9-25-2013
From the movie Back to the Future (in 1955, TAB and Pepsi Free aren?t invented yet):
Server -- You gonna order something?
Marty McFly -- Ah?yeah, give me a TAB.
Server -- I can?t give you a tab unless you order something.
Marty McFly -- Then give me a Pepsi Free.
Server -- If you want a Pepsi PAL, you?re gonna pay for it!
Cheap rate packages are keeping broadcast stations from reaching their short- and long-term revenue potentials. In markets all across the country, rate structures are cratering, with prices dropping in some cases back to early-1980s levels.
?It?s all about supply and demand in a saturated media environment and a recessive economy,? is the convenient but short-sighted reason for pants-dropping. Because, as we all know, spoiling local clients (and their little blood-sucking advertising agencies) for the short-term also spoils them for the long-term. In other words, selling cheap packages for ?just this one time? is how we create rate-contentious clients for life.
Smart broadcast sellers advise their clients against spending 95 percent of their advertising dollars on sales events, going after the worst, most disloyal three percent of bottom-feeders who will only buy the merchant with the lowest price. Yet, here we are doing precisely the same thing with our ?special packages.?
So, how do we get rates back up? We go ?back to the future.?
We go back to the ?good old days? of professional broadcasting, back when we had to bring good creative ideas to the table because the clients were not capable of coming up with the same quality of creative on their own (they?re still unqualified in the creative area to this day). We show clients how to identify and solve consumer problems in the consumer?s own language, to drive business to the client without having to sacrifice the client?s price. We show the client why it?s in their best interest to get away from ?clown car? clich?-infested, Crapmaster commercials and get back to deep-sell marketing strategies that solve actual consumer problems.
We do detailed return-on-investment calculations with clients, using their gross margins of profit and their average sales against our total CUME numbers, not fragments of numbers, not with CPP, just like we used to do in the Golden Age of Broadcasting, for the following reasons:
-- So that clients know without a shadow of a doubt that doing business with us is a good, calculated risk rather than a gamble. ?Based on your average sale of $___ and your gross margin of ___ percent, we?d have to bring you ___ new customers per week in order for you to break even. Based on our weekly audience of ______ thousand people that means we could fill up ______Arena ______times, and out of all of those people we would only have to sell ____. If we sold ____ people, that would be a 50 percent return on advertising investment. Looks like a good, calculated risk to me.?
-- So that we can manage their expectations about results. If you don?t do the ROI analysis, you and the client are not on the same page about how many new customers the client needs to break even. That?s when you get the surprise phone call, ?Cancel my advertising. It?s not working.? Based on what? That?s anybody?s guess.
-- So that we can double or triple what they feel comfortable spending on your station. Once clients understand return on investment and how few new customers they really have to sell to break even, they may opt to spend much more money with you. We should be establishing the cost, not them. Would you make your decision on what attorney, accountant, or surgeon to hire based solely on who had the cheapest price? I hope not. If your doctor told you that you needed open-heart surgery, would he ever say, ?By the way, what?s your budget for this?? No, of course not. ?Um?could you do me for about $400?? ?Why, yes, we could. Of course the surgery will seem like an Aztec sacrifice to you, with no anesthesia and all, but we could do it!?
-- Just like back in the Olden Days, we steer conversation away from our price and back to the value that we bring to them as professional advertising consultants. When sold correctly, value always supersedes price.
-- We think bigger, not smaller, even in a recession. The broadcasting industry has been through recessions (and depressions) before. There is no question, even in our current economic situation, that bigger proposals get more client attention and consideration than the little dinky ones. Of all of the vendor proposals pitched to clients, ours are usually among the smallest, hence worth the least amount of the client?s valuable time and consideration. No more small-ball.
-- We invest in training our salespeople in the art of creative thinking so that they can use intelligent headlines to get appointments with key decision-makers, pitch million-dollar ideas, handle objections like professional people, and close long-term agreements for more money at higher rates (Hellooooooo!).
