A deal has been struck between Local Focus Radio and Initiative Media for 2009 Home Depot annuals. The agency, like many others representing large accounts, are requesting and negotiating deep discounts over last year. Local Focus was chosen to service the 150 non-repped, un-rated and/or rural radio requests. This, as part of a national offer to rep firms from Home Depot/Initiative.
From what we’ve heard, the 35% rate decrease request—driven by Initiative (currently under review with Home Depot-see related story in AdBiz)—is based on similarly lower wired/network rates (see email correspondence, below). If you want to keep the spot business, you have to be competitive with wired rates, simple as that, and that is what Initiative expected.
This is the business environment that we’re in. Local Focus is taking the request to market, so it will be up to the stations to decide if they want to play. No stations are being forced to take the discount. Remember, Home Depot isn’t a huge account anymore for spot, but is for wired. So stations may just balk.
Says Initiative Media Director for Atlanta and NYC Joe Cerone: “The radio markets are extremely negotiable right now. We’re actually surprised what we’re seeing, how bad it is. I think that goes for television as well.”
While Initiative did not leak the news to RBR/TVBR, they had to decline further comment because they cannot discuss negotiations on behalf of their clients.
Local Focus has serviced the Initiative/Home Depot business on the West Coast for years now. On the East Coast, Regional Reps was in there as well. A few weeks ago Local Focus/Focus360 met with Initiative to add the East Coast and unrated markets. The request was granted.
We received a Local Focus Radio rep’s email to client stations mentioning the offer. As far as forecasted activity for 09, the agency has suggested that the same markets and weeks will be active. Overall budget is down, but activity is consistent to what was experienced in 08. Some estimates will still come down as :30s only, but THD does see the value in :60s and wants both to be considered. The agency is expecting -35% rate DECREASES over last year, said the email. "You may not get bought unless you lower your rates from 2008 significantly. They are NOT calling this a ‘discount’; but an accurate appeal based on market conditions."
RBR/TVBR observation: Certainly, in this stressed economy, a lot of media are discounting to get the buck. Of course, each station has the right to take the business or not. Simultaneously, RBR has heard these type of stories are out there. Are people taking this kind of business on a widespread basis or not? If so is it a dangerous trend? Maybe it just depends on what kind of inventory each station has available.
Bottom line, it’s good that Home Depot and Initiative came to the industry with this offer—it means they still believe in the medium. But for radio, make sure you are pricing your inventory correctly, because if you drop your rate too many times, you won’t ever get it back.
The only way we’re going to be able to bring up the national spot dollar is stations have to build more asset value besides just their analog system. They have to incorporate and engage into the internet as well. Radio has to get that old media connotation off of their head. To revitalize the medium, people are going to have to utilize all assets to their advantage—establish solid local websites to where they utilize the analog signal to drive a lot of traffic to their website for more content. More programming content is needed, beyond the on-air signal. More and more listeners are getting radio from the internet and internet devices. There is no harm in driving them to all of your internet properties and programs if you have advertisers supporting it. New ideas from the entire staff—and the entire staff should participate on the web portal of the station.