Report: Cumulus Dropping Rush and Hannity

7-30-13

A story like this always seems to pop up around the quarterly earnings call (Cumulus reports tomorrow at 11AM). Politico reports it would be a major industry shake up if Cumulus dropped Rush and Hannity from about 40 stations at the end of the year. Politico says Cumulus and Premiere are at odds over the cost of distribution and that Cumulus has been looking for local and regional talent "that will be left vacant by Limbaugh and Hannity." However, a source tells Radio Ink nothing has been decided and a deal could even be worked out in the next month or so.

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Radio Dropping Rates to Get The Buy

3-13-2013

It's the same old story, only the faces of salespeople have changed. Radio has an abundance of inventory and salespeople have goals to meet because the home office has debt to pay. If money is on the table and a savvy client knows radio will buckle in the negotiation, that client will wait it out, knowing another radio seller is coming in the door and that cycle will start all over again. In turn, some sellers would rather walk through the sales managers door, with an order, try to explain the lower rate, rather than leave money on the table.

That cycle translates into slow (or flat) revenue growth for the industry and unbearably long stopsets on radio stations across the country. Saga CEO Ed Christian says this is a big problem that the industry has to do something about. Yesterday his concern was aimed at national business. "Agencies are testing the bottom. They are spending where the spots are cheap and they will continue to do so when there is someone willing to provide the supply." Christian also said national radio business is down and his company is focusing, even more, on local ad revenue. He said in Milwaukee the national cost per point has dropped from $68 to $45 and in Des Moines it's gone from $45 to $22.

Christian also said there was an expectation that when PPM came along more money would flow to radio as a result. That was an over-promise that has not delivered, he said. Saga does not subscribe to Arbitron.

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Are You Still Dropping The "Y" Bomb?

Over the years, I have found that my dropping of the ?Y-Bomb? results in one of two, basic responses. Broadcasters either immediately panic and scurry away while covering their ears and muttering ?Na-na-na-na-na.? Or, they panic; muster up some righteous indignation; pick up their torches and pitchforks and look around to make sure there are others willing to head up the mountain. Those that have both experiences at the same time just vibrate to the point where they explode right there on the spot.

Given the pressures Radio is under ? despite the Happy Daze pronouncements by some senior ownership who are blissfully unaware many of their stations? scurvy-ridden crews are ripping up the hull planks, scrounging for lemon peels - this is no time to be hiding behind or spewing Dogma. To be succinct: There is no Santa. There is no Easter Bunny. There is no Tooth Fairy and there is no Personal Listener. I could go deeper, but that would become a dust-up for another time and another bar. Suffice for me to say, I?m a secular Canadian. All I really have to be is ?nice?.

The ?Y-Bomb?, to continue, is not a precision weapon either. Nor is it ?clean?. It?s a ?dirty? bomb; leaves large holes, tons of collateral damage and renders the environment toxic for long periods. The moment a broadcaster says ?You?, the largest portion of any audience is only ticking moments away from being blown off by being unable to relate to or believe whatever else in which that ?you? has been wrapped. But, the broadcaster has (unknowingly) made it incumbent on the listener that they do go through a process of attempting to relate and believe!

For example: The nice announcer says, ?? and I?m glad to have you here with me.? Although a banal, vacuous and innocuous statement anyway, it also challenges a listener to wonder how they got to be with the announcer? when they?re not! If the otherwise nice announcer were to change that somewhat by saying, ?? and it?s great to have you listening.? the, by now, befuddled listener is obliged to conclude: ?He has no way of knowing that. And besides, I wasn?t actually ?listening ? it?s just on in the background.?

This is an ongoing, everyday, every shift, almost every set, every spot and every promo phenomenon. There?s no need for me to complete the list. So many examples ? so little time. Rule: People process language, first ? literally! Yikes! An extremely impressive incidence of this noxious behavior, however, comes mostly from all those TV stations and some radio stations who have chosen to market themselves with that whining, pandering, patronizing statement: ?On Your Side.?

On My Side!? When? In what way? What? Who? You? Me? Huh? Even my normally tolerant offspring might respond to that by texting the station back with a slightly more strident: ?STFU!? The station might be as well served, if not respected, were they to simply come out and say, ?Since we have decided our audience is made up of gullible, credulous, clodhopper-hicks, we believe we can ram just about any scat in here; tell them anything and these  four-toothed goofs will believe it.? They could be right ? but only some of the time. Many folks are wising up. It?s a trend. Meanwhile, anybody else willing to stake the prosperity of their broadcasting business based on such a proposition? Apparently? yes!

Is it any wonder stations keep telling us how wonderful, sincere, credible and worthwhile they are? No, because they are none of those. If they were, we would already know it ? without being told. And if audiences ever figure that one out in larger numbers?.woo-hoo!

