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					SMART Situational Analysis
Getting Higher Rates

Preface Dealing With Client Level Decision Makers Dealing With Media Buyers Some Ready-To-Use Responses "Why the KFKF/KBEQ Combo is a Bargain" Summary of Tactics

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Preface There are two basic situations where you need to get a higher rate: 1) When a media buyer tells you that your Cost Per Point or Cost Per Thousand is too high, which is tantamount to telling you that she will not pay the rate you charge. When you have a regular advertiser on who is paying a rate no longer acceptable.

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This "Situational Analysis" is about how to get a higher rate than the media buyers and client-level decision makers want to pay. All of the experts will tell you the same thing: what you can charge is directly related to the value of what you are selling and that "perceived" value is more important than absolute value. Once they impart this pearl of wisdom, the "experts" wish you well and bow out. What they say is true but woefully inadequate when you're operating in the real world. Obviously, what they say about establishing value is easier said than done. The "SITUATIONAL ANALYSIS" section SMART will help you through the real-world situations you encounter. Parenthetically, at this point, let's remind ourselves and the "experts" of the only law of economics that Literature and History majors need to know in order to get by in the business world: supply & demand drive prices...up or down. We'll get back to this because it's so damned important. The experts will also tell you that you cannot get the rate you need from a media buyer. The overriding imperative for the media buyer is to buy Radio spots at a pre-determined Cost Per Point. Usually, the Cost Per Point limit requires you to lower your rate. The buyer stubbornly refuses to pay what you want. It's in the media buyer's job description. Therefore you must sell the value of your station to decision makers above her and to the right of her, i.e., the client-level decision makers. Much of SMART is dedicated to getting to the client-level decision makers, establishing and cultivating appreciation for your medium, your station and -- most importantly -- for YOU. SMART shows you how to be appreciated for your professionalism and your own, caring, interesting SELF. But, in the real world of Radio advertising sales, there are many times when your fate rests entirely with the media buyer. In these cases, you do not have a client-level contact and you may never have a client-level contact for many accounts. The guy exists but you're not going to get to him. Furthermore, you are not going to get an audience with someone higher in the agency let alone persuade that person to override the media buyer's mandate to buy Radio spots for a certain Cost Per Point. So, let's remind the experts that oftentimes you either find a way to get the media buyer to allow you to come in at a higher Cost Per Point than the other stations or you lose the buy. This assumes that your sales manger won't allow you to lower the rate you submitted. Good for him because his next decision might be to let your sales assistant deliver spots to the media buyer at the rate she wants to pay. No "selling" needed.

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Since the scenario just described represents the greatest challenge, let's dispose of the situation the experts invite you to pursue first. i.e., getting to higher-ups in the agency and client-level decision makers. We'll come back to media buyers, saving the worst for last. Of course, you can ZOOM right to this situation if it's what you're in need of.

Dealing With Client-Level Decision Makers on Getting the Rate: There isn't much sense in talking about what you can do to get agency higher-ups and client-level decision makers to "perceive" a higher value for your station (than the media buyer might want to pay) if you cannot get in front of these people in the first place. "These people" are in one of two categories: decision makers for 1) the biggest-billing and biggest-potential-billing accounts on your list or, 2) infrequent-billing accounts that may become active at any time. The most valuable SMART marketing tool you have is the "Top 20 Marketing" program found in the INTRODUCTION section. If you have not already implemented this program insofar as your key accounts are concerned, start now. You very definitely need to have a personal relationship with the client-level decision makers at your major accounts and with your biggest-potential prospects. When one of your accounts is making a Radio buy through its agency, you should be in a position to meet with the client, find out what you can do above and beyond airing the spots, and shore up your share of the business. SMART has a "Prospecting For and Developing New Business" monograph in the SALES TRAINING, METHODS & PROCESSES section that gives you step-by-step methods for getting to decision makers. The monograph prescribes a process that takes a couple of weeks to complete. It is not going to work if a decision to use or omit your station is going to be made very soon. In these cases, you are certainly at a disadvantage. The media buyer won't pay the rate. The sales manager won't allow you to lower it. You have never established a contact above or beyond (the client) the media buyer. Besides, going above or beyond her is going to upset her and harm your relationship with her. What do you do? Hopefully, you have a good enough relationship with the media buyer to be able to explain the predicament to her and ask for either her help in getting to the decision makers or her acquiescence to your attempt to meet with and influence the client. You can explain the predicament this way: "My station will not lower the rate enough to hit the Cost Per Point (CPP) goal that you have. I understand the situation you're in: your job is to bring the buy in at the CPP. Your client really needs to be on WAAA for this campaign. We both know that. What I need to do is get to the media director, the account executive, the client, or all three and attempt to demonstrate why WAAA is worth a little more that the other stations being considered and maybe find a way in which WAAA can add some value that might possibly justify the rate. I need your help. Will you clear the way for

