The new generation of radio revenue specialists PART II
(from RBR/TVBR's February Solutions Magazine available in Digital reading. By Carl Marcucci)
There's a quiet revolution underway in radio sales. A new generation of radio revenue "specialists" is challenging the way business is done in 2006. These new companies are filling a need in a time of change. Each has a different way of getting to the same place. There are at least four unsold inventory specialists out there accomplishing similar objectives, but with different ways of getting to it and some very different bells and whistles: dMarc Broadcasting, Bid4Spots, Marketing Architects (which declined to be interviewed for the story) and Soft Wave Radio.
[regarding Google's deal with dMarc] Marc Guild, Interep's President/Marketing, tells RBR/TVBR that to date all of the radio station owners he's talked to will be up in arms about this. As well, isn't this inventory already represented by the rep firms? "Contractually, it has to go through Interep," he says.
What about when the contract runs out and stations want to sell the Google/dMarc ad buys direct? "I'm sure we will have to fight it," Guild predicts.
Regarding advertisers transacting directly with stations for inventory that would have been repped by Interep or Katz, Tim Armstrong, Google VP/Advertising Sales, tells us his company has a very similar business on the Internet where there are both people who sell directly and third parties involved in the process. "And we've been able to build what really equates to a very large, healthy business for all constituencies that we deal with. I think the best premise...is to do things that the customers want to do themselves. For the market to be its most healthy, it's an ecosystem. The bottom line is the ecosystem has many different components of it. The tools that dMarc and Google have allow for different groups of people to use them in different ways. That may be third parties, it may be people directly. Instead of a zero-sum game where people feel they may or may not benefit from this, I think you will see a growth of the overall ecosystem."
Eventually, Google and DMarc will be connecting their ad networks together and give advertisers the ability to see both web inventory and radio inventory that could be impactful for them. They will be competing with Westwood One, Premiere, Katz, Interep, etc.
Kathy Crawford, MindShare President/Local Broadcast, says she understands why one might think this might curtail the need for the reps, however, "I'm not convinced we're going down an inevitable path today. I think we all have to take a deep breath and say, 'Where are we really going?' Google has jumped into a bunch of things lately. Google does one thing very well. Are they going to do six things very well? This dMarc platform has only been for certain types of inventory for certain types of clients. I had a conversation with them after looking at their site. I said I wanted very specific rating points and dayparts and they couldn't offer it. Based on that, I would call it remnant. They say this software package will eventually allow me to buy exactly the same as I would through a rep. Let's crawl before we walk and find out what this is really is before we pronounce death to the rep."
She adds, "This has to be in conjunction with the stations, so the real determiner will be with the sellers, not the buyer. Will they embrace it? What do stations use the rep for? I can tell you they have done a terrific job of supplying the buyer with things we need-for instance they have solved electronic invoicing problems. They have given us buying abilities that we didn't have before. It is quite clear that many people who build software packages who don't understand the business that I'm in and the business that the rep is in, and it takes a very long time for them to actually come up with a product that speaks to our needs. So I'm not so quick to say that it's death to the rep. On the other hand, if this evolves, which it could very easily do, then we're talking another subject. Either way, this is probably a wake-up call to everybody."
With his company Bid4Spots, radio ad veteran and CEO Dave Newmark sports the industry's first CPM-based reverse auction. The model leverages the Internet to offer a flexible, fast solution that increases radio stations' revenues by ensuring that no daypart goes unsold, while helping advertisers get access to radio airtime, often for the first time.
Advertisers create the auction and select the market, daypart, demographic and station format in which they would like their spots to run. They also decide the maximum amount they are willing to spend. Radio stations meeting the market and format criteria are invited to participate in the auction. Stations can pre-screen the advertisers and their spots to determine if they want to bid in the auction. Bidding takes place on Thursdays between 8 AM-Noon (PT) and winning spots air the following broadcast week.
"Functionally, we are simply an electronic meeting place where buyers (advertisers) create the auctions and sellers (radio stations) bid against one another for those advertisers' dollars," Newmark explains. "In this meeting place, the lowest price wins. Financially, we are more like an ad agency in that we are compensated by the radio stations (not the advertisers)."
There may be two stations bidding against one another or two hundred. It depends completely on how the advertiser has created his/her auction. At the conclusion of the auction, spots may be won by many stations across the country.
Bid4Spots says it has signed up 1,280 stations, representing nearly all the top 300 U.S. DMAs. Nearly 200 advertisers and more than 40 ad agencies are participating.
Good Morning - Gain a personal edge on today's business day. Are you reading this from a forwarded email?
