in Sierra Vista, Arizona, which again should be a great political market for us.
• 20:36
  Bill Wilson: So, we are limited to how many we can own, but we're not limited to the number of markets we can operate in.
• 20:41
  Bill Wilson: so there's plenty of room on the growth side there, 100%.
• 20:45
  Jonathan Boyar: So there's plenty of room on the growth side there?
• 20:45
  Jonathan Boyar: 100% (Bill Wilson).
• 20:45
  Jonathan Boyar: You were talking about not getting the multiple you deserve.
• 20:48
  Jonathan Boyar: One way to do that is by having artificial intelligence in your name.
• 20:52
  Jonathan Boyar: You have been talking a little bit about how you're using AI.
• 20:57
  Jonathan Boyar: Just curious, how you're using it in your business today.
• 21:01
  Bill Wilson: Yeah, I couldn't be more excited about artificial intelligence just from a business perspective efficiency, productivity, as well as just being a citizen, and what's going to transpire over the next five years.
• 21:10
  Bill Wilson: I'm just incredibly fascinated.
• 21:12
  Bill Wilson: But we actually, over the last 12 months, have been starting to leverage artificial intelligence for business processes.
• 21:19
  Bill Wilson: This gentleman by the name of Sun Sax, he actually just won the Digital Leadership Award from the National Association of Broadcasting a couple days ago in Vegas.
• 21:26
  Bill Wilson: Sun and I go back over 20 years.
• 21:28
  Bill Wilson: He was my head product at AOL and he brought over a team of 15 to 20 people, including Anibal Rosado and Juan Sarri and many others.
• 21:37
  Bill Wilson: So I had the benefit when I joined.
• 21:38
  Bill Wilson: It wasn't just myself, it was almost 40 colleagues from AOL at the time, and he is really leveraging a lot of artificial intelligence.
• 21:45
  Bill Wilson: So I'll give you a couple examples.
• 21:47
  Bill Wilson: One would be, when we create creative or we create a website, traditionally we would start from scratch.
• 21:55
  Bill Wilson: I would call Boyar Value and say okay, what assets do you have?
• 21:58
  Bill Wilson: What can you provide me so I could start to create digital advertising for you, be that a display ad or a video ad or anything else of that nature.
• 22:06
  Bill Wilson: He's created some AI that will plug in the name of the business.
• 22:10
  Bill Wilson: You plug in the URL of their website and it'll scrape that website.
• 22:13
  Bill Wilson: Come back with draft creative.
• 22:15
  Bill Wilson: Then the human is involved and they do the extra 10 or 15% on top of that to make it great.
• 22:20
  Bill Wilson: Show you, Jonathan, as the client.
• 22:21
  Bill Wilson: Here's your creative, you sign off on it.
• 22:23
  Bill Wilson: Then they use AI instead of a human to put that across multiple sizes and platforms.
• 22:29
  Bill Wilson: Where before, it would take somebody, say, an hour to create multiple sizes of a display ad, we now use AI to do that.
• 22:35
  Bill Wilson: So obviously an amazing, efficient way to save time and energy and put that time and energy into other returns on those people's times.
• 22:44
  Bill Wilson: The other thing we're doing is in Towns quare Interactive, we're using AI to listen to all the clients who call in, as well as all of the outbound sales calls we do, and we used to have a manager sit there and listen or transcribe and get some key takeaways from calls.
• 22:58
  Bill Wilson: Now we're using AI to go okay, if a client is upgrading, what are the things they're upgrading for?
• 23:05
  Bill Wilson: If someone's looking to downgrade or if they have a problem with their service, what are those commonalities?
• 23:10
  Bill Wilson: When a sale pitch goes well and closes, what are those commonalities?
• 23:15
  Bill Wilson: We're using AI for all of that, where before it would literally be hundreds of hours of listening to calls.
• 23:20
  Bill Wilson: So those are just two examples of maybe 10 or 15 today that we're using.
• 23:25
  Bill Wilson: So when I think about the next two, three, four years, I think it's going to have a profound impact on our business.
• 23:30
  Bill Wilson: But, quite honestly, I think it's going to have a profound impact on everybody's business.
• 23:34
  Jonathan Boyar: Okay, Towns quare AI.
• 23:36
  Jonathan Boyar: You get an AI multiple.
• 23:38
  Jonathan Boyar: The stock will rip.
• 23:39
  Jonathan Boyar: I hope you've been enjoying the interview.
• 23:41
  Jonathan Boyar: To read Boyar Research's report on Towns quare, please visit boyarresearch.
• 23:45
  Jonathan Boyar: substackcom.
• 23:48
  Jonathan Boyar: And now back to the show.
• 23:49
  Jonathan Boyar: You had mentioned Towns quare Interactive.
