RAB Radio Training Academy
Strategic Pricing: Is Now The
Time To Offer Guaranteed
Advertising Results?
Mark Levy
VP/GSM
mlevy@rab.com
Mike Mahone
Exec. VP
mmahone@rab.com
RAB Radio Training Academy
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RAB Radio Training Academy
PDF of slides
• Will be available
• Watch your e-mail
for a link to an
evaluation and
the PDF.
RAB Radio Training Academy
Problems
•
•
•
•
Everyone is cutting rate
CPP is dropping like a stone
No integrity in the business
If I drop my rates to get the
business, I’ll never get them back
up
• If I don’t drop my rates, I don’t
get on the buy
RAB Radio Training Academy
Submitted For Your
Consideration:
What’s a better course of action
for your stations’ short- and longterm health? Taking a risk on
Guaranteed Advertising, the odds
of which you can tilt in your favor
or continuing to offer “Buy one,
get one free” when the inventory
demand is low?
RAB Radio Training Academy
An Idea to Submit for
your Consideration
• These problems all stem from
letting others tell us what we are
worth. IF clients (and our own
sellers) believe we are worth
what we ask, rates are much less
of an issue.
RAB Radio Training Academy
Rate Classes
• MAY be the tool that allows
us to quit being at the mercy
of others who try to price
our inventory for us
• May allow us to get our
integrity back… a weapon
against “Dive! Dive! Dive!”
RAB Radio Training Academy
Yes, A Super Premium Rate
Class Based on Guaranteed
Results
• Based on client/ station
partnership
• Station needs to have trust in
the client (more on that later)
• Station can charge maximum
rates because CPP or CPM is not
a factor
RAB Radio Training Academy
How Does “Guaranteed
Advertising Results” Work?
1) Based on station and advertiser
agreeing that a schedule will run and
something that BOTH PARTIES AGREE
ON will happen
2) Based on sales, lead generation,etc.
3) Station runs HEAVY schedule at
premium rates.
4) If agreed upon action does not happen,
station reruns schedule
RAB Radio Training Academy
How Does “Guaranteed
Advertising Results” Work?
1) Necessary ingredients include:
a) “checks and balances”
b) A Set Of HARD FAST RULES
c) A Solid Marketing Plan
d) Staff Buy In
e) Oh yes, and a good set of
spreadsheets!
RAB Radio Training Academy
Pros:
•
•
•
•
•
•
Differentiate yourself from competitors
Insulate yourself from ratings wobbles
Get more LARGE schedules at premium
rates;
Move your stations out of “Commodity
Mode;”
Develop deep, long-lasting partnerships
with clients
Help reduce risk clients have in doing
business with you
RAB Radio Training Academy
Pros:
•
•
•
Forces a collaborative effort
between client and station (not
just seller) to SOLVE CLIENT
PROBLEMS IN A PROFITABLE
MANNER FOR STATIONS
MUCH greater transfer of
information
Takes focus off CPP, rates, etc.
and focuses it where it should be:
generating measurable action
(not necessarily sales results) for
the client
RAB Radio Training Academy
Pros:
•
•
•
•
•
Great way to drive rates
Helps SELLERS focus on writing
large orders
Helps copywriters learn to quit
putting filler in spots … every
word counts!
Forces interaction with manager
and seller
Uniquely positions your station(s)
in the advertisers’ minds
RAB Radio Training Academy
Cons:
•
•
•
Station may have to rerun
schedules at no charge
You may have to tell some sellers
and clients that they can’t do it.
The station may be told “your
parameters for this are
ridiculous!”
RAB Radio Training Academy
Foundations of “Guaranteed
Advertising Results?”
1) Good Customer Match
2) ROI (Return on Investment)
3) DEEP Client information
4) A Solid Marketing Plan
5) A Set Of HARD FAST RULES
6) Staff Buy In
RAB Radio Training Academy
It’s Not Price if the Customer
Values the Product …
Who Values Yours?
• Common Sense
• Local Qualitative Research
• MRI Gold Digger Reports
RAB Radio Training Academy
Matching Listeners to Prospects
RAB Radio Training Academy
ROI plays a huge part in
offering guaranteed advertising
results…but just what is ROI
and how can it be defined?
• Answer: “Return on Investment: what
one should expect to gain in return for
an expenditure of time, effort, and/or
money. The word ‘should’ is important
to the definition, as what one “pays” for
something is NOT ALWAYS an indication
of its value. The value, as you might
expect, lies in the eye of the beholder.”
Antiques Road Show
RAB Radio Training Academy
Good News
• When used correctly -- and at the
right time -- ROI can be an
amazingly effective tool to “reduce
the risk” a client may feel before
doing business with us
RAB Radio Training Academy
Bad News
• ROI isn’t as simple as pulling out
a calculator and saying, “The
numbers say you should see a big
increase!”
