THE “MPR’S” OF PROGRAMMING

PART 21: REVENUE BEYOND THE BASICS

This month the MPRs of Programming  continues with another look at the final “R” on the list of MPR’s…Revenue….Beyond the Basics. This time around we’ve solicited opinions from a couple of successful General Managers and a Sales Manager about the basic ways that radio station’s generate revenue based on ratings and other factors.

As noted in the last article on Revenue Basics, most GM’s and Sales Manager’s primary focus is on this particular “R”. While generating revenue is the main focus of their jobs, they all agree that there are different ways to get there.

DO SOLID RATINGS  REALLY MATTER?

While it would be simple to state that a station’s ratings automatically add revenue to the bottom line,  how critically important is it that a station have solid ratings in the process of generating revenue?

“Solid ratings create a perceived value to the station and sometimes cause the phone to ring,” states Jim Cooley, General Manager of the Lotus Broadcasting properties in Tucson, Arizona which include KLPX (Rock) and KFMA (Alternative). “Conversely, a lack of ratings create a difficult sell and draw little attention.”

Mike Robbins, the General Manager for KNIK (Smooth Jazz) and KZND (Alternative) in Anchorage, Alaska believes that it becomes an issue of degrees. “While the primary driver of revenue is a combination of your sales staff, and the image in the market that the clients have of your station, having good ratings are the spring board to the next level. While ratings are not critically important to my station’s ability to get the business, it’s critically important when it comes to taking a station’s revenue to the next level.”

Pete Tonsits is the Sales Manager for KILO (Active Rock) and KYZX (Classic Hits) in Colorado Springs. While he agrees with Cooley and Robbins that solid ratings are important to the revenue generating process, their main function is important when dealing with national business. “When it comes to national business, you’re dealing with cost per point issues,” notes Tonsits. “I don’t think solid ratings are as critical for local sales.”

“From a local sales point, a lot of other things come into play beyond the ratings,” explains Tonsits. “How long a sales rep has been with a particular station is extremely important to a local client. With all the turnover that has occurred recently in the radio industry, local clients and buyers are thrilled when they can call a station and talk to the same sales rep that has been handling their account for the last three years or so.”

THE  IMPORTANCE OF A GREAT SALES STAFF

 While Tonsits feels strong service from his sales staff is important from a local sales angle, how important is it to have an excellent sales staff to compensate for less than stellar ratings overall?

“I think it is very important to have an excellent sales staff all the time,” states Tonsits. “If you’ve got a poor sales staff that’s basically asking ‘would you like to buy some spots,’ or ‘we’re number one so you have to buy us,’ these kinds of sales people will just kill you when the ratings aren’t there. You need to have a sales staff that can show the client how the station will get results for them, ratings or not.”

“Some stations never develop ratings but are successful due to results oriented sales packages and a strong retail sales strategy,” explains Cooley.

While Cooley agrees that a resourceful sales staff can help you get by a bad book or two, they’ll eventually need ratings success to maintain momentum.

“I really think you need both ratings and a strong sales staff to make it work, but a great sales staff is more difficult to recruit and retain while ratings can be greatly influenced due to a number of changing variables."

Robbins remains extremely bullish on the importance of a great sales staff in the revenue generating process. “Ratings or no ratings, the sales staff is the most important element in the battle for revenue,” states Robbins. “If you have ratings your staff becomes faced with an entirely separate set of issues that are just as difficult to overcome as the issues you face when you have no ratings.”

“When you’re number one it becomes a battle for higher rates and holding the cost per point,” continues Robbins. “When you have no ratings it’s also  about just being included in the buy with agencies along with dispelling myths about your station created by your competitors.”

When faced with the prospect of choosing between either great ratings or an excellent sales staff in generating revenue, the choice for Robbins is obvious.

“I would always choose the great sales staff,” says Robbins. “Ratings or no ratings, this remains a business built on relationships and without relationships this business becomes totally transactional. Great salespeople understand the value of relationships and how they transcend poor ratings and just about any other objection the competition may use against them.”