As to The Personal Listener: That was first offered to newbies as a fantasy-technique to get over mic-fright. It was never intended to be anything more than a part-time, short-term metaphor. Nor was it ever thought through to the point where a later reality-check would become a necessary therapy. It was expected a rookie would, in time, get past all that and realize ? all by they own se?ves - they were talking at/to an audience made up of many individuals ? none of whom was in the ongoing awareness of the broadcaster.

It?s true that some deluded listeners insist they are being talked to ? exclusively. But, help is available. Experientially, that is more a comment about a subjective feeling - not a verifiable fact. Broadcasters, however, who agree and continue to feel the same way have less of an excuse and even more issues about which to be severely concerned. That thing, that assumption, nevertheless, just hasn?t turned out properly. What we had was a useful story that became a myth that became mythology that became accepted wisdom that became: Dogma? and we?ve been screwing ourselves up on the premise ever since.

Fortunately, even better alternatives do exist and, once again - help is available.

Ronald T. Robinson has been involved in Canadian Radio since the '60s as a performer, writer and coach and has trained and certified as a personal counsellor. Ron makes the assertion that the most important communicative aspects of broadcasting, as they relate to Talent and Creative, have yet to be addressed. Check out his website www.voicetalentguy.com

(10/17/2011 6:51:01 AM)
Blather. Come on Ronald. Radio is a PERSONAL medium. We talk directly to the invidual. If you aren't, you are not reaching your audience. Which radio station are you using your theories on these days? Any at all? If so, is it a competitive station, or just another spot on the dial that your nameless, faceless, personality-less staff inhabits until the ends of their shifts? Pfffft.

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Stop Complaining About Competitors Dropping Rates - Part 2

Here is my follow-up to Monday's article "Stop Complaining About Competitors Dropping Rates." In that article, we gave you the first 6 tips to take control of your rates. (If you missed that article, just click on the red text in this story). Here are six more ways to take control of your rates.

7.) Sell on Value
Selling on value, rather than cost, is key to radio capturing the investments you deserve. The secret to the value formula is that value is more perception than reality. Value equals the customer?s expectation plus or minus the customer?s experience. When you train your account executives to sell on value, they quickly learn how to manage the value perception. At the customer expectation end of the equation it?s important to council the advertiser on the value of up-sells, repeat business and the lifetime customer value of every new customer your campaign attracts. Multiplying that lifetime customer value by word of mouth and referral rates and you can quickly establish very realistic and lucrative ROI expectations from your campaign. To manage the customer?s experience in the value equation you simply always leave room in your presentation to under promised and over-deliver. When you conduct your post campaign analysis and deliver your written wrap up, you?ll clearly validate how you delivered beyond the expectation, and delivered value as defined by the value equation.

8.) Understand ?Benchmarking

When you release a package or cave to a cut rate demand, you are establishing the real value of your product in the minds of your account executives. The best account executives care about delivering value to their customers. When they know one of their client?s competitors bought you at a $60 rate, they have a moral conflict selling their client at your $90 rate. It?s that simple. The low-ball rate you offer in one case eventually becomes your average perceived rate value because your team has lost confidence in the value you deliver at rate card. The best reps will respect you, and themselves, when you fight for rate integrity. Rate integrity is best preserved with a long term rate strategy. Your lowest and best rate should ALWAYS go to the clients who book high frequency consistently over 52 weeks. Never let a Johnny Come Lately capture a lower rate than your best customers simply because you are missing budget this month.

9.) Sell Marketing Bundles
You have much more to sell than spots today. Your presentations can actually earmark a value to everything in your bundle, and offer the total bundle at a monthly investment rather than a spot rate. Even if you ?bonus? (I hate that word) some of the elements in your bundle at least show your prospect a value for each and every element in your bundle. A sponsorship banner at a county fair, for example, is not valued at the cost of the banner, it?s valued by the exposure the client?s sponsorship achieves. So if you estimate 20,000 people will see your sponsor?s banner, the ?value? of a $50 banner to the sponsor (not the cost) is 20,000 people times 4 cents per person = $800, even though in your bundle price it might represent the cost only. Here are just a few of values you can include in various marketing bundles beyond spots;
? Exclusivity; no competitors can participate
? Marketing consulting
? Creative writing
? Guaranteed rotation of schedule
? Website links or banners
? Station or announcer endorsements
? Station contest participation
? Product placement at event and/or on air
? Sales meeting participation
? Social media exposure
? Sponsorships
? Sourcing co-op

10.) Tap New Wells
Many of the old traditional wells have been poisoned by radio?s weak transactional sellers! New businesses and new business categories not yet exposed to the rate discounters care more about monthly investment and return on investment than individual spot rates. You?ll find most of the fresh untainted wells are not in retail where margins are squeezed to the limit by online shopping and big box stores. In fact retailers by nature, delight in buying low and selling high?..that?s what they do for a living and they?re good at it. The services or professions sectors, doctors, lawyers, roofers and plumbers are 100% local. Consumers don?t go online to Pakistan when they have a toothache and local lawyers rates are not impacted by low Chinese legal rates. The service sector has many more prospects and a lot less pressure on margins. These non-traditional wells have much higher margins than the retail sector. Therefore they can achieve higher ROI?s from your campaigns. Tapping these fresh new more lucrative wells will always yield higher rates if you start them on the right foot. But it takes training. Using old retail hot buttons like ?traffic? or ?awareness? with these prospects just doesn?t work.