• 23:51
  Jonathan Boyar: Can you briefly explain what that business is?
• 23:56
  Bill Wilson: Sure.
• 23:56
  Bill Wilson: So we have two significant digital businesses.
• 23:59
  Bill Wilson: One is Towns quare Interactive and one is Towns quare Ignite.
• 24:02
  Bill Wilson: Towns quare Ignite is advertising and Towns quare Interactive is digital marketing solution.
• 24:06
  Bill Wilson: So I'll talk about Towns quare Interactive.
• 24:09
  Bill Wilson: It was interesting, Jonathan, coming from AOL and New York City and big city media one of the things when I started at Towns quare that Stephen Price and Stu Rosenthal.
• 24:18
  Bill Wilson: They were very dedicated to go to every market Back then it was 35, grew to 50, today 74, but literally go to every market every year.
• 24:25
  Bill Wilson: I joined this chief content and digital officer back in 2010, and I would join them on these trips and as we started to transform our digital websites.
• 24:34
  Bill Wilson: When I joined the company, we had no digital websites.
• 24:36
  Bill Wilson: We created digital websites.
• 24:37
  Bill Wilson: We created this audience that I told you earlier reaches 70% of the adult population.
• 24:42
  Bill Wilson: In one of our town halls, w e'd always go in and we'd give an update on the company, but really the benefit to us was hearing what was going well, but also the challenges and how we could do better for our clients, our community.
• 24:52
  Bill Wilson: What could we do better at corporate to help and empower the teams?
• 24:56
  Bill Wilson: So it was a two-hour town hall, open questions and an account executive in St.
• 25:00
  Bill Wilson: Cloud, Minnesota it's about 90 minutes outside of Minneapolis raised her hand and said we've done such a great job for our own brands and created tremendous value on our websites.
• 25:11
  Bill Wilson: Why aren't we doing that for our clients?
• 25:13
  Bill Wilson: And I'm like, well, tell me more, because I'm coming from New York.
• 25:16
  Bill Wilson: I'm thinking everybody's got a website and they're good to go.
• 25:19
  Bill Wilson: And long story short, after hearing her and then doing market research in five of our markets, we realized there was a significant opportunity to provide digital marketing solutions.
• 25:28
  Bill Wilson: So building websites, helping people with search engine optimization, doing social media, helping them set up their profile on LinkedIn anything you would think of for a business.
• 25:38
  Bill Wilson: So, we started that business organically in the markets we were in back then when we were in less than 50 markets.
• 25:43
  Bill Wilson: This is in 2013, roughly that business, in essence, over the past decade has added almost 10 million top line once it got it started and 3 million bottom line every year.
• 25:56
  Bill Wilson: So I think last year was over 80 million in revenue at roughly a high 20% margin.
• 26:02
  Bill Wilson: After a few years of only being in our markets, Jonathan, we realized I wouldn't call it by mistake but there was a seller in our Fort Collins market in Colorado, which is about an hour outside of Denver, who started selling the same product and solution to small SMBs.
• 26:19
  Bill Wilson: Our target was businesses with less than 20 employees, less than 5 million in revenue, so pretty small businesses.
• 26:25
  Bill Wilson: And they were going home one day or on a trip to Colorado Springs, which isn't a market we had radio stations in, and they say, hey, I see there's a need here for the same thing.
• 26:34
  Bill Wilson: Can I sell it?
• 26:34
  Bill Wilson: I'm like, of course.
• 26:35
  Bill Wilson: So then all of a sudden we started testing a call center in Charlotte and started calling into like-sized markets so again, markets outside the top 50 and offering the same service.
• 26:45
  Bill Wilson: And today 70% of our Townsquare Interactive clients are outside of our radio footprint and roughly 30 are inside.
• 26:52
  Bill Wilson: And it's a monthly subscription business.
• 26:54
  Bill Wilson: So, as a small business owner, you're giving us your credit card.
• 26:57
  Bill Wilson: On average, we're charging you about $300 a month and it's a recurring revenue stream and that's almost 20% of the company's revenue and profits today.
• 27:07
  Bill Wilson: And we see significant, significant opportunity over the next 10 years to continue to grow that business and grow that first over $100 million, then over $200 million, and then keep going.
• 27:15
  Bill Wilson: We have a great slide in our investor deck that talks about there's 9 million target customers here with a $32 billion TAM opportunity, so, a lot of runway for us.
• 27:24
  Bill Wilson: We did take a step back last year.
• 27:25
  Bill Wilson: First time ever, we lost some subscribers and that was really two things that happened: self-inflicted wound of having a return to work mandate, because coming out of COVID Charlotte was our largest office with over 500 employees and they all were working remotely for a couple of years.
