Oh, sorry! You can’t go to your favorite Mexican eatery. The federal government has a regulation that requires you to evenly distribute your restaurant choices among all available ethnicities. Since you’ve already been to a Mexican restaurant, you must select from Greek, Italian, Chinese, or one of the other styles available.

If you’re licensed by the Federal Communications Commission, this scenario is not quite the joke it appears to be. New guidelines from the FCC require stations to include a disclaimer on proposals to advertisers reminding them that discrimination in the purchase of airtime is illegal. This tactic is designed to prevent agencies from enforcing advertiser dictates for certain formats. No more should advertisers be able to say “No Hispanic” or “No Urban”. If you want to advertise, you have to advertise to everybody.

Of course, this flies in the face of the concept of targeted marketing and practices that have worked well for hundreds of thousands of advertisers for over 50 years. Managing several country music stations over my career, I was frequently faced with “No Country” dictates. While I thought the advertisers were short-sighted in taking that choice, we didn’t try to force the advertiser to buy our station. Of course, we weren’t the federal government. But even if we were, that approach would have been wrong. And it is wrong today.

In a free society, an advertiser — or a dining patron — should be free to choose where he spends his money. Forcing an advertiser to buy all the stations in a market without regard to format or target audience is typical bureaucratic thinking. It is not part of the fabric of American life, and hopefully common sense will prevail.

So enjoy your choice of restaurant — for the moment. We haven’t as yet progressed to the point where government is telling you where you can eat. But looking at this FCC mandate, one wonders if your favorite tacos might soon be on someones regulatory list.

Of the many stations where I have worked, only a very few were truly well-equipped to enable the employees to do their jobs in an expeditious, professional manner. While no owner desires to throw money away, those in the “excellent” category are willing to invest the capital to build an organization of which every employee could be proud.

This is the difference that manifests itself at a live broadcast when one station arrives in a clean, professionally lettered/decorated station van, with wireless microphones, dedicated links to the studio, one or more air talent, a producer, and even the salesperson who sold the broadcast present to coordinate with the client. By contrast, another station arrives with the air talent driving his own personal vehicle, broadcasting the event via his hand-held cell phone or some combination of equipment cobbled together from a foray to the local Radio Shack.

There is much more to this than spending or saving money. Clients can see at a glance which stations care enough to invest in the future — and the future of the advertiser who purchases time on the stations. Employees who care about the owners for whom they work take pride in having the tools of the trade they need to do the job. Salespeople are confident the stations will produce results for clients. Better talent is attracted to successful stations, allowing the owners to build superior staffs.

This all translates into an improved bottom line.  Not in the short term, necessarily, but over time, it is one of the ingredients that builds a good station into a great station.

I only wish more owners could come to realize it.

Somehow, local retailers managed to sense a slowdown in business long before it revealed itself in national statistics.

They responded to their perceptions by cutting back on their advertising budgets. Our stations always saw a drop in overall revenue several months before the recession became apparent to everyone else.

The reverse was also true. After a time, while the media was still moaning about the slow economy, local retailers began increasing their ad budgets. Our stations’ revenues increased. And, a couple of months later — ta-dah! — the recession was over.

As a result, it was encouraging this month that some of the major radio groups are beginning to see sales increases of 4 percent or more over the previous year. It’s an indication that the economy is far from dead.

Given the right conditions, the economy’s natural tendency is to grow. In fact, it’s actually difficult to hold it back.

Unfortunately, we are not experiencing the right conditions. Instead of a government that encourages private industry and increased employment, it appears we have an administration that seeks to place more inhibitions, road blocks, burdens, and red tape on employers. The result is a chilling effect on economic growth.

The economy is trying to recover. We’ll keep an eye on our “Radio barometer” to see if the sales increases continue, and if Radio can predict the end — or continuation — of our current recession.

The stations were only selling 31% of their ad time.

I asked if the stations were using a yield management system.

The answer was “no”, because management felt “rate integrity” was important. They thought “yield management” was another way of saying “cut rates”.

Well, rate integrity is important. And so is flexibility. What these station’s management doesn’t realize is that yield management can give you both.

With a well-run yield management system, your station’s rates adjust to the advertiser’s demand. The higher the demand, the higher your rates. If the demand drops, your ad prices drop with it. The goal is to sell more time, have less “wastage”, and increase yield.