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me to meet with these people? I'm certainly not going to undermine anything you are doing. What we need is for the client to agree that WAAA is important enough to this campaign that coming in above the CPP is acceptable. If you cannot help me, I understand. But, please don't hold it against me if I take my best shot at getting the client to see the value of WAAA. Besides, it's expected of me and if I don't make the attempt, I could lose the account." The idea it to get the media buyer to empathize with your predicament and collude with you in solving it. You may or may not be able to get to the client on short notice. You really cannot use the process detailed in the "Prospecting" monograph. It takes too long. You need to call and attempt to make an appointment as soon as possible. Here is the SMART approach: Call or write the decision maker to convey the following points: * The Radio advertising campaign that you have planned will benefit from having WAAA be one of the stations airing your commercials. We have a large audience and one uniquely qualified to purchase your product. I can demonstrate that to you but your media buyer already acknowledges that. Furthermore, our approach to airing commercials is conducive to getting attention and getting response. The problem is that we charge a little more than our competition. If you will give me an opportunity to meet with you, I think I can accomplish two things that are in your interest. 1) I can explain why we are worth a little more. It all comes down to what you receive for what you pay. Basically, WAAA is a Radio station that gets better results for its regular advertisers. It costs us a little more to design and maintain a more effective advertising capability. That's what is different about WAAA: rather than figure out how to cut costs so we can charge less, we have concentrated on spending what it takes to be a more effective for our advertisers. Our regular advertisers pay a little more and are convinced that they get a whole lot more. I think you will find it interesting as to why this is so. WAAA does more than pick up copy at the agency and air your commercial. We work with each individual advertiser to learn how we can help solve marketing problems and achieve marketing goals. We find out what we can do in addition to airing the commercials...what will make the schedule of spots work even better...what kind of value we can add. To make an analogy, you guys make a great car and you know that how it's driven will have a significant affect on performance. WAAA gets involved in driving performance. I'll show you what I mean when we meet.

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I just want a chance to show you how and why WAAA will sell more of your product and why our "cost per sale" will make our "Cost Per Thousand" listeners look insignificant. If you'll give me ten minutes, it will be well worth it to you. Either copy the media buyer on the letter or articulate what you plan to say over the phone as you go for the appointment. So, let's say that you are able to get to the client-level decision maker. Because you have worked hard to build a relationship over time, you need only call and schedule an appointment. You need only refresh the client on why your station is of value. On the other hand, you may be meeting with the person for the first time and starting from scratch in terms of establishing value. In either case, here are some ways to establish value: * Place paramount importance on the value of yourself. Nothing will matter so much as the client's perception of you. You are going to be someone he wants to reward or someone he doesn't care a stitch about. For the most part, you are the Radio station. If you have made a good impression, he will reward you. If you have demonstrated that you care about him and his business and you can help him with his problems and opportunities, he will reward you. Convey that, "I have your interest at heart. I have the expertise to help you ascertain your needs and utilize my Radio station to fulfill them." Business people sometimes like to agree to pay a little more. It is a way for them to express their generosity, power, and ego. Make the point that price is nice but getting results is the most important thing to concern yourself with. Suggest that radio schedules fail every day because the wrong objectives were pursued. Everyone who purchases something wants to be sure that they are getting it at a good price, a price no higher than others are paying. Businessmen, unlike media buyers, care about getting results. If you convince them that they can get better results by doing what you prescribe, they WILL do it so long as the price differential is not substantial. Ask the client to allow you to focus on what your station may be able to do to get better than expected results. If you are able to find something, then higher than expected price will be offset. You may give them an idea that they apply across the board, that they do on every Radio station being used. But, giving them that idea is worth something to them. It's of value and you will be rewarded. In this case, you will be rewarded by being allowed to cost a little more on a CPP basis. Get the client to talk about his business. Know about his business and talk about it yourself. Do more of this than selling your station's features and benefits. Get the client to spend as much time as possible. The idea is to get him to "invest" his time. He will want to have something come of that investment of his valuable time. Emphasize that your station has a lot of advertisers because it gets extraordinary results for advertisers. Imply or state outright that the spots you want to sell him are going to be filled by some advertiser. You want it to be his advertising.