RAB Radio Training Academy
ROI as a Component of
Guaranteed Advertising
Results
• ROI’s Role in Managing Client
Expectations – The History Book!
• How do should you calculate it?
– Units Sold, Prospects, ?
RAB Radio Training Academy
Why The Emphasis On ROI Now?
• More competition for ad dollars
(new sources)
• Greater sense of fiscal responsibility
brought on by Wall Street
• Fear on client’s side of making a
mistake … the end of the
entrepreneurial spirit?
• Clients smell the fear on us too
– Do your sellers call clients in the middle of
their flights to see if the flight is working?
Why not?
RAB Radio Training Academy
To REALLY Do It Right…
All the basics … plus
• Past 12 months gross sales, at
least by quarter, and if possible by
month
• Average ticket
• Total # sales transactions (by
quarter or month if possible)
• Closing %
• Average % of gross profit
RAB Radio Training Academy
Info Needed (cont’d)
• Amount invested (NOT SPENT)
in advertising in last year, again,
by quarter and/or month, either
dollars or % of gross sales to
achieve past sales
• How money was allocated
• Projected sales for next 12
months ?
• Do your sellers regularly get this
information?
RAB Radio Training Academy
Info Needed (cont’d)
• Projected Average ticket change
(up or down)
• Projected closing % change
• Projected amount to be invested
(NOT SPENT) in advertising in
next 12 months, again, by
quarter and /or month, either
dollars or % of gross sales
• Use a calendar
RAB Radio Training Academy
Use a Calendar (Sample)
RAB Radio Training Academy
Now, Let’s Look at ROI as a
Component of Guaranteed
Advertising Results: Tools to
START you on your way
• Yes, you will get working copies
you can use at the station level!
RAB Radio Training Academy
Return-On-Investment Calculator
RAB Radio Training AcademyReplace any number in RED
Average Sale
Profit Margin
Adv Investment
Station Cume
Number of Sales
1 Sale
2 Sales
3 Sales
4 Sales
5 Sales
6 Sales
7 Sales
8 Sales
9 Sales
10 Sales
20 Sales
30 Sales
40 Sales
50 Sales
100 Sales
R-O-I
-60%
-20%
20%
60%
100%
140%
180%
220%
260%
300%
700%
1100%
1500%
1900%
3900%
$20,000
6.0%
$3,000
50,000
% of Cume
0.002%
0.004%
0.006%
0.008%
0.010%
0.012%
0.014%
0.016%
0.018%
0.020%
0.040%
0.060%
0.080%
0.100%
0.200%
How to read: If an auto dealer's average sale is $20,000, with a profit margin of
6%, and the dealer invests $3,000 on your station, then with 1 sale, the dealer
loses 60% of the investment. With 2 sales, the dealer loses 20%. With 3
sales, the dealer's return-on-investment is 20%! The "% of Cume" column
shows the percent of your audience that buys from the dealer. If the your cume
is 50,000 and the dealer makes 10 sales, that is 2 one-hundredths of 1% of
your audience that buys.
Calculating ROI: Sales
Calculating ROI: Prospects
Mark Levy version
Return-On-Investm ent Calculator: Replace any # in RED
Avg # prospects per w eek
10
Avg # sales
2
Avg sale
$15,000
Prospect Value
$3,000
Profit Margin
6%
Ad Investment
$5,000
Station Cume
Prospects delivered
50000
ROI
Prosepect % 0f
# Probable
Cume Sales Profit from Sales Amount of Sales Sales-ADV net
1
-40.00%
0.002%
0.2
$180
$3,000
($2,000)
2
20.00%
0.004%
0.4
$360
$6,000
$1,000
3
80.00%
0.006%
0.6
$540
$9,000
$4,000
4
140.00%
0.008%
0.8
$720
$12,000
$7,000
5
200.00%
0.010%
1
$900
$15,000
$10,000
6
260.00%
0.012%
1.2
$1,080
$18,000
$13,000
7
320.00%
0.014%
1.4
$1,260
$21,000
$16,000
8
380.00%
0.016%
1.6
$1,440
$24,000
$19,000
9
440.00%
0.018%
1.8
$1,620
$27,000
$22,000
10
500.00%
0.020%
2
$1,800
$30,000
$25,000
20
1100.00%
0.040%
4
$3,600
$60,000
$55,000
30
1700.00%
0.060%
6
$5,400
$90,000
$85,000
40
2300.00%
0.080%
8
$7,200
$120,000
$115,000
50
2900.00%
0.100%
10
$9,000
$150,000
$145,000
100
5900.00%
0.200%
20
$18,000
$300,000
$295,000
How to read:
All of this is based on what the client tells you! Garbage in, Garbage out!