So here’s a question for any station that hasn’t considered yield management: Is it better to get something for an ad slot or nothing? Changing 31% sold to 40% or 50% sold can and will make a big difference to your bottom line.

If my friend’s stations see the light, I’ll report the results here. But if they continue on their stubborn path of not considering a good yield management system, they’re missing out on the best of both worlds.

Unfortunately, most Radio sales reps can’t or won’t convince the advertiser to air a large enough schedule to obtain truly remarkable results. This underselling of Radio hurts the advertiser, your station, and Radio as an industry.

Many years ago, a very sharp sales rep I worked with — we’ll call him “Jerry” — taught me how to turn down an order.

Turn down an order?!?

The client wanted to air a schedule of 25 ads for the week on our station. While the schedule would have added around a thousand dollars to Jerry’s sales total for the month, Jerry just shook his head.

“I can’t accept this,” he told the client. “Because when it doesn’t work, you’ll blame me.”

Jerry then proceeded to explain to the advertiser how Radio really works, and how in order to be truly successful, the client should be airing 25 ads a day. When the advertiser replied he had never heard of such a thing, Jerry said: “It’s because they’re afraid to tell you.”

For Radio to work–to truly blow the doors off–three things are required:

1. A good product or service at a good price (customers aren’t stupid);
2. A compelling message that breaks through the ad clutter (notice, I did not say a louder message — screaming only insults the customer), and;
3. Sufficient frequency to ensure the audience hears the message.

We’re not talking a “frequency of three”…we’re talking a frequency of 20, 30, 40 impressions in a week.

We’re talking using the power of Radio to dominate a station or group of stations. This requires what used to be called a “newspaper-sized” budget. A full-page ad in the newspaper doesn’t dominate anything. But take the budget for that full-sized ad and place it on one station for the week and the advertiser will own that station.

Jerry’s client was convinced — he ended up buying two ads per hour every hour for a week — and had the best week in his history. All because one Radio professional was willing to tell a client the truth.

It’s time to stop underselling Radio. In the current economic conditions, including the rapid decline of newspaper, it makes more sense than ever before for Radio to step up and claim its unfair share of the ad pie.

The problem is not store closures or empty strip centers. It is confidence and spending.

I think Radio as a whole is fine. The latest RADAR study shows 92% of the population listens weekly.

We just somehow have to get clients back to previous spending levels.

I think Radio will eventually shake out okay. The few group owners that survive will be financially sound with manageable debt. There will be some public companies but mostly with large market holdings. Medium and small markets are not suitable for public ownership. Maybe no Radio is.

A business with a limited market area and limited inventory at some point has to rely only on price. You cannot do that in Radio because of market dynamics. Price cannot go up forever and the Big Radio myth is that if you raise your price advertisers will raise their investment. Most advertisers keep investment the same and run fewer ads driving down results. Then the stations have to find even more advertisers but now the advertisers have to be willing to pay higher prices. This is why Radio stations go through cycles.

So, large companies–especially public–that have a never-ending appetite for more profit will eventually hit a dead end with Radio. Many already have. Even if they grow by expansion–as all of them did in the 90′s–that road will eventually end.

We can add “products” like interactive, but that only takes you so far. It’s also a big time distraction to selling the core.

Radio is far better suited for a local owner who wants to make really good money and knows that every now and then he is going to have a down year. The competitor is going to surge. The unexpected is going to happen. And he will have to learn to live that year on $300,000 instead of $500,000.

A return to sanity can be reached if Radio sales prices are low. Six times multiple; eight times max, with a manageable debt load. The difficult eccentric local owner will replace the difficult eccentric corporate management team and it will be back to the future.

In middle and small markets there will be a return to more things like news and local coverage. Newspapers are dying. There is simply not enough local news in these smaller markets to justify an hour a day on five local TV stations. But there is plenty for a three-minute newscast on the hour via the local Radio station. Like it used to be. The Internet is a factor, but not so much for local news.

The future of the Radio business will be more like the past, albeit with a better eye towards quality. Listenership will decline some as will revenues, but as long as we remain the only really viable commercial advertising source that allows a listener to totally multitask while consuming it, we will have a place.

