From the Corner Office

It's now official that a major broadcast company has signed with Google to sell some of its inventory online, and other broadcast groups are considering following in its footsteps. As with any new or innovative event in our industry, the first question everyone asks is "Is it good or bad for radio?", quickly followed by "...are you going to follow?"

The answer is not as simple as the question is. And I'm not sure the question is the right one to ask.

First, the decision to partner with Google must be good business or broadcasters wouldn't have done it. It's no secret that the past year or so has been difficult for the entire industry, with the demand struggling to keep up with the supply of radio spot inventory. In this type of environment, it makes good business sense to put some of that unused inventory to work.

But that leads me to ask how much inventory is enough, and how much is too much? Radio had decades of ever-increasing marketplace expenditures, and most of the industry's philosophy has been based on the ability to offer the most attractive deals to advertisers. It was all about beating the other guy's deal, either with better ratings or a better price. In recent years, this mindset has led us to package selling or cluster deals which not only beat the other guy's deal, but threw in excess inventory from our own lower-rated stations. And the industry still is near the inventory loads from the late 90's, when added spots fattened up bottom lines with dot com revenues. Regardless of length, radio is still flush with too many commercial units. For the long term health of the business, we have to address this problem.

Do we wonder why our inventory loads are not working anymore? I can remember the days when anything more than 8 units an hour on an FM station was just not viable. It would lose you an audience, and it wouldn't attract any more advertisers. Just as those early days of FM are long gone, so are the years of limited spot loads and ever-expanding radio revenues.

Sufficient inventory is that which your sales staff can sell profitably for your station without disenfranchising your listeners. Long term, more inventory doesn't create added profit; it simply reduces the selling price. Between the marketplace and competitive pressure, the price will quickly go south. Professional time buyers used to negotiate the price down; now they're negotiating us out of business.

The second important question to ask: Are we selling spots or are we selling value? If you're still answering avails, negotiating with time buyers, and making a couple of cold calls, it's time for you to get a new job. And it's time for us to take a close look at the leadership, operating philosophy, and organization of our sales departments. If we are judging our activity simply on the latest Miller-Kaplan, we're missing a large part of the game.

Selling value means making believers, not just in one radio station, but in the power of our medium to perform for business. New advertisers are created and maintained by constructing programs that get business results. Selling value means bringing talent, creativity and sharp thinking to the table on behalf of a client. Never before have retailers had more options about how to spend their marketing dollars; there's a dizzying array of choices. And there's real economic pressures to make sure those decisions are correct and pay off. If we blow the assignment from the client, there won't be a second chance - not only for our station, but for our medium.

Software can't address these issues. Software can't visit the client's store, and software can't brainstorm the best positioning of his special sale. The true value of a radio salesperson is the experience, advice and creativity he or she brings to the advertiser's problem. You cannot take the human element out of the sales process. Too much valuable idea creation happens during the interaction on a local basis with the advertiser to solve their customer problems. It's more complicated than ordering a sweater from LL Bean.

Don't use a technology crutch to solve a business problem. This is all about marketing, not just advertising. Metrics don't solve business problems: regardless of how many people listen or visit a website, without the right idea, nothing happens. Concepts solve business problems. We have to educate, train, support and invest in sellers who can and do find new prospects, understand business problems, collaborate with clients to create win-win solutions, and are able to defend a fair value for their work and the station's effectiveness.

The effective radio seller must have a solid grasp of economics, how businesses make money, margins and reasonable investment levels in marketing and advertising. They need to be able to talk with advertisers of all sizes in the language of the advertiser, not the radio station. Selling features and benefits and rankers won't get it done. Effective radio sellers have learned to stop denigrating their radio competitors. They are more focused on the most effective ways to move cars off the lot, how the floor plan works, or what an advertiser's customer profile looks like.

There is more business out there than we know. Radio does not have to accept the twenty billion dollar ceiling. But we have to get smart to grow our industry. I am afraid that we have shown many advertisers that when you buy radio, you've joined the circus, complete with clowns. There are too many stories of first-time radio advertisers getting a shower of calls from competing stations, right after their spots begin. Why? Do we congratulate them for their investment in the medium? No, we try to switch pitch them, by telling them what a bad decision they made by buying time on the competition. Stand back from that for a second. We regularly tell people that radio's bad when we try to sell against one another.

Google's technology is intriguing, because it places radio in contact with new prospects who are interested in building their business and interested in giving radio a crack at doing the job for them. Instead of phone or face calls, Google is in contact online with qualified, self-selected businesses. Fine by me. Google gives radio stations selectivity over what advertisers can be accepted through Google. If it's an agency account, they can be turned back into the traditional selling channels. So, it seems to me that Google is like a variable network deal, with the station having some, but not all of the control. Would this be a good revenue generating technique for stations? It comes down to how effective your local and national sales staffs are.

So, is it time to turn over the selling of radio to Google? If we can do no better than chase transactional business, then I say yes. Because someone has to convert new prospects into advertisers and Google will expose radio to new prospects. But if we are doing our jobs selling the value of the radio medium, then I say it's not time to surrender.

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