If a store averages 10 customers a week and gets 2 $15,000 sales a week
that means a prospect value of $3000. Remember, not every prospect is a buyer!
Your job is to deliver qualified prospects!
If your schedule delivers 1 prosepect , and the cost of the schedule is $5000,
the buyer has a -20% ROI or -$2000 net investment.
If the same schedule delivers only 5 prospects, the buyer has a 200% ROI,
and a + $10,000 net investment!
RAB Radio Training Academy
Promises Promises!
• At the end , we will show you a
more “in depth” spreadsheet to
help you do “long term math for
guaranteed results.”
RAB Radio Training Academy
Guaranteed Advertising
Results: Extremely
Important As Part Of
Your On-Air
Campaign…TO ATTRACT
ADVERTISERS!
RAB Radio Training Academy
Marketing Tools
• On-air marketing campaign
(you should have one at all time –
don’t give it all to programming)
• Tri-folds
• Stuffers in bills and statements
• Fax cover pages/e-mail signatures
• Website
• Business cards
RAB Radio Training Academy
Guaranteed Advertising Results:
An Integral Part Of A SALES
Marketing Campaign
• A positioning statement that means a
heck of a lot more to your advertisers
than “The Work Escape Station,” “The
Home of Continuous Country
Favorites,” or “The Best Mix of the
’60s, ’70s, ’80s, ’90s, and Today!”
• It can do more to differentiate you
from your competitors than just
about anything else…if it is right for
you
RAB Radio Training Academy
Yes, Guaranteed Advertising Results!
Our Company knows how important it is for your business to
achieve its marketing goals. To reach them, your advertising
has to be on target and cost-effective. Wouldn’t it
be great if it were also guaranteed
to pro-
duce results?
Let Our Company Give You That
Here is how it works: OUR COMPANY offers this type of guarantee to clients running “System Schedules” simultaneously on stations A, B, C and D. All
parties agree ahead of time to exchange information based upon a needs analysis. Items
covered include past marketing efforts, including expenditure levels, as well as what good
performance will look like, and how it can be
verified. Copy must be approved by OUR
COMPANY management. After the schedules have run, an analysis
of the sale will be made. If the agreed upon expectations were not
met, OUR COMPANY will rerun the schedule at no charge in a like
week after receiving payment for the original schedule (certain week
restrictions may apply due to inventory demand).
“Why would we do this?”
It’s simple. We know that
radio advertising motivates
people to action, and that our
stations combined reach
more of an audience than our
local newspapers or
television stations. We expect
our clients to get good
results, so much so that we
are willing to guarantee our
results!
“What is a ‘System Schedule?’” It is a scientific scheduling approach developed to
reach any station’s audience
an average of 3 times in a
week. To do this, one must
“reach out to a stations audience on a twenty four hour
basis with enough frequency
to turn “Just lookers” (people
really only thinking about
buying) into shoppers. Studies have found that in general, this results in schedules
of 45 to 55 commercials per
station per week.
RAB Radio Training Academy
We Don’t Think You Will
Find
Any Other Radio Stations,
Television Stations
Some people put
“The ROI Math”
right here
Guaranteed
Advertising
Results
Or Newspapers
Presented By
Making You A Guarantee
Like This!
Call Today And Start Putting
Guaranteed Advertising
Results From
OUR COMPANY
To Work For You!
Call
Contact Name
at
(555) 555-5555
Your
Log
oHe
re
“Helping Our Clients Increase Their
Profitability Through
Better Marketing
RAB Radio Training Academy
Submitted For Your
Consideration:
What’s a better course of action
for your stations’ short- and longterm health? Taking a risk on
Guaranteed Advertising, the odds
of which you can tilt in your favor
or continuing to offer “Buy one,
get one free” when the inventory
demand is low?
RAB Radio Training Academy
Guaranteed Advertising with
Maximum Upside and
Minimum Risk-
It’s All In The
PLANNING And
ROLLOUT
RAB Radio Training Academy
You Will Need to Address
• Having your sellers get MORE AND
DEEPER information than most
sellers ever get
• Maintaining creative control
• Scheduling
• Pricing
• Agreement with the client over
what good performance will look
like
RAB Radio Training Academy
You will need to address (cont’d)
• Agreement on the verification
process
• What you will do in the event the
campaign does not produce the
desired results
• Rock-solid payment terms
• The client’s signature on
everything
• Your “outs”
• The fact that not all clients
qualify
RAB Radio Training Academy
Station Must Have
Creative Control
Bad Copy = No ROI!
