History shows that even in the worst of times, innovative businesses can generate new products and revenues. Some of your peers in broadcasting have done it through partnerships, clever sales promotions, new local programming and even old-fashioned cold calling. The one thing you don’t want to do is slash ad rates. That hurts short-term and long-term.
I had the opportunity last week to make a presentation called “Turning Lemons into Lemonade: Business Strategies for Achieving Near- and Long-Term Success in a Recessionary Market” for station executives at the Michigan Association of Broadcasters’ Great Lakes Broadcasting Conference & Expo in Grand Rapids.
I was flattered by the invitation. I have to admit, however, that, while preparing what I was going to say, one of my first thoughts was how one of my former bosses derisively defined a consultant as “someone from out of town who was wearing a suit and carrying a briefcase.”
Before heading out to the conference I wanted to make sure I had something worthwhile to say. So, I spent time reviewing industry trade stories posted on TVNewsCheck and features like Ad Age’s “Ten Things You Can Learn From ’70s Recession” and “Digging for Dollars” in Broadcasting & Cable as well as MFM’s own The Financial Manager to see what those who run media businesses on a daily business were doing.
I also did some research into successful business strategies during a recession, finding articles on the Web and in old grad school textbooks. Knowing that MFM members learn the most when they discuss ideas with their peers, I was also determined to turn my presentation into an interactive session.
There are not many states in the nation that have been hit by housing and unemployment challenges as hard as Michigan. That and the continued uncertainty about American automakers make the economic outlook for Michiganders even more difficult to predict. Add that to assessments that broadcasting’s best days are in the rear view mirror and you might expect to have the audience heading for the exits. But that’s not what I experienced.
Instead, I saw a group of leaders resolved to find the harbingers of new prosperity. Rather than talking about how bad things are, they were committed to finding solutions that they could bring back to their stations for making things better.
It was a great forum for talking about the importance of being proactive and managing a recession rather than allowing it to manage them. After all, a crisis is equal parts threat and opportunity.
FedEx and Microsoft started during the recession of the 1970s. Established companies also found opportunities to introduce new products, including Procter & Gamble, which rolled out Era detergent and Pringles in the 1970s. It was also when a former advertising agency executive made millions by importing some landscaping material from Mexico and selling it as Pet Rocks. Closer to home, the first generation of national cable networks took off during this period of economic stagflation.
I started my GLBC presentation with the suggestion that you can sell your way out of the current market and seize the new revenue opportunities that are likely to become the staples of the business in the years ahead.
One of the successful sales strategies we discussed was using partnerships to reduce cost per sale. For example, my research uncovered the story of Raycom’s WCSC Charleston, S.C., which partnered with a firm called New Business Opportunities to target advertisers who typically use Yellow Pages and newspaper ads.
Working together, the duo organized advertising seminars for local merchants and identified and invited 1,000 prospects to participate. Approximately 300 local businesses attended the seminars and the station signed more than two dozen broadcast TV contracts representing over $500,000 in new business.
Another strategy involves using trade-outs to jump-start sales. Diversified Broadcasting’s WCJB Gainesville, Fla., found a way to generate sales from gasoline gift cards that it got in a trade-out.
On-air promotions were used to drive viewers to the station’s Web site, where they could register to win a $50 gas card, with a new winner each day. The station used information about the registered Web users to up-sell other advertisers to custom promotions. The 100 daily $50 gas card winners became finalists to win a stay at a resort, and another contest sponsor donated a jet ski. These added elements allowed the station to turn $5,000 worth of gas cards into $60,000, in revenues — a whopping 12-fold return on the investment.
Repacking sales offers with new names and lower prices is another way to stimulate sales. One example was Meredith’s KPTV Portland, Ore. This station targeted new or lapsed advertisers with a 48-hour sale on their established rate card. Elements of the campaign included an e-mail with the message that “something big is coming up” followed by phone calls to the campaign’s target advertisers in which reps offered deals of up to 30 percent off standard pricing. The results for KPTV included signing up 63 clients, more than half of them new to the station, and increasing its quarterly revenue by 7 percent.