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Convey that there is more to success than the size and makeup of your audience. Schedule Strategy, Merchandising, Promotion, Employee Involvement Plans, Creative Approach, Sponsorship Opportunities...these things are available to advertisers who simply allow the station to provide them. Provide examples of collateral support and success stories. Have a specific plan for adding value to his spot schedule should he decide to buy a schedule on WAAA. If your station had higher ratings in the target demographic, you wouldn't have a problem with CPP in the first place. Go to "Selling Beyond the Ratings" in the RADIO SALES TRAINING, METHODS & PROCESSES section. Read it carefully and pull out what will help you establish a higher comparative value for your station or otherwise convince him that CPP doesn't matter as much as some other aspects of media valuation and your station in particular. You will find excerpts of the most relevant points covered in "Selling Beyond the Ratings" at the end of this Situational Analysis. You may have participated in the "Station Profiling" analysis for your station. Maybe it was finished before you arrived on the scene. That analysis established the unique "features" of your station. Following that, the station conducted a "War Room" exercise where it turned all the features into assets and benefits. Finally, the War Room exercise gave you the ammunition to put into the "Why Advertise" sales piece. Go to the SALES MATERIALS section to find the sales piece on "Why Advertise on WAAA. Go back to the "War Room" data if you need in-depth material on your station's benefits and counter arguments relative to any liabilities and disadvantages you station might have. It is imperative to make a case for why your station can provide something that the advertiser either cannot get elsewhere or cannot get at the same value. Again, remember not to spend so much time on presentation of WAAA as you spend on discussion of the client's business and the client's marketing objectives. Go to the COMPETITIVE MEDIA section of SMART. You will find an comparative analysis of various mass-media costs. Make the point that Radio is so inexpensive what does it matter that your station is $.47 higher than WBBB, if Radio as a medium is $3.50 lower than TV.

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The "idea" of establishing value may not be enough. You may have to simply explain and justify why your station costs more and what can be done to justify or mitigate it. Here are some ways to do that: * Explain that WAAA has a large group of very loyal and consistent advertisers that all have one thing in common: they care more about getting results than getting a low Cost Per Thousand - Average Quarter Hour listeners. (spell this out so you establish a point to use later on, i.e., what is Average Quarter Hour. Most advertisers will think it stupid if it is properly explained to them.)

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Because WAAA has a large, highly qualified audience and an enriched commercial environment it's better than most stations in town. But, its ability to maximize a schedule with smart merchandising and promotion based upon knowledge of the client's marketing objectives is what accounts for the higher-than-average results advertisers obtain. WAAA has a limited supply of commercial availabilities and more demand than most stations. The law of "Supply and Demand" keeps prices a little higher, but the results more than justify the slightly higher price. * * * You pay for what you get. It's trite but true. Everyone knows it. Try us at the rate we charge. See if we're not worth it. Try to get the advertiser to allow you to expand the dayparts. Make the point that you can deliver a lower CPP if permitted to run spots throughout all time periods. Refer to "Selling 7PM-MID & Weekends" in the RADIO SALES TRAINING, PROCESSES & METHODS section for some great rationales on why every advertiser should be scheduled in these time periods. Ask, "Why, because some stations are willing to sell at a low price and have such weak demand that they can do it, does that have to impact negatively on your station. They are cheap. There are reasons for it. Why does that have to eliminate your station? If you are trying to buy so many Gross Impressions for X dollars, cannot the other stations bring in your efficiency?"

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Note: Just in case you thought we might have forgotten about dealing with higher-ups in the agency, you can take the same approach to them as you take to client-level decision makers. Just be very careful not to say anything negative about the media buyer. Suggest that you believe that she would like to use your station and if there is a way around the CPP issue, everyone will be happy.

