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Saturday, January 24, 2009

Should You Ride on the Value Added Express?

This past week several people in my sample of sales people, broadcast and cable media management, and agency media departments mentioned the same issue to me. They said, in essence, that as the economy has weakened, advertisers are getting increasingly noisy about needing value added extensions to media buys.

The value added takes all forms from complicated promotions to as little as a billboard leading in to the sports news or the weather update. Do they work? Usually they do not hurt but their utility certainly varies.

Radio stations have historically had to do frequent promotions and, as a general rule, are far better at them than TV stations. Also, they have more flexibility with their air time than their TV and cable competitors.

Advertisers are also forgetting than TV and cable enterprises have been effected by this recession too and have cut back staff, sometimes significantly.

So, what should advertisers do? It seems pretty obvious to me. Negotiate hard for price. People need your money now more than ever. And, ask for bonus spots and ask again. With domestic auto spending at historic lows and other categories savaged as well, there is inventory available to reward current advertisers. They can execute it--little staff time is involved to drop in some no charge units. In a previous post, I mentioned that DVR penetration and channel surfing is hurting TV's effectiveness. While this is true, someone will see your bonus spots.

A clever boxer does not need a knockout punch. You can win by pouring on the points with the ultimate value added tool--no charge units. Play to the current weakness of the broadcast and cable marketplace and save your promotional energy and that of the media for better times.

For the moment, our suggestion is to hop off the value added express.

If you would like to contact Don Cole directly, he can be e-mailed at doncolemedia@gmail.com

1 comment:

  1. Lower spot prices and bonus units are some of the best value added available. And these days, you don't have to ask for the lower prices; stations just offer them to you. Some of the biggest radio stations in large markets are having a "50% Off Sale." Inventory is plentiful so bonus spots are often there for the asking.

    Radio negotiating is really a different game from what it was years ago. In fact, it can be a dual-edge sword. Many, many yeeas ago, you negotiated a low rate in radio, and the salesperson took care of having the schedule run. These days, with the sophisticated computerized scheduling systems, the buyer might think he or she negotiated a rock-bottom rate, but the computer preempts the spot or shoots it to the periphery of a broad daypart rotation. In fact, in normal economic times, some stations have a grid system with which everyone pays the same price, from the largest to smallest clients.

    Making a good buy these days takes skill but a somewhat different skillset than in the past. Nowadays the best negotiators have a feel for the lowest rates that will clear and run in a good rotation. Staying on top of the salesperson during the schedule is part and parcel to placing a schedule that airs at favorable times. Sometimes inputting the schedule with a certain code prevents or lessens potential problems.

    But gone are the days when a radio buyer could negotiate low rates and attract the adulation of the boss and the client.