• 27:41
  Bill Wilson: And, in 2022, we had a return to work decision that if you were either a new employee or not, a tenured high performer, you needed to come back at least hybridly.
• 27:51
  Bill Wilson: And we lost more people in 24 months in that division than we had lost in the first nine years and that created a lot of turmoil with our customer base and our client base.
• 28:01
  Bill Wilson: And then, obviously in 2023, there was significant inflation wage pressures on these small businesses.
• 28:08
  Bill Wilson: So last year we took a step back in that business and, as I said recently on our earnings call in March, my expectation is we return to a subscriber growth in Q2 of this year.
• 28:14
  Bill Wilson: As I said recently on our earnings call in March, my expectation is we return to a subscriber growth in Q2 of this year and then, after subscriber growth, you'll also start to see month-over-month revenue growth and I expect that in Q2 this year and that'll be followed by month-over-month profit growth Really depends on how quickly we're investing.
• 28:29
  Bill Wilson: Given what we're seeing now, we're investing quite heavily in the business.
• 28:32
  Bill Wilson: We opened the second location in Phoenix last year and, given the runway and our current metrics, we're investing quite heavily.
• 28:42
  Bill Wilson: So, profit will return month over month growth either in Q3 or Q4, depending on how much we can invest right now.
• 28:45
  Jonathan Boyar: So, you had a bunch of employees who essentially quit when you told them they had to actually step foot in an office, and that made customer service deteriorate and some of these subscribers left.
• 28:56
  Jonathan Boyar: Is that basically what happened?
• 28:58
  Bill Wilson: Yes, exactly that's exactly what happened and, to be honest with you, obviously it was a somewhat unexpected in terms of the magnitude of that.
• 29:06
  Bill Wilson: Truthfully, I believe it made us a stronger company.
• 29:09
  Bill Wilson: We got knocked out, let's call it what it was.
• 29:11
  Bill Wilson: Literally every quarter for many, many years we were adding roughly 800 net subscribers, sometimes 1,000, but very, very consistent.
• 29:20
  Bill Wilson: All of a sudden, last year we lost I call it 7,000 subscribers.
• 29:25
  Bill Wilson: We cut that Q4 to Q1.
• 29:27
  Bill Wilson: We told people we'd cut that in half, we'd be under 800 losses in Q1 and return to growth in Q2, as I just said.
• 29:35
  Bill Wilson: But we took it on the chin.
• 29:36
  Bill Wilson: So we said, okay, let's take this opportunity and really attack ourselves.
• 29:39
  Bill Wilson: We built a company from zero to $90 million with a call it a 30% profit margin.
• 29:44
  Bill Wilson: What would we do differently to take a company from 90 million in revenue to make it 250 million in revenue?
• 29:52
  Bill Wilson: And so one big change we did is we used to have a one-to-one customer service model.
• 29:57
  Bill Wilson: So, Jonathan, if you called in, you would get Johnny and Johnny's manager would be Susie, and so obviously, when Johnny left, that was very disruptive for you.
• 30:05
  Bill Wilson: You start talking to Johnny.
• 30:07
  Bill Wilson: He was your marketing consultant.
• 30:08
  Bill Wilson: So we decided to go to a pooled model where when you call in today you may not get Johnny, you're going to get somebody who knows your business, knows why you called before and handle whatever your questions or your needs are, and to your question earlier, we're starting to use artificial intelligence on those calls as well.
• 30:31
  Bill Wilson: I think that's a much more efficient model.
• 30:31
  Bill Wilson: Our answer rates have gone up almost 100% because before, if you called in and you were talking to Johnny, Johnny used to handle 200 businesses.
• 30:35
  Bill Wilson: When I called in as another client, I may go to voicemail because Johnny's on the phone.
• 30:39
  Bill Wilson: So, this is a much more efficient in terms of how to scale and, I think, a better customer service model for our subscribers.
• 30:47
  Bill Wilson: So, there were many things like that.
• 30:49
  Bill Wilson: We don't have enough time to go through them all in this podcast, but I am incredibly confident.
• 30:53
  Bill Wilson: Towns quare Interactive is a stronger company today because of the setback we faced last year.
• 31:01
  Jonathan Boyar: In terms of the Towns quare Interactive piece of your business.
• 31:04
  Jonathan Boyar: I mean you said now a large percentage of it is not in your traditional radio markets.
• 31:09
  Jonathan Boyar: How do you leverage having the radio stations in those markets, like, how do they go together?
• 31:16
  Bill Wilson: So in the 70% of the clients who are outside the market has nothing to do with radio.
• 31:20
  Bill Wilson: There's no overlap In the 30% where we are selling Towns quare Interactive.
• 31:25
  Bill Wilson: We're utilizing our existing sales teams to provide referrals to our Towns quare Interactive team.
