Ad agencies to advertisers: Go away!

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Dave Newmark high res reducedAs a broadcaster, your job is to make your properties a welcome place for ad agencies.  That’s why it may surprise you to learn that one of the primary obstacles to your ad revenue growth may be that at the same time you are saying, “come on in!”, the message that many ad agencies are saying to the many thousands of small to medium-sized businesses that want to broaden their media buying to broadcast television or radio but don’t have mega-budgets is: “Go Away!”


Recently, I spoke to an advertiser who came to us after having spoken with several ad agencies to help with a $5000 radio buy to promote a contest.  The advertiser said he couldn’t believe how many “media snobs” were unwilling to help with the campaign unless the budget was “a quarter million dollars.”

Get Big or Get Lost

The reason ad agencies don’t want to bother with smaller spenders:  it takes too much work!  Media used to concentrate audiences, so making the buys was pretty easy.  In radio, for example, each city had its top radio stations and each was well-known.  Today, audiences are fragmented so ad agencies have a harder time making the media buys.  Negotiations cross over many more companies to get the same total audience reach.  So, when budgets are small and the buys are difficult, the ad agencies turn that business away.

If an advertiser, having been shunned by an ad agency, decides to go it alone to get a message out using radio or radio-like platforms, which ones do they chose?

In addition to standard radio signals over the air (terrestrial radio), there are services that stream a broadcast signal including iHeart Radio, TuneIn and Rdio (no, that is not a misspelling!) and services that aggregate music or spoken word content such as Pandora, Slacker, Spotify, Rdio and now iRadio from Apple.  Beyond that, there are thousands of podcasts capable of taking ads and even more thousands of “pure-play” streaming stations from independent broadcasters.  It’s enough to make your head spin and enough to turn off most small-budget advertisers.

Advertising is more than Google Adwords

Instead of broadcast and streaming audio or video, therefore, most small-budget advertisers fall back on Google Adwords, Social Media and other word-of-mouth marketing.  These advertisers like the DIY methods of media buying, but recognize their limitations; specifically that at some point messages need to be broadened to secure more customers or users.  These businesses think that advertising on radio or television is the answer, but lack the experience and often fear over-paying and not get a satisfactory Return on Investment.

SMB’s are Worth the Effort

The U.S. Small Business Administration quotes these facts:

  • The 23 million small businesses in America account for 54% of all U.S. sales
  • Small businesses provide 55% of all jobs and 66% of all net new jobs since the 1970s
  • Since 1990, as big business eliminated 4 million jobs, small businesses added 8 million new jobs

Our company is testimony to the power of aggregating small business advertising as well.  Since our company’s inception, over $40 million of radio revenue has been transacted in our system from advertisers who, for the most part, spend just $1000 to $10,000 per week.

Broadcasters can help these small-businesses advertise if the ad agencies don’t want them.  They merely need to help these business owners understand that broadcast is not the same as online advertising.  In online advertising, targeting is the key.  The more companies target customer prospects, the better the ROI (because there is less “waste”).  Unlike server-to-server distribution of audience impressions, broadcast is just what it says:  casting the message broadly.  Some broadcast platforms have fairly detailed audience information, others only age and gender.  So, in order to succeed, advertisers shouldn’t think about broadcast advertising in the same way as online.  In broadcast advertising, the better strategy is to make sure to target according to age and gender but beyond that, broadcasters can succeed by providing as much value as possible out of the buy.  The rewards for such efforts will be great.

–Dave Newmark is Founder and CEO of www.Bid4Spots.com.  He created Bid4Spots in 2005 to enable businesses to buy prime radio airtime at greatly discounted rates and to help radio stations from across the nation monetize their unsold prime inventory each week.  Seeing an opportunity in the nationwide supply of unsold commercial ad units, Newmark, who had been running a successful ad agency with his wife, Patty, devised a “reverse auction” in which radio stations bid for advertisers’ spots (hence the name, Bid4Spots), driving down the price that the advertisers pay per ad unit.