Dealing With Media Buyers on Getting the Rate: Again, what do you do when the media buyer simply demands that you meet her CPP, meaning you have to lower your spot rate, and your sales manager will not permit it? First of all, realize that one or two of the Radio station sales reps calling on her are going to be treated differently: they are going to be able to get away with sticking to their (higher) rate. You already know this. You may be one of the reps yourself. Media buyers have their friends and they have a number of ways that they can rationalize or justify paying a higher rate on their friends stations. Since media buyers are accountable to higher-ups in the agency and the client, they make sure that they can "explain" how a certain station got included on a buy even though their CPP was over the limit. If you are not one of her "friends," you should be. But, for now, let's assume that you are not. So, what do you do? One

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of the things you can do is, learn the ways she justifies putting her friends' stations on the buy and use these ways to get your station on the buy. * She will average rating books based upon some legitimate or perhaps illegitimate rationale. Averaging rating books might help or hurt your station. Furthermore, she may exclude a certain rating book because it was a "down" rating book for her friend's station. She may be averaging four ratings books but omitting one in factoring her friend's station because it was a "down" rating book for that station. In every case, you can bet that she is prepared to justify the decisions. She is simply handicapping the stations, giving station A a percentage bump based upon her belief that it was the victim of a fluke in the last rating book or it is increasing its listenership and surely ascending in the ratings. She adds 10% to their 30,000 AQH and makes it 33,000. Simple enough. She is giving extra credit -- in the form of ratings handicapping -- for some kind of on-air value added, e.g., billboards to a feature, on-air promotional mentions, "high spotting," bonus spots, etc. She is allowing her pet station to come in at a higher CPP because the average CPP for the market has been achieved by forcing other station rates down. She is handicapping the ratings by applying some value based upon qualitative data, e.g., a 30,000 AQH becomes a 35,000 AQH because station WBBB's audience indexes at 116 for people who make over $50,000 per year. She has conditioned the client to believe that station WBBB is relatively more valuable than the other stations and he should expect to pay a little more.

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Understanding how media buyers rationalize paying a higher CPP on certain pet stations is the best way to figure out how to make the case for your station's higher CPP. The strategies put forth in "Selling Beyond the Ratings" will be of help in dealing with media buyers. Read and re-read them periodically. Some other tactics: * * * Add time periods. Get her to make an exception in your case. Threaten to go to the client and reveal her utter stupidity.

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Guarantee rating point delivery against the next rating book.

Ready-To-Use Responses

"The first thing I have to tell you is that the rate I've submitted is the best I can do. I absolutely cannot lower it." "In our discussion of this matter, can we agree that, generally, you get what you pay for and there are reasons why WAAA costs a bit more than the other stations." "How about if we schedule some off-prime time periods to bring the average rate down?" (Use the "Selling 7PM-12Mid & Weekends" and the "Frequency Frequency Frequency" pieces.) "It's because of the fairly constant demand on the station's inventory from our long-term advertisers who can count on consistently good results from WAAA. As you know, the law of 'supply and demand' establishes the price of everything." "Would you please give us a try this time. Give me an opportunity to demonstrate why WAAA is worth more than the other stations." "I cannot lower the rate, but I can add some value. May I have an opportunity to show you some ways that we can more than make up for the slightly higher CPP." "With all due respect to the Arbitron Ratings Company, may I suggest that their estimates are dead wrong about 20% of the time. I can show you a simple graph of the ratings performance over a two year period of any station in town to prove the point." "Can't you justify paying the rate the other advertisers are paying on WAAA. From what you're telling me, you made a very smart buy on WBBB. Does the bargain you negotiated there necessarily have to be the reason you cannot justify buying my station?" "WBBB is cheaper; no doubt about it. There are reasons for as you are well aware. We cannot be expected to price ourselves as low as the losers in the market." "We try to charge all of our advertisers the same basic rates to be fair. Wouldn't you like to know that there aren't other advertisers paying a lower rate than you. Why penalize the guys who are playing fair and have integrity?" "Doesn't it really come down to value: May I please have a chance to demonstrate the incredible (superlative) value of WAAA; I know you will see why our regular advertisers accept our rates:"

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In demand Better Results Better advertising environment More commercially effective Higher quality listeners Better reputation Consistent ratings performance Big name personalities Associate with prestigious (or hip) advertisers Expert Radio marketing executives who know how to make campaigns work Marketing and research resources to support your use of Radio and WAAA Excellent Creative Services Department available to you Strong management Avant Garde/Cutting Edge/Progressive/Contemporary IMAGE "WAAA has a very high "P1" or "Very Loyal" listener group -- 40% of our overall audience. If you are not on WAAA, you cannot reach this group (with a 'selling frequency') on any other station." "Our commercial inventory is consistently sold out...at the rates we charge. That just wouldn't be the case if we were over priced relative to the results we deliver to our advertisers. Isn't that the best proof that we are worth what we charge?"