• 31:31
  Bill Wilson: So I think, going back to one of your questions like why are you performing so much better just radio to radio companies?
• 31:36
  Bill Wilson: Putting aside the success you've had in growing a very profitable digital business, part of it is we have full funnel marketing solutions.
• 31:45
  Bill Wilson: So meaning clients don't want to deal with multiple vendors.
• 31:48
  Bill Wilson: Well, Gordon Burrell has done a number of studies where 10 years ago, a small business would work with, quite honestly, 10 different providers, be it the yellow pages, the newspaper, television, radio, outdoor company.
• 31:58
  Bill Wilson: Today, they want to work with one or two providers who could really handle their advertising and marketing needs.
• 32:03
  Bill Wilson: So, you want to be really one of one and the only way to do that is to have full funnel solutions.
• 32:09
  Bill Wilson: So, the fact that we've got radio, which is the best cost-effective reach medium, but then we've got this programmatic digital business, and then we could also help you with your website, build your website, make sure you're on the front page of Google for the appropriate search terms.
• 32:22
  Bill Wilson: That is highly differentiated and a competitive advantage.
• 32:27
  Bill Wilson: So, going back to your question, in the 30% of the sales where they're coming from our markets it's part of the same pitch that we're pitching advertising, so, it is one ecosystem in those markets.
• 32:38
  Jonathan Boyar: Yeah, but Wall Street hasn't been as kind to you as it should be, at least in our opinion.
• 32:42
  Jonathan Boyar: In terms of the valuation, it seemed like the Timess quare Interactive would get a higher multiple.
• 32:47
  Jonathan Boyar: Have you ever considered spinning out that portion?
• 32:50
  Jonathan Boyar: Would that make sense?
• 32:51
  Bill Wilson: We get a lot of questions about that.
• 32:52
  Bill Wilson: Is that a possibility one day?
• 32:54
  Bill Wilson: It could be, but the characteristics of helping the radio division and that overlap is powerful.
• 33:01
  Bill Wilson: So could that happen?
• 33:02
  Bill Wilson: Yes, because they could obviously be an arm's length relationship.
• 33:05
  Bill Wilson: But my view is we are going to get that value, particularly as we today call it 50% of our revenue, 55% of our profits coming from digital.
• 33:15
  Bill Wilson: Fast forward, just two or three years, I expect that to be over 60% and then think five years, I expect that to be 70% revenue of digital and 70% digital profit.
• 33:26
  Bill Wilson: So, we're extremely patient.
• 33:28
  Bill Wilson: I mean just like you are, as investors, like I read a lot of your materials.
• 33:31
  Bill Wilson: We have the same approach where, as long as we stay disciplined, consistent, I think we have a culture of high performance and accountability.
• 33:38
  Bill Wilson: We're not worried how we're valued today.
• 33:40
  Bill Wilson: We're trying to unlock value.
• 33:41
  Bill Wilson: We're de-levering.
• 33:42
  Bill Wilson: We get the advantage of our stock price being so undervalued.
• 33:45
  Bill Wilson: We're able to retire millions and millions of shares at what we think is a ridiculously slow price.
• 33:50
  Bill Wilson: I think part of the story, Jonathan, is A, w e're lumped in with radio traditionally and I think we're starting to break out of that box.
• 33:57
  Bill Wilson: Two, we've been highly levered.
• 33:59
  Bill Wilson: We stated for a little while that we were going to come down from six times.
• 34:03
  Bill Wilson: We stayed above six times for quite some time.
• 34:05
  Bill Wilson: We've got our lowest net leverage, in essence in quite a while at 4.4 times.
• 34:09
  Bill Wilson: We expect that over the next 18 to 24 months to come down to three times.
• 34:14
  Bill Wilson: So I expect that to be a material difference in the eyes of investors.
• 34:18
  Bill Wilson: As you know, we just initiated a dividend a year ago.
• 34:21
  Bill Wilson: We increased that dividend by 5% in March on our year-end call.
• 34:26
  Bill Wilson: It's now, I think it's about a 6.5% yield.
• 34:30
  Bill Wilson: You talked about pivoting from the radio business before.
• 34:32
  Bill Wilson: What I think we're doing is pivoting to really putting a spotlight on our cash flow generation.
• 34:37
  Bill Wilson: We continue to do amazing in terms of growing our cash flow from operations, and by initiating the dividend based on the investor meetings I've had that new investors who discovered the company.
• 34:50
  Bill Wilson: I think it's clear that was a great, almost a marketing strategy on its own to get people to recognize the company.
• 34:57
  Bill Wilson: So we're just going to stay disciplined.
