So protecting rate integrity is important it is also important to get long term contracts. During the negotiations for those long term contracts, rate per ad comes up with most clients. Most often it they are likely to bring it up towards the end of negotiations, but most generally it does come up.
For years I have said if you buy one widget it costs a certain price, but if you by a carload, you should be able to get a better price per widget. In this same way, when moving people from buying a week or month at a time to buying an annual there needs to be some monetary incentive.
Having between 70%-80% of the billing on the books prior to opening a new month has really been a help for me and those long term contracts are a beautiful thing. It also keep a customer locked in for the full term of the contract so you don't have to keep selling them again every month.
I am not suggesting 50% discounts, but when negotiating but not giving anything on a point that the client considers important enough to bring up, we are shooting ourselves in the foot. I would rather sell rate card to all of my clients and I do for the most part. However, when I was buying advertising, if there were no incentives to buy a longer term contract, I just wouldn't.
Giving bonus ads is pretty much the same as discounting the rate so that makes no sense as an answer, as you then need to add the bonus ads into the mix to figure the average rate anyway.
I have had sales trainers say, well they know they will get placed where if they are not on contract, they might not get into the log if it is sold out. When I was buying(for a small very focused business in a large city), if I couldn't get onto the station I wanted I found a company that fit the demographics as best as possible and see if they were hungry enough. But what is a clients incentive to buying a long term contract if there is no rate per ad consideration?
My answer has been, buy the boxcar load and I will give you a better price. Want one widget? Here is the retail price. Most businesses understand the concept of buying in bulk.
Daryl, one item to consider is your station's cancellation policy -- in other words, how firm is the "annual commitment" on the part of the client? Many stations have a "two weeks notice" policy, meaning that the client can place for 12 months and cancel at any time with two weeks' notice.
If your station does this, you can say to the client, "Here's your incentive. Place for the year now and you'll be protected from rate hikes and being shut out during high-demand times. And if business conditions change, you can get out of this by giving us two weeks' notice." Explained properly, it's a no-brainer for the client.
If your annuals are firm, you obviously can't use this, but 75% of the stations I encounter offer something like it.
Dr. Phil is right on. Most places should be into the two week or sometimes 30 days cancel policy because economic situations change and you want the client to perceive your station as willing to work with them if a problem arises. Two other points to consider are: submitting initial rates at a point that enables discounts that are acceptable to your company and knowing that bonus spots usually become the minimum acceptable "norm" for future business with that client. :
I don't offer discounts based on volume because we are usually so close to being sold out during prime time, the rates are pretty firm.
$100 a minute is our standard rate for prime time and when are 90% sold in a daypart, that's what clients pay. We are between 75% and 95% sold out for all of 1st Quarter 2016.
Like what Phil Bernstein mentioned, we have offer either a 2 week or 30 day cancellation policy. Next week I am going to an advertiser that started with me in February 2015 and only wanted to do 13 weeks at a time. After her first two contracts, we had to raise her rates due to inventory demand. So she signed up for 6 months.
Now, I'll be presenting her with a 12 month agreement that offers rate protection. This is what she should have done originally but she wasn't comfortable with that last year. Also, I have been the only advertising she has done continuously since she began 11 1/2 months ago.
I have added some extra bonus spots on rare occasion, but not as part of the regular negotiation. I had a client bump up their December schedule from $1500 to $10K for the month and so I added some ROS 30's.
I was taught not to discount the spot but add to the value. By knowing what is important to the client, even personally important, you can give them 'perks' that are important to them instead of discounting the per spot rate.
I had a client that loved the local high school football team. He had been a part of the team growing up. A 'perk' I gave him was having the coach select a player of the week and we offered a one minute feature that played several times each week, sponsored exclusively by the client that signed that contract. As I recall, I found several little 'perks' like that which took little inventory and just a small bit of work to execute.
The 'perks' were meaningful to him personally and in the way he positioned himself in the community. You might say it was the glue that held it together.
I did bonus spots for an AC/Heat company in an oddball way. On the first cold snap I ran a heavy commercial load talking about how cold it was and how you needed to call my client to be sure future nights would be warm and toasty for them. Likewise, the first hot day, I did the same. It always generated a bunch of calls and first time customers. I doubt we did not than 50-60 units a year for his annual weather sponsorship package of 936 units a year.
I found many clients wanted to be 'til further notice' versus on a firm contract. In such cases, any add ons we offered were spaced out so they were earned after the client had been on for at least 3 consecutive months. Most on what we called TFN orders did stay on continuously, even beyond a year and one of those perks was no rate increase for at least a year after rates increased.