-- We stop sales turnover by paying our sellers a living wage so they can concentrate their time and energy on our business, instead spending their time looking for another job just so they can pay their bills.
When clients bring up other station?s cheap rates and packages, remind them that there is a lot more at stake than just the rate. ?Remember at family get-togethers like Thanksgiving, when you had the Big Table and the little table? Well, Mr. Client, they?re trying to seat you at the little table. Their prices and lack of a solid creative campaign reflect that. A business like yours has a lot of potential and I think you?ll get there a lot faster and feel more comfortable seated here with us at the Big Table. Now, let?s move on and talk about long- and short-term marketing strategies.?
We must sell smarter, we must sell bigger. We convince clients that our plan for their success is better than theirs, not that we have the cheapest rate in the market. Can we? Yes, even in a recession. Turning our backs to cheap rates now is the only way to a brighter future. And, if we don?t go back to higher rates, the future doesn?t look very bright at all. Here?s to back-to-a-brighter-future for all of us.
Principal Strickland -- You don?t have a chance. You?re just like your old man. A McFly never amounted to anything in the history of Hill Valley.
Marty McFly -- Yeah?Well, history is gonna change!
Paul Weyland is a broadcast sales trainer, author, and speaker. You can reach him at paul@paulweyland.com or by phone at (512) 236 1222. Find Paul?s books, CDs and software at www.paulweyland.com or on www.amazon.com.
(9/25/2013 6:38:14 PM)
Does no one acknowledge the brontosaurus in the room - the fact that our commercial production is so lacking in influential and appealing/listenable messages that audiences dislocate knuckles in their hysterical stabs at changing frequencies?
Spot efficacy just might be a factor in advertisers' ROI. Besides, most advertisers have nothing even close to that "one big thing" to which consumers would flock.
I agree with both Larry and Matts feedback. I would add that the spot loads across the industry have to be cut by at least 40%. The industry is at risk by continuing to run spot loads of 12-14 minutes per hour. They are too high, the industry knows it, the listeners are fatigued by it and the advertisers are worried about getting their message "lost" in that kind of environment. We have to have the courage to move forward and do what is right for the listeners and the advertisers.
(9/25/2013 8:07:30 AM)
Ok. The obvious challenges with this article in the real world is that (last I checked):
1. More than 80% of the business is purely transactional where stations are slicing and dicing to secure a rate/share balance that satisfies corporate's favorite performance metrics (which largely center around making budget and delivering share).
2. Local sales management and sellers are largely ill-prepared to influence the spending/price-setting decisions of key accounts in their markets. Much of this challenge speaks to the deficient business/marketing acumen on the part of radio sellers (CSS has been trying to combat this for decades).
3. The "good old days" have gone the way of the VW bus and they ain't coming back. This is the new normal. Our media ecosystem has so dramatically changed that radio spends much of its energy on defense as its share of media spending gets siphoned off by the shiny new kids on the block.
Great article.
(9/25/2013 8:07:30 AM)Ok. The obvious challenges with this article in the real world is that (last I checked):
1. More than 80% of the business is purely transactional where stations are slicing and dicing to secure a rate/share balance that satisfies corporate's favorite performance metrics (which largely center around making budget and delivering share).
2. Local sales management and sellers are largely ill-prepared to influence the spending/price-setting decisions of key accounts in their markets. Much of this challenge speaks to the deficient business/marketing acumen on the part of radio sellers (CSS has been trying to combat this for decades).
3. The "good old days" have gone the way of the VW bus and they ain't coming back. This is the new normal. Our media ecosystem has so dramatically changed that radio spends much of its energy on defense as its share of media spending gets siphoned off by the shiny new kids on the block.
Great article.
(9/25/2013 5:09:22 AM)Paul,
Great article! I think you nailed it. Not talking about roi and expectations upfront is one of the biggest mistakes!!! It shows the client that you are not really interested in them but rather just making a sale. Talking about roi says to a client that you are care and that you want to be a resource!
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