A Business Imperative: Rep Firms Must Change

Earlier this year Gray Television made the decision to drop national representation for its newly acquired Raycom stations. Now Tegna has announced the same move, sending shockwaves through the rep community. Are these moves smart or will they create opportunity for competitors?

Gray and Tegna are not the only groups having serious discussions about the future of rep firms. The continuing drop in national revenue is a hot topic in every boardroom. For now, most continue to use representation, indicating a desire to make the system work, but no one can ignore the dramatic change in landscape. Unless the reps learn to serve the new marketplace, their days are numbered.

The current system is fairly straightforward. National account executives build relationships with buyers. Buyers issue “avail requests,” listing all parameters, from demographic targets to air dates and total budget. Account executives respond with a proposed cost-per-point and schedule. Buyers then negotiate with account executives until agreement is reached.

This is a passive system. Reps have no opportunity to influence client budgets or parameters. They are also competing with other reps over revenue share, which creates a commodity market.

As national television budgets shrink, profits are shrinking too, leaving stations incredibly frustrated. National money is not going away, it is being rerouted to a host of other new media and other competitors. Stations are left out.

Compare this to what is happening locally. Today’s station account executives are sophisticated sellers with a host of products their clients want and need. Traditional spot is still the backbone, but mobile, web, third-party, OTT and secondary channels are all in the toolbox. The goal is not to sell every product to every client. It is to become a partner who helps solve client needs. When this is done well, it creates incredible loyalty. It also makes price secondary.

Reps counter that the national marketplace is different. Agencies have different units for different media, technical buying systems are different, even different kinds of people to deal with. But these things are exactly why the rep business must be reinvented. Otherwise stations will continue to be left out, forcing them to look for new ways to do business.

As we move toward addressability and the ability to link advertising to results, we also run the risk of greater commodity buying. Here is the great irony. The people best positioned to build the future are the rep firms themselves, but they must have the will to do so.

The best reps do a great job of relationships, so they could start by setting up meetings with major agency heads to talk about their total business, not just television. How can they work together to make everyone’s life better? What can they do to make everyone more money? And by the way, how can they also change the way spot television is sold to be more efficient? Answering those questions, and many others, would provide the nucleus of a restructuring plan.

Next, go to group heads and share what you have learned, bringing stations into the discussion. If groups believe a plan will increase new business, they will invest. This will be hard lifting because cultural barriers must be overcome while still preserving what works well in the current system.

Whatever the answer, continuing to try and survive in a shrinking marketplace is a losing proposition. If that happens, Gray and Tegna will not be the last announcements we will hear. It does not have to be that way. The folk running rep firms are smart, experienced and want success, but the clock is ticking. It is time to play offensive ball.

This is one in a series of occasional columns from Hank Price, a media consultant, author and speaker. He spent 30 years managing TV stations for Hearst, CBS and Gannett, including WBBM Chicago and KARE Minneapolis. He also served as senior director of Northwestern University’s Media Management Center and is currently director of leadership development for the School of Journalism and New Media at Ole Miss. He is the author of Leading Local Television, a handbook for general managers.