NON-TRADITIONAL REVENUE

Beyond just selling spots, generating non-traditional revenue (NTR) has been a huge boon to radio over the last decade. Radio stations have successfully generated additional revenue through non-traditional sources like sponsorships, event marketing, and the Internet.

While Cooley believes that nothing replaces near sell out conditions at premium rates, he does see the value of certain non-traditional revenue sources. “Events that stations are able to co-produce, charge admission, and benefit from concession sales are definitely a positive,” notes Cooley. “We’ve had tremendous success with KFMA Day, our alternative station’s annual rock festival, and look to make this a benchmark event.”

NTR is becoming a bigger piece of the pie for Tonsits and his sales staff at KILO as well. “We’ve been able to generate a significant amount of business by tieing in clients on concert flyaway promotions and are currently in the process of selling the first year on a sports tournament that we plan to make an annual event.”

KILO’s annual summer Rockfest has been a huge event for the station over the last three years. “We’ve drawn between six and ten thousand fans to see some of the hottest established, and up and coming bands play our Sky Sox Stadium,” says Tonsits. “Last year we did a decent job of event marketing, but have since gone back to the drawing board to discuss how we can make this year’s Rockfest even bigger.”

NTR has become a necessity of sorts for Robbins and one of his stations. “KZND uses Eastlan ratings because it’s not listed in Arbitron,” explains Robbins. “On this station, without sponsorships and added value we’d be dead. Even though the market accepts and believes in the product, they still seem to require this type of NTR more of us than they do other stations.”

“On the other hand, our smooth jazz station has Arbitron ratings and a high level of buyer acceptance,” continues Robbins. “For this station we use the event sponsorships to increase our share or to generate extra dollars. Our most successful NTR project has been the Smooth Jazz Notes Magazine, both as a promotional vehicle and to help us get into a print budget that we’d normally not have access to.”

SELLING PROMOTIONS WITH LISTENER BENEFITS

While the development of non-traditional forms of advertising is an important aspect of generating revenue beyond selling spots, one of the biggest challenges a radio station constantly deals with is taking the hundreds of mundane sales promotions and making them effectively work with the “listener benefits” that programming-driven promotions afford. Today’s revenue demands amidst continuing consolidation have put a premium on doing promotions that add to a radio station’s bottom line.

Cooley feels that successful radio stations can afford to just say no to the glut of sales promotions that often burden the sales and programming departments. “Those station’s that can’t say no need to strongly address the issue,” states Cooley. “Radio station’s need to strive to marry the efforts of the programming and sales departments in all areas, particularly this one.”

Tonsits agrees that the “value-added” aspects of sales promotions present a huge challenge to radio stations. “If there isn’t a way to add a client to a programming-driven promotion, we’ll at least try to add an element to an originally weak sales promotion to make it work for the station and the listeners. When programming is originally opposed to a ‘mundane’ sales promotion, it’s amazing how tweaking the promotion slightly makes everybody happy.”

It’s this spirit of sales and programming  synergy that makes things work for Robbins and his staff in Anchorage, along with a healthy dose of open communication. “We run a very open and honest organization,” claims Robbins. “We celebrate victories and deal with defeats with everyone. This helps us sell our ideas to both the on air staff and sales. As a result of everyone buying into our well-stated goals, the station manages itself.”

“As a result, before they even sell a promotion, the sales people ask the question ‘what’s in it for the listener?’ They understand that to get the jocks excited and for them to really sell it on the air, the listener benefits have to be there. By the same token, the Program Directors work equally as hard to accommodate the sales staff and help them re-tool ideas into a shape that fits both needs.”

Indeed, the basics of generating revenue for a radio station should not be just a sales issue. The real astute programmers should always look at ways to marry programming opportunities that benefit listeners with revenue generating possibilities as well.

Next time around, I’ll be wrapping up the MPR’s of Programming series with a final review of the most important highlights of this programming process.