• 34:58
  Bill Wilson: We're going to continue to de-lever, we're going to continue to grow our overall profits and the mix is going to be more and more digital revenue, more and more digital profits and, to your point, the intrinsic value I think in your piece was called $25.
• 35:10
  Bill Wilson: We think not only are we going to get there, our aspirations are much higher, as long as we continue to execute and grow the overall business.
• 35:17
  Jonathan Boyar: Yeah, no, I mean you've done a fantastic job in terms of capital allocation and I think it helps that you personally own a lot of the company because you have skin in the game.
• 35:26
  Jonathan Boyar: I mean, I think, at least in our calculation, you've purchased about 60% of shares and warrants outstanding.
• 35:33
  Jonathan Boyar: You know an average price of a little over $7.
• 35:35
  Jonathan Boyar: Its share price now is 12, which is great, assuming the shares are undervalued.
• 35:41
  Jonathan Boyar: But does the leverage keep you up at night in an uncertain world?
• 35:47
  Bill Wilson: Not at all, because I mean, just think about our cash flow generation.
• 35:49
  Bill Wilson: Obviously, if we were concerned at all about that, we wouldn't be buying back as aggressively as the share.
• 35:55
  Bill Wilson: We'd just be hoarding the cash, and you noted this in your piece.
• 35:58
  Bill Wilson: If you just look at the free cash flow yield and you look at the free cashflow versus the market cap, and I don't know if that's three or just incredibly undervalued we talked about multiples before of EBITDA.
• 36:07
  Bill Wilson: I would encourage people just look at our free cashflow.
• 36:10
  Bill Wilson: You've noted in your piece the three-year average.
• 36:13
  Bill Wilson: In that it's consistent.
• 36:14
  Bill Wilson: It's not like one year was great and a couple of years were subpar.
• 36:16
  Bill Wilson: Each and every year, even after last year, which I would call a subpar year for the company overall because of the step back in subscribers at Townsquare Interactive, we still had a great year second highest revenue, second highest profit in the company's history.
• 36:31
  Bill Wilson: So, going back to your question, not at all, I think.
• 36:32
  Bill Wilson: As I moved into this role putting aside COVID in 2019, I became the sole CEO when, I think, we were about over six times levered and we've marched that down to about 4.4.
• 36:41
  Bill Wilson: And we said we were going to do that.
• 36:43
  Bill Wilson: We're going to continue to do that I think, as I said earlier, we'll get that under four and closer to three over the next two years.
• 36:49
  Jonathan Boyar: Do you like being CEO of a public company?
• 36:53
  Bill Wilson: I like being CEO.
• 36:54
  Bill Wilson: I'm blessed.
• 36:57
  Bill Wilson: I have an incredible family.
• 36:59
  Bill Wilson: This is a dream come true for me in terms of the job and the people I work with, the culture we built.
• 37:04
  Bill Wilson: I'm incredibly proud of the Towns quare team.
• 37:06
  Bill Wilson: I feel it's an honor to represent the team.
• 37:08
  Bill Wilson: They're obviously doing all the work.
• 37:10
  Bill Wilson: The corporate office is extremely small.
• 37:11
  Bill Wilson: We're talking about even with the accounting team, we're talking about less than 50 people.
• 37:15
  Bill Wilson: So, with over 2,200 employees, the people doing the work are all in the markets, serving their communities and their clients, and to me, that's what Townsquare is about.
• 37:24
  Bill Wilson: It's like how do we serve these tremendously underserved communities, how do we help these clients?
• 37:28
  Bill Wilson: And that's what we're really, really proud of helping these business owners reach their dreams.
• 37:33
  Bill Wilson: So, I love being the CEO of Townsquare.
• 37:35
  Bill Wilson: I look forward to doing this for as long as the board will have me.
• 37:38
  Bill Wilson: The board couldn't be more supportive, as a first-time CEO has given me tremendous advice.
• 37:43
  Bill Wilson: They have long-term vision.
• 37:45
  Bill Wilson: I can't say enough about the Towns quare board, but obviously, being a public company, you spend a lot of time on things that maybe aren't the most effective.
• 37:52
  Bill Wilson: It's just sometimes there's things you got to do that are a waste of time.
• 37:55
  Bill Wilson: Thankfully, I have an amazing corporate team, our COO, Eric Hellum, a tremendous business partner.
• 38:00
  Bill Wilson: He actually started in the radio industry, so it's been a great combination of somebody like myself with the digital background.
• 38:06
  Bill Wilson: He started decades ago and been in the radio industry the whole time, and we wouldn't be where we are without Eric Hellum.
• 38:11
  Bill Wilson: So I love being the CEO of Towns quare.
• 38:15
  Bill Wilson: I could see us being private or public and being just as happy.
• 38:19
  Jonathan Boyar: Would you be doing anything different if you were a private company now?