11.) Create Premium Packages versus Discount Packages.
Why do we think ?packages? always infer discounts? The best marketers sell premium packages. BMW?s ?sports package? for example, artfully takes the customer?s focus of the vehicle?s base price (the equivalent of your base spot rate) and focuses on selling a total package at a price considerably higher than the base vehicle price. Sure, they ?discount? the sports accessories in the premium package, but that package consists of a list of options that few, if any, buyers would buy in total. The BMW sports package includes their highest margin products, leaving more room to give the appear5ance of discounts, without touching the base vehicle price. 

Their average sale is always higher, not lower, and their profits are considerably higher selling premium packages. Many of your prospects and customers don?t care as much about ?spot rate? or base price, as they do about the total monthly investment and what they receive in return. (most who do focus on spot rate have been ?trained? by us to do so). Package your spot campaign with low-cost high profit options that don?t devour your spot inventory. Options like product placement, on-air contests, product sampling, online surveys, mobile, data base marketing, better creative, guest appearances, and more, can take the focus off of your spot rate and result in higher average sales and happier clients.

Your ?package price? should always be higher than you?re A.M.I. ( average monthly invoice). Average monthly invoice tells you want your market and your sales people perceive your station to be worth. A premium package that delivers more than just ?spots? will deliver sales higher than that average.

12.) Understand Buyer?s School
While you are going to seller?s school, know that your clients are going to buyer?s school. They know how to manipulate you into thinking it?s all about rate. The most important thing you can do is practice ENS Media?s Negotiating 101 (one-oh-one) Never, never, never give one unless you get one!  For every rate concession you offer, you MUST get a concession in return. You might ask for wider rotation, payment up front, more frequency, longer term etc. But if you reduce your rate without asking for a concession in return, the buyer will always believe you can reduce your rates even further. When you demand a concession before every concession you make, the buyer believes you?ve reached your limit.

Wayne Ens is President of ENS Media Inc and can be reached via e-mail Wayne Ens wayne@wensmedia.com

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Stop Complaining About Competitors Dropping Rates

by Wayne Ens
In a recent survey of 110 radio account executives we asked ?What is the biggest hurdle to sales that you face each day??  The most common answer? ?Our competitors are driving our rates down.? I?m sorry, but your competitors don?t set your rates at the local level, you do. We have numerous station managers who we consult and mentor who we have coached to significantly higher rates, and we continue to do so with great success. Admittedly, it has not been easy, but we?ve proven rates can and should be increased.

I?ve heard all of the defensive excuses for cutting rates, the most laughable is the ?perishable inventory? argument?.that it?s better to sell unsold inventory at any price rather than see it go unsold. I don?t think an audience that wants more news or music, or advertisers who want a stronger share of voice on your station, would agree.

The defenders of unsold inventory discounts always point to the airline industry as the icon of perishable inventory pricing. Do you know any airlines that are not in trouble? And how do passengers feel about airlines gouging them when they need them the most in peak periods? Why would we hold the airline model in high esteem? Business leader Jack Welch said ?There is always a better way. Find it!?  Here are six ?better ways? you can consider to motivate you to take control of your rates. We'll post six more Thursday of this week.

1.) Your Commission Structure
Many stations reward sales people, and sales managers, on gross sales, whether those sales are profitable or not. Talk about lunacy! I liken it to the real estate sales person who would rather sell your house for $450,000 than $500,000. With commissions in the balance in excess of $20,000, and only a couple of thousand dollars difference in commission between the low price and the high price, many agents would rather take the least line of resistance and ?sell? at the lower price (I use the word ?sell? very loosely). Car dealers don?t pay commissions on the total price of the car, they only pay on the gross profit of each car.

While your bean counters might protest it?s more difficult to manage commissions based upon profit per spot than on gross sales, you know your rates would go up if you paid more for better rates. Right now your sales people only care about the total sale, and have no incentive to drive rate. This strategy leaves you with the headache of ?inventory management.?  

2.) Leaders Need to Lead
Just say ?no? to rate choppers! I shutter when I hear a heritage station manager or market leader talk about the competitive pressures created by the underdogs in the market. And the programming and promotions people who have worked so hard to give those stations a leadership position must think we?re just order takers. The market rate is established by the market leader. Period. If the market leader cuts their rate by 10%, the underdog will follow suit with a 15% rate reduction and the downward spiral begins.
Market leaders have to act like leaders and be willing to walk from cut-rate business or be prepared to enter the never-ending downward spiral of rate cutting. 

