(By Paul Weyland) Have you ever wondered why we’re back at 1980s spot rates? Well, you can thank our friends at the advertising agencies, as well as our own poor negotiating skills. Imagine being present at the scene of the worst negotiation ever … between an advertising agency principle and a television general manager.
Agency guy: From now on we’re going to buy you differently.
Broadcast guy: What do you mean?
Agency guy: From now on, we’re going to buy you based only on this single snapshot of your audience size. But if this audience size shrinks, then you owe us more commercials.
Broadcast guy: Gee, OK … so if our audience actually increases, then you owe us more money, right?
Agency guy: No. Absolutely not.
Broadcast guy: OK, then we’ll do it!
Brilliant? Not so much. But that didn’t stop some radio companies from cutting the same deal with the agencies some two decades later.
Now the agencies are needier and greedier than ever. They send their buyers to schools to teach them how to outnegotiate us. Besides posting, they also want free promotions, cheaper rates, free spots, free production, and other “added value.” And in exchange for all of this we pay them their 15 percent commission (it could be worse; in other countries advertising agencies also demand an additional 15 percent “kickback”).
I have seen a media salesperson break into tears after returning from a negotiation with a circus that recently went out of business. She said she felt like she needed a shower. Many of you are aware of a huge home improvements chain that is just as bad. They dangle the carrot, and somebody in the market will cave.
How to fight back?
Reframe your short- and long-term goals. Change starts now. Rearrange the rules so that they’re more favorable to you. In exchange for a lower rate, restrict programs and dayparts. Redesign the playing field so that you’re starting from their 20-yard line instead of always laboring at yours.
Just say no. Stop kowtowing to outrageous agency demands. If they want more, you ask for more. If they take something away, you take something away. A good negotiation means that both sides feel as though they have won. A handful of free tractor pull tickets won’t help you pay the bills.
Prove your worth to business owners by wowing them with better marketing ideas. Once they are 100 percent convinced that your plan for their success is better than theirs, they’ll pay a higher rate for a better campaign.
Use an ROI analysis to back up higher rates and larger orders. All you need is the client’s gross margin of profit and average sale to command bigger orders. (I have a PDF chart on my website with about 80 gross margins of profit for different product and service types.)
Train your sales staff to sell more long-term local direct business. Pay higher commissions for annual local direct business. Sell out at higher local direct rates and bump the cheap agency spots.
Deal sternly with any local agency that is telling your clients that they can buy your station cheaper than the client could buy it from one of your local reps.
Strengthen your relationships with local business leaders. Be more active in civic clubs and the Chamber. Join the country club. Hang out where they hang out.
Remember that your station has value, regardless of market size, format, programming, or ratings.
Paul Weyland helps broadcast stations interested in selling more long-term local direct business. Purchase Paul’s books at www.paulweyland.com. Bring Paul into your market to meet with your clients. Reach out to him at 512.236.1222.