• 38:23
  Bill Wilson: Nothing in terms of strategic decisions or decisions.
• 38:26
  Bill Wilson: So, I'm sure everybody says this, but, as I said, going back to the board, they have impressed on me from day one.
• 38:32
  Bill Wilson: As we plan, say, 2025, we're thinking about what's the right thing for 2030.
• 38:36
  Bill Wilson: And that should be factored into your plan for 2025.
• 38:39
  Bill Wilson: So, we're never making short-term decisions for the next quarter or, quite honestly, even the next 12 months.
• 38:45
  Bill Wilson: If that was the case, Jonathan, we would have actually stopped our investment in Townsquare Interactive last year while we had an off year and said, okay, let's take a step back, let's make sure we've got this right.
• 38:55
  Bill Wilson: They were like if you're confident, continue to invest.
• 38:57
  Bill Wilson: We continue to hire throughout this significant downturn where our revenue is down 15% in Q4 for Townsquare Interactive.
• 39:04
  Bill Wilson: So no, being a public company, we're not making decisions that are different than if we were private.
• 39:09
  Bill Wilson: It's just there's a lot of auditing and a lot of the stuff around SOX compliance and things we have to do.
• 39:14
  Bill Wilson: That we wouldn't necessarily do, we definitely wouldn't do, if we were a private company.
• 39:18
  Bill Wilson: They just added personnel for SOX compliance that we wouldn't have.
• 39:25
  Jonathan Boyar: Would it shock you one day if you were part of another company or if the company was private?
• 39:29
  Bill Wilson: Not at all.
• 39:29
  Bill Wilson: I think about it one of two ways.
• 39:31
  Bill Wilson: As you said, a lot of my compensation personally has been part of stock-based compensation.
• 39:37
  Bill Wilson: When I joined in 2010, in essence, Stephen Price said I can't pay you what you make at AOL.
• 39:41
  Bill Wilson: My salary back then was public because I was an officer of AOL as a public company, so I took about a 50% cash comp step back and my wife was a big part of that decision, obviously because we had a family and I got that in stock-based comp before I was CEO.
• 39:56
  Bill Wilson: And then now about third to 40% of my compensation is stock-based versus cash and a lot of that is performance-based, meaning I earn the RSUs only if there's different hurdles hit in terms of shareholder value.
• 40:13
  Bill Wilson: So, I think, all in, if you look at unvested and invested, I probably have a million shares in the company.
• 40:15
  Bill Wilson: So it's significant to your point of making sure the business is run right and that's why we're going to make long-term decisions and never short-term decisions.
• 40:20
  Bill Wilson: But, I think one of two things is going to happen.
• 40:22
  Bill Wilson: Let's say, five years from now, just to pick a number.
• 40:24
  Bill Wilson: Our stock is either going to be significantly higher not only what you said at 25, but significantly higher above that in five years, or we'll have the wherewithal to go private.
• 40:34
  Bill Wilson: That's the way I look at things.
• 40:35
  Bill Wilson: If we were sitting here in three, four years at the same stock price, given our cashflow generation and our ability to in essence, de-lever, we could take the company private.
• 40:45
  Jonathan Boyar: So, I just wanted to talk a little bit about digital advertising and the Ignite piece part of the business.
• 40:52
  Jonathan Boyar: It's a little bit harder for people to, I guess, understand.
• 40:56
  Jonathan Boyar: You gave us a fantastic demonstration, I think, probably two years ago, of the power behind that.
• 41:03
  Jonathan Boyar: Can you explain what it is for people who might not be as digital savvy?
• 41:08
  Bill Wilson: Yes, thank you, Jonathan, for asking so for your listeners.
• 41:10
  Bill Wilson: We have a division in the company called Towns quare Ignite.
• 41:13
  Bill Wilson: So we talked earlier about Interactive, which was the subscription business for a website building and SEO and things like that.
• 41:19
  Bill Wilson: Ignite is our digital advertising business and within that there's really two components.
• 41:23
  Bill Wilson: There's monetizing the significant scale of audience we have on our property.
• 41:28
  Bill Wilson: So we have over 300 websites, over 300 mobile apps and there's a significant size at scale audience there.
• 41:34
  Bill Wilson: We collect first party data on that audience.
• 41:36
  Bill Wilson: So in a world where cookies go away, it's highly valuable.
• 41:41
  Jonathan Boyar: What's first party data just for those who don't understand?
• 41:42
  Bill Wilson: So, first party data would be getting information when they come to your website about their interests.
• 41:47
  Bill Wilson: So are they reading a personal finance article?
• 41:50
  Bill Wilson: Are they reading an article about real estate?
• 41:52
  Bill Wilson: Are they reading an article about nutrition or medical?