This fall, I complete 35 years in Radio. I think that qualifies me for an opinion liks this. I am now–officially–the old man.

Although the “experts” still never listen.

—-

“Anonymous” is a skilled Radio executive with extensive experience in sales, marketing and management in small, medium, and large markets. He started “on the street” selling Radio over 35 years ago and has trained hundreds of Radio salespeople in how to get results for their clients. He currently manages a multi-station cluster for a major broadcast company.

And yet…

As unemployment approaches 10%, 90% of the workforce remains employed.

As tens of thousands are laid off, hundreds of millions are still earning a weekly paycheck.

As the stock market struggles to climb above 8-thousand, millions in profits continue to be made.

So, how much of our economic woes is the result of real, tangible actions, and how much is a product of negative thinking?

The recession/economic downturn of the late ’70′s hit the U.S. hard. We experienced double-digit inflation, skyrocketing gas prices, gasoline rationing, and a malaise that suggested the country’s best days were behind us. President Jimmy Carter even informed Americans that our children would experience a lower standard of living in the future and we should get used to it. It was the end of life as we had come to expect it to be. We had become the land of “no more opportunity.”

Then, something remarkable happened.

A new president arrived on the scene with an optimistic outlook. America’s best days were ahead of us. And, sure enough, with a change of attitude more than anything else, the United States entered a period of prosperity that spanned almost 30 years.

Certainly we have economic problems. GM and Chrysler didn’t get into trouble overnight. Their woes are the result of a series of bad management decisions over decades that have brought them to their current condition. But the wonder of this country is that — with a change of direction and an optimistic outlook — things can and will get better. It has happened before. It will happen again.

While the media almost gleefully pounces on the latest bad economic news, remember: people are still buying products, the majority of businesses are still in business (and even making a profit), and the citizens of this country have an irrepressible faith that things will get better. It may take a different president, and it will certainly require more tough decisions, but the spirit that saw us through 233 years of booms and busts, wars and peace, good times and bad, will again reassert itself.

If only we will let it.

The free market has done a pretty good job for the last 89 years in helping Radio serve the public. If a broadcaster airs a program that people don’t listen to, that program soon goes away. Without listeners, there are no advertisers. Without advertisers, there is no revenue. Without revenue, there is no station. One would think that anyone with a brain would be able to grasp this concept.

Apparently, this reality escapes quite a number of our senators and representatives. But then, a lack of intelligence has never been a bar to public service.

So if we’re going to be “fair”, let’s do it right. Let’s have legislation requiring equal time for all formats on all stations. For every hour of rock, lets have an hour of polkas. For every hour of jazz, an hour of rap.

It’s only fair.

Okay, it’s not fair. Because despite the tyranny of lawmakers, listeners will vote with their Radio dials. Or vote with the “off” switch. But perhaps legislators have an answer for that, as well: forced listening.

Are we turning into a dictatorship? My fear is the answer could be “yes”. And certainly, re-enactment of the “Fairness” Doctrine is a first giant step in that direction.

Does what you call a thing make a difference? A lot of people on Madison Avenue certainly think so.

It’s my position that one Radio ad is equal to one newspaper ad. We demean our product by referring to a Radio ad as a “spot”, and inadvertently elevate the product of one of our competitors.

Here’s a belated New Year’s resolution for 2009: ban the term “spot” from your vocabulary (unless you’re talking about removing something from your clothing). Let your advertisers know they’re purchasing a quality product, not a blemish on their wardrobe.

One very successful market manager I know believed in hiring as many salespeople as possible. He felt a larger staff put more pressure on the stations inventories, driving demand and higher rates. He was willing to suffer a few poor performers—for a time—in order to achieve his sales goals.

Another successful manager demanded performance from every rep and marginal players had 90 days to become producers. Failure to achieve earned them a brief “exit interview” and a final escort to the door.

Which approach is better? My personal experience has been that the larger sales staff works best. There’s no doubt that a smaller sales staff means fewer bodies on the street and less pressure on the inventory. And in tough economic times, I would certainly monitor everyone’s performance closely. But isn’t that something we should be doing regardless of the economy?

There’s no good answer, and I would be interested in hearing about what’s working or not working in your market. Your comments are welcome.