Happy Friday, everyone!
Last week's Friday poll question drew many responses, which generated nearly as much heat as light. To recap last week's question:
Your biggest client is currently spending $10,000 a month with you - his whole radio budget - for which he gets 75 spots per day on your station. He's just told you that the rep from a competing station told him he's running too many ads on your station and has recommended that he divide the budget between your station and theirs. (They play country music, which you don't, and therefore can offer him a new audience.)
How would you respond? What do you say to this client?
As mentioned last week, this episode really did take place...in the 1980's, when legendary sales trainer Jim Williams was "infecting" some of the most profitable radio stations in America with his unstinting philosophy and practice of selling radio as a primary medium ("like newspaper," dollar-for-dollar, time-for-time).
Salesperson Susan had sold a car dealer (Good call, Debbie Hill!) a ten-day, $10,000 schedule for his Grand Opening (the client having rejected her $14,000 proposal). His event was so successful that he agreed to continue advertising heavily with her station, to the tune of $10,000+ per month for at least the next three months, running 75 spots a day. (As Tom Collins pointed out, this worked out to $4.44 per spot; undoubtedly that's a blended rate, since the client was advertising 24 hours a day - an average of 3 spots and hour; in today's dollars it'd be more like an average of $10/spot.) This triggered the visit by a competing station's rep and the suggestion that the dealer split the budget.
Susan wisely asked her client for time to prepare a response to this challenge, which she ultimately recorded and presented to the dealer. If you click on the audio file below, you'll hear in 30 seconds the gist of Susan's reply. But if you'd prefer to hear the whole response, CLICK HERE and then scroll down the page to the audio player containing Chapter Fifteen, "The Challenge-Reply Demo Tape." Run time is about 7 minutes.
After listening, please feel free to share your further observations. Thanks for keeping the discourse objective and civil.
After listening to the tape I'd like 48 hours before I post my response.
wow - that was really good. I was especially struck by her explanation of the 2.4 radio station levels and how your stations listeners effect their friends who may not listen. I am definitely adding this to my selling arsenal.
I still have to say though (again this is my humble opinion) that you can still deliver a great ROI with fewer than 75 ads per day - because radio has done this successfully over and over again. That being said - 3 spots an hour for many advertisers may be out of reach for their budget and I'm positive that $10K per month will be less than 75 spots a day. This was afterall, 30 years ago. So 75 ads per day on our stations right now would be more around $16-20K per month. BUT - if you can deliver the ROI and they are happy, this was an excellent reply with fantastic reasoning. I love it when I can be proven wrong with a clear and understandable explanation - much better than saying 'if you can get it, get it.'
This was also a great lesson in starting high and coming down ($14K to $10K) - and still ending up on top.
As a Station Owner a someone who came up in the ranks from sales rep to sales manager to General Manager to owner, I have had a few experiences along the way. Here is the summary. I have seen many businesses waste lots of money by running far to few ads, but I have never seen a business waste their money by running a very heavy, aggressive schedule.
The greatest dis service that radio reps to for business owners is that they are afraid to tell them the truth. It is unreasonable to believe that any business that runs 2 or 3 ads a day will have ANY outstanding success. It takes much more than that, and as radio professionals, we should believe that if the ad is good and the offer is outstanding , that more frequency should equal more success for the business owner. I forgot to mention, that in addition to owning radio stations , I have owned several other businesses and have spent hundreds of thousands of dollars on radio advertising on stations that are not my own. In EVERY case I have had to convince the selling rep that I needed MORE frequency than they were proposing, which is a very sad situation.
Great clip, good debate, useful insight. This is a little like trying to answer the question, "How high is high?"
I hold to the view however, that the advertiser will have a terrific ROI without 75-ads. Keep the $10,000. Double the unit rate, become more profitable, deliver a great ROI with 38 ads and open up inventory for another high frequency advertiser.
Well-stated, Celeste!
Thanks for your thoughtful reply.
Joel,
My pleasure. We'll be adding audio continuously until it's all there for others to enjoy.
Remember Larry Bauer of Milbank, SD fame - Gimbel's (sp?) Furniture Store Parking Lot Sale, etc.?
He's picked up the mantle from Jim and is doing sales training/consulting for a number of stations. Doing it very well, too, from what I've heard.
Rod
R.C., Firstly, my name is Oscar Felix Jr., V-President at KOFH Maxima 991 in Southern, AZ. I am the son of the owner and we began this radio station over 12 years ago. I didn't know anything about radio, but I knew how to work, communicate and sell. Secondly, I'd like to congratulate you on all of your success as an entrepreneur. Thirdly, I wanted to say that I totally agree with you on how business' should run more ads aggressively on-air. I'm always trying to convince new business owners that by being aggressive you brand your name on-air and the listeners are influenced by what radio station, jock or commercials are directing them where to go. We are in a small market and sometimes it's hard for them to understand that. So I have to go to Tucson or Phoenix to get clients. Most of all coming up with new ideas for current and future clients is my specialty. Sometimes the gimmicks work and sometimes they don't, but like I tell them. Your name is getting out there and that's the most important thing. Your name being branded out there... This is to up-selling the client so that they brand there business more frequently on RADIO!!!
From RSC member Woody Woodward:
When I started at the radio station in 1974 our average rate was around $3.50 per :30 second commercial. If stations are still giving away our product 39 years later than we have a problem believing in what we do. An ad rate of $4.44 in this day and age is stupid low and tells our customers that we aren't worth more than that. We have clients who will buy a full page ad in a local paper with a circulation of under 6,000 and they pay $1,200 plus to get them. This indusrty and it's sales people need to wake up and understand why we are at the back of the line in budgets. How do you convince a customer that $4.44 is worth anything when they pay $3.95 for a gallon of gas or any number of other products. If the client is willing to spend $120,000 a year he is willing to buy $15.00 ads.
The goal of a radio station should be to provide quality advertising and quality listening for a fair market price. Instead of 75 ads per day you could run 25 ads at $15.00 and do a better job for your client. Less clutter and beter recall are worth more that running a bastard format with 12 minute commercial sweeps just to keep the lights on.
I see no problem with a client being willing to commit a large budget, but we shouldn't undersell our industry to do it.
Note from Rod:
Woody,
To clarify, $4.44 was a 1980's rate. Today's equivalent would be $10. I know of many small market stations charging less than that for a high-frequency schedule today.