• 41:55
  Bill Wilson: And knowing that about an individual, you can get that data on the open marketplace from third parties and you pay an effective CPM for that data.
• 42:03
  Bill Wilson: But, as I said earlier, we reach 70% of the adult population, so I believe nobody has as much data on the people in our 74 markets than Towns quare has.
• 42:12
  Bill Wilson: So that's a very, very significant competitive advantage in the digital advertising landscape.
• 42:17
  Bill Wilson: So that's one component of Towns quare Ignite.
• 42:20
  Bill Wilson: The other component of Towns quare Ignite is programmatic advertising, so we're able to buy inventory across the internet.
• 42:28
  Bill Wilson: We are integrated with all of the major exchanges.
• 42:31
  Bill Wilson: If you're familiar with Trade Desk, Simplify, Zander, Madhive, there's literally dozens and dozens of companies that aggregate inventory across any connected device.
• 42:42
  Bill Wilson: So, not just a traditional PC or laptop, but you're watching your Samsung TV and you're watching Netflix, now added advertising, Hulu, Disney Channel.
• 42:52
  Bill Wilson: If you're watching ESPN, all of these are now being served advertising through a connected device.
• 43:00
  Bill Wilson: One of the fastest growing parts of the company is serving programmatic digital advertising highly targeted.
• 43:05
  Bill Wilson: So, as Jonathan, you described a couple of years ago when we met in your office, you're like you know, I think I understand this.
• 43:10
  Bill Wilson: Can you demonstrate this for me?
• 43:12
  Bill Wilson: So, we actually, with Jonathan and his team, walked through a presentation where he was a small business in one of our markets and we gave him a pitch and I think all the light bulbs went off, which is great.
• 43:23
  Bill Wilson: So, you tell me you're a business, say you're an HVAC company in Tyler, Texas.
• 43:31
  Bill Wilson: Who is your ideal customer?
• 43:32
  Bill Wilson: What's their household income?
• 43:33
  Bill Wilson: Where do they live?
• 43:34
  Bill Wilson: What are their interests?
• 43:35
  Bill Wilson: I then go find those customers.
• 43:37
  Bill Wilson: First, I create the advertising for you.
• 43:39
  Bill Wilson: I A B test that to make sure the creative is the best that can be continually optimizing that creative.
• 43:45
  Bill Wilson: And then I serve that ad to the right individual, the right individual being that target demographic you described.
• 43:50
  Bill Wilson: And then I optimize where that ad shows up.
• 43:54
  Bill Wilson: Should it show up on a Hulu show?
• 43:56
  Bill Wilson: Should it show up on a Disney show?
• 43:58
  Bill Wilson: Should it show up on the Weather Channel?
• 44:01
  Bill Wilson: And we see which one performs best.
• 44:03
  Bill Wilson: And performs best is really defined by the client.
• 44:05
  Bill Wilson: What is their key performance indicator?
• 44:07
  Bill Wilson: Are they looking for awareness?
• 44:08
  Bill Wilson: Are they looking for a form fill.
• 44:10
  Bill Wilson: Are they looking to convert to a paying subscriber for e-commerce?
• 44:15
  Bill Wilson: It's incredibly powerful and when you think about what we've been talking about, Jonathan, where Towns quare is focused on markets outside the top 50, my belief is no one can do this better than we can, and we're quite pleased with the growth where we are.
• 44:28
  Bill Wilson: It's the fastest growing part of the company in terms of revenue and profit for the last five years.
• 44:33
  Bill Wilson: But when we think about the next decade, you think about 69% of all advertising today in the United States, local advertising is digital advertising.
• 44:41
  Bill Wilson: That is expected to grow almost to 80%.
• 44:42
  Bill Wilson: In the United States, local advertising is digital advertising that is expected to grow almost to 80% in the next five years.
• 44:47
  Bill Wilson: So we've got this tailwind behind our back of growth in digital advertising.
• 44:51
  Bill Wilson: We believe we're highly differentiated in that space and then, even if it wasn't growing as much as it is, based on our data from Gordon Burrell and Associates today, in 2023, we captured less than 15% of the addressable digital market in our markets.
• 45:08
  Bill Wilson: So, there's so much more share shift that can happen and then you have share shift plus the benefit of a growing market, and that's why we're as excited as we are about Towns quare.
• 45:16
  Bill Wilson: Ignite our digital advertising arm.
• 45:18
  Jonathan Boyar: Is there a big overlap between the customers of Towns quare Ignite and Towns quare Interactive?
• 45:23
  Bill Wilson: Very little overlap.
• 45:24
  Bill Wilson: I think part of the reason is our Ignite customers.