Why the KFKF/KBEQ Combo is a Bargain 1. Advertisers "get what they pay for": highly-rated, high-quality radio stations that deliver consistent audiences and consistent results. KFKF & KBEQ get results for their advertisers. A. Check the attached list: these are advertisers that buy stations based upon delivering results. They do not evaluate KFKF & KBEQ based solely upon rates. KFKF & KBEQ are Personality-Driven, Information-Oriented, FOREGROUND radio formats that compel listeners to stay tuned in mentally and physically making them more COMMERCIALLY EFFECTIVE than most other stations.

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KFKF & KBEQ index well above average in every important qualitative category, income, education, job status and retail spending power. These are audiences that can afford to purchase advertised products and services.

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KFKF & KBEQ experience high demand on their limited commercial inventories. Between ad agencies wanting to schedule their clients on Kansas City's market leaders and directretail accounts intent on advertising on the stations that deliver results, KFKF & KBEQ are regularly sold out. Country music is the most listened to format nationwide. And, KFKF & KBEQ are Country-Formatted radio stations in a market where Country listening is 114 above the national average! Country is king in K.C. and you can hardly make a viable Radio advertising buy without it. The "Exclusive Cume" audience for KFKF & KBEQ is over two times that of the average radio station in K.C. There are over 50,000 people you simply cannot reach unless you are advertising on the giant Country combo. The "P1" or "most loyal" KBEQ and KFKF listeners identify the stations as their "favorite" and spend most of their time listening to one or the other. This group of radio listeners -over 182,000 in number -- is virtually impossible to reach to on any other station in town. They don't spend enough time listening to any other station for an advertiser to achieve a minimum Frequency threshold. Throw in the "P2" (KFKF or KBEQ are one of favorite stations), and there are almost 250,000 adults in K.C. who you cannot achieve a "Selling Frequency" against unless you do so with a schedule on KFKF/KBEQ.

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KFKF & KBEQ are market leaders and the benefits to the advertisers are many. The KFKF & KBEQ morning shows (Radio's prime time) are rank #1 and #2 among adults 25-54 in the K.C. Metro area. While KFKF is #1 25-54, KBEQ is virtually tied for first in the 18-34 adult demo. Listeners know that KFKF and KBEQ are powerhouses, number one in town. They credit the advertisers they hear on the best with being better advertisers. Being on the number one stations supports credibility and builds image. KFKF has a strong commitment to news and information, one of the reasons it is number one in the morning. KBEQ has, far and away, the most entertaining morning show in K.C., one of the reasons it is number one in the morning for 18-34 adults.

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KFKF & KBEQ are incredibly consistent performers. While other stations move up and down in the ratings due to inconsistencies in programming and promotion, these stations remain constant. Advertisers can count on getting what they pay for every rating period. KFKF & KBEQ do not -- for the sake of snagging a few extra bucks -- increase commercial limits or conduct myriad on-air promotions that fatigue the listeners causing them to tune out mentally or physically. Advertisers enjoy the benefits of exclusive and limited commercial and promotional franchises. Solid programming; consistent investment in advertising and promotion; investment in topnotch personalities, news and information services; and prudent commercial & promotional levels, combine to make and keep KFKF and KBEQ dominant radio stations in Kansas City.

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The huge, highly-qualified and exclusive audiences, the market-leading reputations, and the potent commercial environments of these two stations make KFKF & KBEQ a bargain for the advertiser. KFKF & KBEQ set a standard of excellence against which many of the other Kansas City radio stations measure themselves. Where they set their rates is an indication of where they see themselves measuring up to the market leader.

Summary Rate Objection Response Tactics Value of yourself Value of station relative to: (handicap stations) Commercial environment Commercial policy Listening mode Personalities, News & Info Consistency Exclusive cume and P1 size Am drive dominance Qualitative

Introduce Audience Reach into the equation

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Introduce Qualitative Research into the equation (show how to quantify it) Change the demo Change the daypart request Split demo into two demos and weight each before re-uniting What they don't get by eliminating your station Why the ratings might be wrong Placing a value on value added Multi-book averaging Bonus audience Bonus spots Guaranteeing points

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posted:1/29/2008
language:English
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Ryan McWhorter Ryan McWhorter
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