RAB Radio Training Academy
Scheduling
• Guaranteed Advertising should ONLY
BE OFFERRED ON HEAVY FLIGHTS
where you have a good chance to
deliver the ROI: 50, 70, 80 commercials
IN A WEEK, Monday-Sunday 24-hour
equal distribution (the “2nd and 3rd shift
prime” buyers)
• CHILL! Clients spend $5,000, $10,000,
$40,000 a day in a single newspaper,
with no guarantee. We don’t get
because we are afraid to ask.
RAB Radio Training Academy
Scheduling (con’t)
• Look at doing these in the lesser
demand weeks of the month (often
first two weeks of the month).
• Schedules are non-cancelable
• This is not for all clients!
RAB Radio Training Academy
Pricing Based on ROI
• With Guaranteed Results, we price
upon our GUARANTEE that we will
meet the client’s objective(s). This
means a minimum of a 25-35%
premium!
• CAREFUL! Clients can figure out math
too -- if you double your prices, they
will view you as hedging your bet that
the schedule will fail, and you are just
“gouging” them upfront!
RAB Radio Training Academy
Performance
•
•
Guaranteed Advertising can be
based on sales, but other things
it can be based on are lead
generation, web traffic, phone
inquiries, requests for
information, store traffic, etc.
This is the place that many
stations, after looking at the past
history of the client’s success, or
lack of, decide to walk away.
RAB Radio Training Academy
Performance
•
•
HINT: If your gut says “no,” it is
probably right
“Secret shopping” to back up your
hunch
RAB Radio Training Academy
Verification
• There IS an element of trust at play
here, but handshakes won’t cut it!
• Written agreement is a must -legitimacy and legality
• Notarized (hey -- you notarize
affidavits!)
RAB Radio Training Academy
Payment Terms:
Another way to monitor who you do
Guaranteed Advertising with
• 100% up front for anything less than
perfect credit
• 100% up front for new clients
• Okay to bill really good clients? Ask, “Will
they pay if we have a misfire?” You need
some commitment!
• You need client signature on
EVERYTHING!
RAB Radio Training Academy
Your “Outs”
Terms that allow you to graciously
walk away if you are uncomfortable:
• Client information
• Copy
• Client credit
• Result verification
methodology
• Potential to deliver client’s
needed ROI
• Payment terms
RAB Radio Training Academy
Misfires
• They will happen
• Run complete schedule in similar
week-if you leave this open for
interpretation, a client may try to
force you to air in your peakdemand weeks
• Be fair and ethical
• Use them to prove your credibility
• Any worse than “Buy 1 get 1
free?”
RAB Radio Training Academy
“What About A Sample
Agreement?”
• That will be sent to you at the
conclusion of this webinar
RAB Radio Training Academy
Staff Rollout- THE BIGGEST
PITFALL OF ALL!
• Need to impress upon staff the
importance of what it is that you
are doing!
• Positioning as a market trendsetter
• Faith in the team
RAB Radio Training Academy
“Weird” Staff Objections
• “Why can’t we guarantee all our
flights?”
• “Does this mean that smaller
flights won’t produce results?”
• “Why can’t I take this to all my
clients?”
RAB Radio Training Academy
Now Use Your
“Guaranteed Results ROI
Calculator”
And See If
It Makes Sense…
RAB Radio Training Academy
Summary
• Someone will do this in your market. If
you do it first, you are a trendsetter. If
you don’t, you WILL be playing catch-up.
• Offering Guaranteed Advertising FORCES
you to be on top of your game …
purchase cycle, likelihood of purchase,
recognizing good offers … USE YOUR RAB!
• It also allows you to get the information
you need to be ahead of your
competitors!
RAB Radio Training Academy
Summary
• The information you collect will help your
sellers write more and larger schedules
than they currently do, even if they are
not at the Guaranteed Advertising level.
• You will have some misfires. USE THEM
for credibility’s sake.
• You take giant steps towards getting
YOUR MEDIUM, and your stations in
particular, out of “commodity mode.”
RAB Radio Training Academy
Final Musings
• Every time we offer a free commercial,
we devalue our own product
• Hence the question, “Is offering
Guaranteed Advertising Results worth
the risk, especially on a station where
inventory is plentiful?”
• Remember “The 22 Immutable Laws of
Marketing?” The number one law is the
law of being first. Someone in your
market will probably launch this. If it is
not you, you may find yourself chasing
your competitors with the old “me too”
mentality.
RAB Radio Training Academy
Strategic Pricing: Is Now The
Time To Offer Guaranteed
Advertising Results?
Mark Levy
VP/GSM
mlevy@rab.com
Mike Mahone
Exec. VP
mmahone@rab.com