More readers chimed in with opinions on Home Depot's switch from spot radio to network radio and the effect it and other similar moves may have on radio's bottom line.

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In answer to your request for local input in regard to Home Depot's decision to buy network, instead of local/regional radio:

In 2004, I was working with Mike McHugh of Regional Market Radio in West Palm Beach, to place ads for the Home Depots in central Kansas. He told me that network radio spot buys would be the direction Home Depot was headed this year. Of course, we both were disappointed for the obvious reason, loss of revenue. But as a person who works solely with advertising agencies for the six radio stations in The Salina Media Group, I see the benefits of placing local radio buys, sometimes in addition to network schedules. This allows the agencies to adjust schedules according to the needs of each market. I try, as often as possible, to involve these national companies in local community events.

Here is a recent newspaper article that shows how important it is for Home Depot to be aware of local activity and the need to react to those opportunities.

Contractors are building as fast as they can to accommodate troops and their families. They are moving in every day, but the next big arrival will be in March 2006.

Huge Economic Boom for Fort Riley, Junction City and Manhattan, Kansas Area!

With the return of "The Big Red One", the 1st Infantry Division, to Fort Riley, comes a two billion dollar increase, counting construction, payroll and effects on schools. The 24th Infantry Division is moving in now and growth is already underway! The total population of the Fort Riley community, counting soldiers, families, retirees and employees could approach 70,000 in two years. The boom won't be confined to the post. Since the Army established in 1853, surrounding communities have provided crucial support for the military --- and soldiers have been important to the economy. Housing market has been consistent, with properties typically selling within 40 days of listing. Most will sell between $120,000 and $150,000. The influx of soldiers also will affect commercial development. Both Junction City and Manhattan are getting calls from commercial developers wanting to locate new restaurants and retail shops. Visitors won't recognize Junction City once the new development is completed in a few years. Fort Riley is a little more than one hour driving distance from Topeka to the East and less than an hour from Salina, Kansas to the West.

--Carolyn Carpenter, Salina Media Group
Regional Sales Director for KSAL-AM, KSAL-FM, KYEZ-FM, KSAJ-FM, KABI-AM, KBLS-FM
Phone: 785.823.1111 or 1-800-608-1150

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As we read through this thing, if I am speaking to Home Depot as a radio rep or radio station sales rep, I would want to put these guys on the defense to explain how network radio is meeting their guidelines. To me, there are many key points of their demands that there is no way in hell network can provide.

For example....

Tell me....how can network radio possibly provide local presence? They say local presence is key to their success. How can network radio provide local promotional support, and how can it be their primary focus?

These are the "ideas" for local promotional support in the RFP. I haven't seen Paul Harvey, or Bob and Tom, or Alice Cooper...or any network personality or DJ...showing up at the Jonesboro Home Depot to make a DJ appearance. None. Further, when I took my kids to the "once a month kid builder activity" last month, and built bird houses with The Home Depot guy, I went as a father and citizen..not as a radio guy. And you know what? Me and my four kids were the only ones there. Why? Because it had not been promoted on local radio, there had been no local in-store presence. There had been no broadcasting from the local store. There had been no DJ/side kick call-ins to the local store on Friday promoting the event on Friday. (How did I know? When you have triplet 4 year old boys, you actively seek such time spending activities!) And there damn sure haven't been any "how to" tips attributed to Home Depot on any of our stations. What did network radio possibly promise that would have assured Home Depot that they would be getting this local promotional support that they used to get? Whatever it is, they should be held accountable to getting it. They sure aren't getting it in Jonesboro.

There are no billboards, no live reads, no sponsorships, no gift card giveaways, no traffic and weather sponsorships. And all website presence in this market is going to Home Depot's chief, locally-owned competitor, Barton's Lumber Co. They are getting all of this type of support in this market, not just from us, but from KAIT-TV as well with their Home Makeover promotions for backyards, bedrooms, living rooms, etc. Again, I ask, what did network radio promise that they would do to meet this request. And, again, whatever it is, they should be held accountable to getting it.

After dealing with Home Depot in the past, it is hard to believe that they are settling for a M-Sun 5A-12M rotator. Similar to spot buying? Holy cow....they bought daypart specific, and God help us if we ever ran one out of its daypart, or on the wrong day, or whatever. Again, what did network say to get this deal?