3.) Practice What You Preach
You have probably told some of your clients about the importance of branding, and that only butchers and barbers can cut their way to success. It?s time to put an end to hypocrisy. You know that to a large degree you establish your image and credibility with your pricing policies. Can you say ?Rolex? or ?Mercedes Benz? ? 

And when you hear a 50% off sale at a furniture store or men?s wear store, you tell yourself ?Boy, they must have a heck of a lot of margin. That 50% off is probably all the product is really worth.? Could it be that radio?s small share of the over-all advertising pie is directly attributable to the credibility and image we?ve established for radio with our one day sales, unsold inventory bonuses and rate slashing?

4.) Focus Upon Your Real Competitors
Radio?s share of total advertising budgets is so small that it?s almost laughable to call another station that?s nipping at your heals ?a competitor.? I recall when I left the newspaper business to begin my radio career. A stand alone ad, you had to have a full page to ?stand alone?, in my paper cost $1,800 at the time. I was astonished that a stand alone ad on the radio was less than $30! Every ad is ?stand alone? on radio.

With that attitude I quickly became the station?s number one sales person outselling many seasoned veterans who were focused on other station?s rates rather than on the rates at the paper. I?m shocked when I ask a radio sales person today how much a billboard, a newspaper ad or a yellow directory ad in their market costs?..many don?t know! You?re reps have to be trained how attractive your pricing is relative to their real competitors.

Our market audits consistently prove that reps grossly under-estimate the rates at competing radio stations in town. Sure, every station has the  occasional ?stinky? deal. You probably have one yourself. J But don?t think for a moment that every advertiser gets the same rate as that stinky deal you uncovered.

5.)Train Your Sales People to Embrace New Media
Advertisers have always needed two media strategies, and intrusive media ?push? strategy and a passive media ?pull? strategy. In the old media world  most passive media, catalogues, newspaper, flyers, coupons, phone directories, invitation events, brochures, etc., were all expensive print products. ?Expensive? because of the heavy production and delivery costs of pulp and paper, printing presses, and delivery.

Today the production and delivery costs of passive media, anything digital or online, are basically free or very inexpensive. Compare the costs  of a full color web page running 24/7 for a year, to that same page running in the local newspaper everyday for a year and you?ll see what I mean.

Or compare the cost of putting a coupon on your website versus a printed one delivered by the post office in a coupon envelop.Traditional media?s share of ad budgets, largely print in the forms of brochures, coupons, newspapers, directories etc, is predicted to decline  more than 10% from the 85.9% captured last year.

By the year 2015 ?traditional? media?s share of ad budgets will shrink to 76.4%, still by far the largest share, largely because the shift to online  passive media is so inexpensive to produce and deliver. A properly trained radio sales force that understands the respective roles of intrusive and passive media in the new media mix can capture an astronomical growing share of that 76.4% and create an inventory shortage. The ?unsold inventory? problem will melt with the training of account executives to sell the new media mix with radio as a dominant player.    

6.) Quit Selling ?Spots? or Cost Per Point
At the local level, you commoditize your product, making you vulnerable to price comparisons, when you sell spots or CPP or CPM. A competitor will always claim to sell spots cheaper. I?ve often told advertisers ?We have a quarter hour average of six radio reps from competing stations, and everyone of them is going to hear your campaign and tell you that you?ve bought the wrong station or they?ll sell spots cheaper than we do.? But local advertisers don?t really want ?spots? anyway, and most don?t believe your audience claims and CPP numbers. Our research of 540 local advertising decision makers in three different markets reveals that advertisers don?t buy to get a lower spot rate or lower CPP.

They buy to increase sales. Period. When you consult with your clients to establish strategies that will increase sales, and present creative campaign ideas to achieve their goals, the schedules and spot rates are inconsequential. Often when I ask an account executive to tell me about a client?s campaign, they'll say something like ?They bought 30 spots a week? or ?they bought our 8 AM news.? That?s not a ?campaign??.that?s a spot schedule. A campaign has a marketing strategy, an objective, and creative communications solutions to achieve those objectives.

The advertiser cares more about how much they need to invest to increase their sales than how much a spot costs. What good is a cheap spot if sales don?t increase? And notice, we?ve taken the focus off of ?cost? and we focus on ?investment? and return on investment. 

Check back Thursday for the remaining 6 tips from this list.

Wayne Ens is President of ENS Media Inc and can be reached via e-mail Wayne Ens wayne@wensmedia.com

Wayne Ens is President of ENS Media Inc and can be reached via e-mail Wayne Ens wayne@wensmedia.com

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