• 45:26
  Bill Wilson: There is some overlap, but I'd say less than 20%, because the Ignite customers are usually much larger in scale, have a lot more money to spend than the smaller customers that we're focused on for Towns quare Interactive.
• 45:39
  Bill Wilson: So incredible opportunity with Towns quare Ignite and it's performed extremely well year in and year out and we're excited for the next five to 10 years in that space.
• 45:47
  Jonathan Boyar: Your competitive advantage, I guess on Ignite and please correct me if I'm wrong is, you have all these websites that you created in those smaller towns and you're able to target people in small communities, and that's why someone would want to use your marketing agency.
• 46:05
  Jonathan Boyar: Is that?
• 46:06
  Bill Wilson: That's one component of it.
• 46:07
  Bill Wilson: The other component is a, we've got all this first party data.
• 46:10
  Bill Wilson: Two, we have a team there's roughly a hundred people who buy media, optimize media.
• 46:16
  Bill Wilson: The creative is a big part of this in terms of the messaging and the visuals we're doing now.
• 46:21
  Bill Wilson: In essence, we're doing television advertising for clients.
• 46:24
  Bill Wilson: We weren't able to do that five years ago because we didn't own television stations, but now, with cord cutting and as much inventory with streaming television, we're in essence competing with cable television and network television.
• 46:34
  Bill Wilson: So part of the differentiation there is we've got this huge scale of hundreds, if not sometimes thousands, of campaigns for lawyers, doctors, plastic surgeons, hvac you name a vertical and quite honestly, I could sit down with you we're doing this in the home improvement space and particularly HVAC, and I could sit down with you and say we've done this campaign for over 500 customers across the US that look just like you.
• 47:03
  Bill Wilson: This is what they did prior to working with Townsquare and this is what they're doing today.
• 47:08
  Bill Wilson: So having that scale and that expertise in verticals is highly differentiated.
• 47:14
  Bill Wilson: Again, particularly in markets outside the top 50.
• 47:17
  Bill Wilson: In addition, we're often competing with local agencies.
• 47:20
  Bill Wilson: There's a digital agency in every one of our 74 markets.
• 47:23
  Bill Wilson: They're utilizing usually free exchanges.
• 47:26
  Bill Wilson: They go on Facebook.
• 47:27
  Bill Wilson: My son buys ads on Facebook.
• 47:29
  Bill Wilson: There's no barrier to entry.
• 47:30
  Bill Wilson: You could buy display advertising through Google there's no barrier to entry.
• 47:35
  Bill Wilson: But we're sitting at exchanges that have six or seven figure minimums per month in spend.
• 47:40
  Bill Wilson: So, a local agency wouldn't be able to do that necessarily in Tyler Texas.
• 47:45
  Bill Wilson: But because we're bringing this, I call it national sophistication to small town America, it gives us outside differentiation in terms of purchasing power for inventory, as well as just the ability to see the amount of inventory we can.
• 47:59
  Bill Wilson: And that may matter less in New York, but when you're in Tyler Texas with 300,000 people and you want to reach somebody with a household income of 75,000 who has two kids, drives a Honda Odyssey and loves MMA, there's only so many opportunities you have to do that.
• 48:15
  Bill Wilson: So, the more inventory you have to not only reach that person but to optimize that creative, make sure that you're reaching them on the right platform.
• 48:23
  Bill Wilson: We take great pride in that and we live and die by the results we provide our clients.
• 48:27
  Bill Wilson: So, I view that as highly differentiated for Towns quare versus others that we're competing with in our size markets.
• 48:33
  Jonathan Boyar: Bill, I want to thank you for your time.
• 48:36
  Jonathan Boyar: It's been fantastic learning about your career, working with Clive Davis to AOL to then going to Towns quare, where you took kind of a big risk in terms of a pay cut to try and build something great.
• 48:47
  Jonathan Boyar: I look forward to monitoring your progress and following Towns quare, and I think the best days are still ahead.
• 48:55
  Bill Wilson: I agree, Jonathan.
• 48:55
  Bill Wilson: Thank you so much.
• 48:56
  Bill Wilson: It's been an honor, it's been a pleasure and I look forward for all your listeners, hopefully to learn more about Towns quare, spend some more time understanding the company, and if anybody has any questions, they could always reach out to me at any time.
• 49:06
  Bill Wilson: My email address is bill@ soundsquaremedia.
• 49:08
  Bill Wilson: com.
• 49:09
  Bill Wilson: And thank you again, Jonathan.
• 49:11
  Jonathan Boyar: Thank you.
• 49:11
  Jonathan Boyar: I hope you enjoyed the show.
• 49:13
  Jonathan Boyar: To be sure you never miss another World According to Boyer episode, please follow us on Twitter @Bboyarvalue .
• 49:22
  Jonathan Boyar: Until next time.