Another tactic involves ramping up cold calling by going after new segments of the local advertiser market. The process starts by identifying the businesses that aren’t advertising on your station. For example, Meredith’s WHNS Greenville, S.C., reached out to local businesses that conduct pharmaceutical testing. Elements that can sweeten the appeal to a new advertiser include category exclusivity.
Identifying new segments also includes finding new geographic segments. Stations can go into the suburbs and find businesses that do well in this economy, encouraging them to expand their customer bases through the broader marketing that broadcast television can provide. Examples include local auto repair shops, vintage clothing stores and other small businesses that are looking to take advantage of market interest in their goods or services.
Typically smaller businesses are more agile when it comes to making purchasing decisions. These smaller businesses, which may be intimidated by the cost of producing TV ads, can tap into companies like Spotzer which offers generic commercials that can be tagged with the advertisers’ information.
Creating custom promotions is another sales strategy that can add to a station’s bottom line. I found examples of “watch and win” promotions that can address the growing advertiser demand for engagement and measurement. In these promotions, viewers are encouraged to listen for a secret word in specified TV program. Viewers who go to the advertiser’s Web site or the business itself after hearing the word can sign up for the prize.
Other examples of custom promotions include Tribune’s KIAH Houston, which sends sponsored text messages to registered Web users to promote concerts. Some stations are offering naming rights to chopper reports and weather coverage.
LIN’s WNAC Providence, R.I., has launched a new morning program, The Rhode Show, that’s all about branded integration, or product placement. The station has worked in everything from local furniture makers to restaurants and auto dealers into the product mix. The show signed 18 clients, including 10 first-timers, prior to its debut.
As we were talking about these examples, someone told me that he’d finally figured out how to determine how his clients measured their success — he asks them. When you know the answer to that question, it’s much easier to come up with the right custom promotion.
This is also the time for local stations to focus on your unique selling proposition: the fact that you are local. You have more and stronger ties to the community than a Craigslist or CitySearch.
Media General’s WNCN Raleigh-Durham, N.C., has shown the advantages of tapping into its unique selling proposition with “MyNC.com,” a series of about 21 hyperlocal sites.
Community research indicated there would be a good market for Web sites serving specific territories and topics, such as music, business and health. The sites include aggregated content and content produced by WNCN’s salaried “embeds” who produce content for the sites and the station.
The Web initiative has resulted in 165 new advertisers and, most notably, WNCN estimates that 95 percent of them would not have purchased television advertising.
All of these examples also demonstrate the importance of “pricing for profit” and avoiding loss.
Stations can look at the value they provide their customers’ customers and sell based on that. Then, there’s the psychology of selling that we learned in Selling 101. When presented with three price levels, buyers tend to select the middle-priced option. Doing a little extra advance preparation may make all the difference in how the sales call turns out. Now, more than ever, we need to make it easy for potential advertisers to choose us as the right option.
It’s also important to remember that we need to look at ways to simultaneously raise value and price. One station group owner tells me that he signs longer-term packages and includes production in the price. If at all possible, resist the temptation to do the opposite and sell for less. If you sell yourself short, you won’t be poised when economy turns around. Instead, sell new value and take responsibility for the outcome. Ask how the client measures success and find ways to deliver it.
We will be focusing on these and other strategies for managing a tough economy at “Responding to Change,” the 2009 Annual Conference for members of MFM, its BCCA subsidiary and in conjunction with Interactive & Newsmedia Financial Executives (INFE). The agenda is available on our Web site. It underscores our commitment to give attendees a great ROI on their investment.
After all, the principle of selling our way out of tough times also applies to organizations like ours. This means that the conference, like everything we do at MFM and BCCA, must clearly benefit our customers and our customers’ customers.
I hope you will attend and hold us accountable. I really want to hear what you think.
Mary Collins is the president and CEO of the Media Financial Management Association, a professional society addressing the diverse needs of the industry’s financial and business professionals. Her column appears here every other Friday.