Snatching Opportunity from the Jaws of Recession

Doc Holiday

This recession is causing a great deal of angst in the radio industry, but it is also presenting a real opportunity for radio to succeed by doing what it does better than any other medium. Suggesting that this economy is presenting radio with a great opportunity is not just an attempt to put a positive spin on a bad situation. Indeed, seizing this opportunity will require a lot more than positive thinking. It will require the willingness to consider a change of perspective, an investment of time and money, the commitment and support of management, and sincere buy-in from sales people. That’s a lot to ask at such a bad economic time. Of course, there’s always the other option, which is to hunker down and ride it out. There aren’t many examples of great success achieved against long odds by employing the “hunker down and ride it out” strategy, but it’s probably been argued for many times.

Sure, radio’s nation-wide revenue numbers are significantly down. And company-wide revenues are down for all of radio’s prominent groups. However, it may be a mistake to make decisions regarding what’s best for specific markets, specific stations, and even specific sales people based on a financial overview.

Making micro-decisions based on macro-economics can be risky. It’s the one-size-fits-all philosophy. Perhaps decentralizing the decision making process might be a more sensible way to impact the macro numbers. For instance, deciding that six new radio sales people at a single cluster cannot receive formal training because the company’s total revenues are down might actually perpetuate or exacerbate the problem.

Here’s another example of how segmenting the numbers might reveal a better strategy. Total revenues are down, but there are small to medium markets that were, until the latest reports, actually experiencing revenue growth. Still, the decline in those markets is nowhere near as drastic as that occurring in major markets. Why?

It’s because major markets draw a significantly larger percentage of their total sales revenues from national/agency business. National/agency business is placed largely by media buyers. By the way, that’s an advertising industry title. The corresponding position in most other industries is called a “purchasing agent”.

When you’re selling to purchasing agents, your competitors are other vendors selling the same product or service as you. So, when negotiating with a purchasing agent, the focus centers almost exclusively on price. In our negotiations with media buyers, we agree to lower our prices in exchange for a place on the buy or for greater share, resulting in more inventory being exchanged for less money.

Of course supply and demand also influence price. In a more robust economy, greater demand, and the resulting lower supplies of inventory, gives sellers additional leverage. Unfortunately, those forces are not in our favor right now. Consequently, the inventory-to-investment exchange ratio is being driven downward. There’s another problem with an over-reliance on agency business. Many agencies buy radio as a secondary or supplemental medium.

When a client’s budget is cut, which medium gets eliminated from the mix first? Exactly. Now, don’t take this next point as an indictment against all agencies, but sometimes media buyers place schedules that deliver insufficient frequency. If the results of an agency-placed radio campaign falls short of the client’s expectations, guess who gets the blame? Exactly. When dealing with agencies, sales people have little to no influence over the campaign specifics, but radio suffers the lion’s share of consequences when the results fail to impress. No one said life is fair.

Local-direct business, on the other hand, is generated from a completely different process. The sales person works closely with the actual client. They have the opportunity to analyze needs and to present ideas that are tailored to the client’s unique situation.

The operative word here is opportunity. Unfortunately, there are many sales people who don’t possess the knowledge and skills needed to properly respond to these opportunities. That’s not an indictment of our sales people. It’s just evidence of the need for quality training. If they’ve been in radio for less than two years, they can’t be expected to provide sophisticated marketing analysis and advertising advice unless they have been trained to do so.

Perhaps the phrase “We tried radio once and it didn’t work.” comes to mind.  If sales people are given the training they need to become more effective at securing local-direct dollars and generating better results for their clients, and if management then puts an increased emphasis on the solicitation of local direct business, Radio will be able to control a greater portion of its financial destiny.

Another benefit of focusing on local direct business is that it causes sales people to expand their field of vision when prospecting. When they focus on needs-based selling and local-direct prospects, they start to discover new business opportunities that were not visible to them when they were focusing primarily on transactional accounts. For new radio sales people, this minimizes the perception that all the “good accounts” are taken.

Finally, local direct revenue is 100% money. Don’t misinterpret these suggestions. Radio should certainly continue to aggressively compete for agency dollars. At the same time, if demand for inventory can be stimulated from a larger base of local direct advertisers, it will increase leverage in pricing negotiations with media buyers while offsetting the consequences of agency business lost as a result of the economy.

This great opportunity is actually fueled by Radio’s inherit strengths as an advertising vehicle, which also represents a corresponding opportunity for local advertisers. Think about it. Consumer demand is down but not nonexistent. Some businesses are closing, but not all of them. Not even most of them. There are still many local businesses in your market who are looking for customers and, therefore, still in need of some form of advertising. They know market conditions are very different now and they are willing to consider different approaches from those they used in the past. This is especially true if they’ve primarily relied on newspaper.

As bad as things are for Radio right now, be glad you aren’t in the newspaper business. Local advertisers are moving huge amounts of advertising dollars out of newspaper and they are looking for effective alternatives. They want to maximize their ability to reach their target and they want to minimize waste. They want effective messages without spending a fortune on production. They want affordability and cost-efficiency. They want flexibility and the ability to respond rapidly to market demands. They want internet products that work. They may not know it yet, but what they really need is radio.

They also need sales people who know how to properly manage all these dynamics, and they want to work with sales people who they know they can count on to look out for their (the client’s) best interests.

Again, that’s where training comes in. Some sales people need to learn these skills. Some just need to be reminded of them after years of working in an economy that allowed them to prosper in spite of bad habits they may have developed over the years. It’s certainly true that not all sales people need training. But it’s not out of line to suggest that there are many radio sales people who, if given the proper training, would enjoy significant personal growth while contributing corresponding revenue growth to their company.

Lastly, just think how much of an advantage these sales people will be to their companies when the economy turns around.

Good sales people want to succeed. They want to help their companies succeed. They want to follow leaders who believe in them and who are committed to helping them seize the opportunities that are available to them.

Right now, Radio has a big opportunity to improve the way it does business and to improve it’s standing in the advertising community. Well trained and effectively managed sales people who are focused on serving their local business community will not only maximize the opportunities available today, they will generate even greater success tomorrow.

(source: Doc Holliday, President Superior Sales Training, LLC Doc Holliday can be reached at: 314-852-5111 www.superiorsalestraining.biz Doc Holliday is a 30 year veteran of broadcasting. Most recently Doc was a training specialist with the Radio Advertising Bureau. His primary responsibility at the RAB was instructing students in all sales training courses, in both on-site and online training programs. Doc was also responsible for developing curriculum, content, and materials including the RAB’s e-learning program that blended online training with classroom instruction. Docholliday4superiorsalestraining@charter.net)

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