We've all had it happen. Somebody goes in and promises a laundry list of things that there is no way they can perform on. And, assuming things happen as they should, it either doesn't work, or someone finally realizes that they really can't accomplish their goals with what has been promised, or both.

Unfortunately, this process does win an occasional victory. In this case, it is a huge one.

-- Trey Stafford
Pres/General Manager
Triple FM Radio Group (Saga)
Jonesboro, AR

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Read your article and comments...just wondering why you would say what you did regarding switch pitching network radio out of a plan to spot when in today's environment where "radio" as a medium is constantly battling to have a presence altogether and not lose dollars to other broadcast options, you would make such a suggestion... whether we sell network radio, spot radio, unwired radio, or local radio, WE ALL SELL RADIO! I believe our best interests would be not to fight ourselves by making switch pitches, but rather to "switch pitch" the other mediums, ie television cable, print, etc.

There is certainly plenty of advertisers whom we can choose from. As a medium instead of negative selling each other, we as radio people will be much more credible this way; and as a result hopefully bring more dollars into all radio.

--Nancy Dobrow, Jones MediaAmerica.

Editor's note:
She has worked there for the last 11 years and was formerly GSM at WCBS-FM for 10 years and CBS Spot before that.

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I think there are some very important lessons to be learned from what transpired here. The Home Depot will not be the last big advertiser to be faced with this type of decision, and like it or not, the decision for the advertiser is a "no brainer" under the current model. We may be a merger away from this happening within other retail sectors, fast food, grocery or even automotive.

Plus or minus a few dollars I've heard that The Home Depot will deliver the same overall nat'l media goals (TRP's by Market) as last year and that on an annualized basis they are delivering it for 1/3 of the cost. If they spent $100 Million in 2004 (est) they will now spend less than $35 Million. The only difference being 30 second messaging instead of 60 and placement through the network sales channel as opposed to nat'l spot.

I've heard this whole situation get blamed on Clear Channel and LIM, I've heard it blamed on the networks for "poaching" spot accounts, I've heard it blamed on

the rep firms for not having a strong enough relationship with the agency and client as well as some other obscure conspiracy theories.

Put yourself in Home Depot's shoes. If you could save $65 Million from your radio advertising budget and believe you won't lose impact wouldn't you do it? Put yourself in the networks shoes. If new technologies allow you to do things like ad-splits and you have the means to offer localized promotions or added value wouldn't you utilize these tools to add a $35 Million account?

In the immediate aftermath of the decision many groups expressed confidence that the networks "couldn't deliver" on the request. People did not believe the networks had deals that allowed them to match HD's daypart restrictions, people didn't believe the networks had the capacity to offer localized promotion and people didn't believe the networks had access to enough inventory fitting these tight parameters to deliver the necessary weight.

While I don't believe all the data is in yet regarding HD sales figures and actual network clearances vs booked, both Initiative and HD obviously felt the networks could deliver or else they would not have moved forward.

I think the big lesson for all here is that you have to carefully manage the "access points" to your inventory and make sure there is integrity to the system. No sales channel should have access at dramatically lower price points without there being tremendous limitations (preempt-able, ROS etc). You wouldn't give one of your local reps rates that were dramatically lower than the rest of the staff selling the same inventory yet this is exactly what has happened in the nat'l world.

The lines have been blurred by technology, relationships and consolidation. You can no longer think of local, national and network as mutually exclusive sales channels. We all call on the same people. Control what you can control and make sure that the "access points" to your inventory stand up to a structural integrity test. If they don't it's time to re-evaluate some deals and make some difficult decisions. If you're a small market guy this is even more important. In some cases you're getting the national spot you are because the advertiser has chosen 60 second creative and it's not available via the networks. HD is the prime example but there will be others.

Small market groups are at the greatest risk here. It's not surprising that Cumulus was hit hardest. Chances are that there is a lot more network inventory available in smaller markets since they tend to import much more of their content. With small market demand not being what it is in the top 25 or 50 many of the owners have done aggressive barter deals that give access to prime inventory at very low rates.

Additionally, these smaller markets depend on a small list of nat'l accounts to feed them. For some owners Home Depot may have been north of 10% of their business. Therefore, it's even more important for you small market guys to exercise discipline and integrity through your different sales channels.

-- I would appreciate it if my identity here was simply

"Ex-Rep Guy"