Negotiator or Hostage?

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You’ve seen this scenario dozens of times in the movies and on TV: the bad guys (robbers, terrorists, etc.) are inside a building with hostages. Outside, police SWAT teams surround the location, and a negotiator communicates with the hostage-takers.

The bad guys have demands: food, transportation, release of prisoners, whatever. The police respond by offering to meet some of the demands in return for the release of some of the hostages. And so it goes, until the hero or heroes take some action to save the day.

Now think about the last time you “negotiated” a schedule with a client. Were you really the negotiator…or were you the hostage?

Negotiators get something in return for giving something. The client says: “Your rates are too high.” If you lower the rate without getting a concession in return, you’re a hostage. Instead of responding: “Maybe we can do a little better on the rate”, you instead say: “I can reduce the rate by this much if you agree to extend the schedule an extra two weeks.” That’s a negotiator speaking.

One of the benefits of a well-founded yield management system is that it gives you the leverage needed to get the most out of client negotiations. You know where your peak demand is as well as days and hours of lesser demand. By adding some lower-demand, lower-priced ads into the schedule, the client gets a better rate, and you sell more time while leaving more of the peak demand ads available for sale to other advertisers.

The economy is going to be rough for the foreseeable future. Improve your negotiation skills now and refuse to be held hostage to unreasonable demands for reduced prices. Then, you’ll be the hero that saves the day.

Feeding On Fear

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The bad news floods out of our Radios, TVs, and newspapers, and we internalize it. Not an hour passes without news of increasing unemployment, declining sales, and dismal forecasts. Eventually, after continuous exposure to such depressing propaganda, we accept it uncritically.

We start to believe it.

Once you’re convinced the economy is in a tailspin, you begin to act in accordance with your beliefs. In short order, we’re all adding to the doom and gloom.

Psychologists have demonstrated through numerous studies that you absorb whatever you’re exposed to. Surround yourself with negative news and depressing people and you become disheartened; associate with positive news and uplifting people and you become encouraged to achieve what others might consider impossible.

Short of turning off your receivers and canceling the newspaper, you can’t avoid the negative news. But even with the negatives, there are positives to be found. Concentrate on the good news—scarce though it may be—and work with a positive attitude that things will turn around.

The recovery starts with you and proceeds one person at a time.

Let’s get started.

What Are They Thinking?

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Radio’s continued financial success depends on a strong economy. The logic that somehow the government can fix the economy is flawed thinking; government cannot create wealth. Certainly, government can create jobs—repairing roads, building bridges, adding a bloated government program or ten—but these jobs do not create wealth. Only the private sector produces a Steve Jobs or Bill Gates, and people like them create millions of jobs (and make others wealthy, as well).

Now, in order to stimulate the economy, the government is planning on sending another round of rebates to taxpayers. Well, pardon me, but wouldn’t it be better to pass tax cuts and allow wage earners to keep what is theirs in the first place? The idea that a third party should take a large chunk of your earnings only to return a portion of it is typical of government thinking.

With the economy temporarily in turmoil, families are looking at their budgets and cutting back on expenses. These reductions will be felt by advertisers, who will also cut back. It will be felt by your stations, who will also reduce expenditures. Will government likewise “cut back”? No way. Instead, we’re hearing plans for more expansion: universal health care, another trillion dollars in bailouts, and more.

Government efficiency is an oxymoron. The best way to resolve our current economic crisis is to get government out of the way; cut taxes—especially capital gains—and slash government spending. Yes, the pain will intensify in the short term, but it will be short, followed by a strongly resurgent economy. Unfortunately, the road government is now planning to travel may minimize the intensity of the pain slightly, but will prolong it for years to come.

Team Up with the IRS

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There’s nothing that could make my blood boil faster than having a client fail to pay for his Radio schedule. While scrupulous attention to accounts receivable can minimize the agony of not getting paid, there are always some accounts that go bad each year, accounting for more lost revenue than you’d like. With the advent of tougher economic times, the likelihood of an increase in bad accounts is something every station will have to face.

Today, while talking with an accountant, I learned that the IRS can be an ally in turning the tables on a deadbeat client.

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“What Did You Do…?”

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In the opening scene of the movie Patton, the late George C. Scott in the title role gives a stirring speech to an unseen group of men prior to battle. After describing the aggressive action he expects from his troops—perhaps nervous about what was to come—Patton says:

Thirty years from now, when you’re sitting around your fireside with your grandson on your knee and he asks you, “What did you do in the great World War II,” you won’t have to say, “Well… I shoveled shit in Louisiana.”

A Radio Ink article from January 6, 2009, estimates Radio revenues will decline by 13 percent or more this year, making for a lot of nervous Radio troops. As the economy flounders and Washington politicians panic, things may indeed become worse. However, Radio—from among all the traditional media—is best positioned to weather this financial storm

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“Think” Revisited

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As I mentioned in an earlier post, the book Think And Grow Rich by Napoleon Hill has many inspiring stories that came out of the 1929 stock market crash and resulting depression. Along with his uplifting prose, Hill made a number of predictions about the future that were wildly off the mark. None of them were worse than what he envisioned for Radio.

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The Un-Fairness Doctrine

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Now that Democrats are about to enjoy a near-majority in the senate, the usual suspects are waxing eloquent about the need for resurrecting the so-called “Fairness” Doctrine for broadcasters, otherwise known as the “Stifling of Free Speech” Doctrine. Proponents claim the long-dead provision should be brought back to provide “balance” to the airwaves.

Unfortunately, removing the wooden stake from the heart of this measure would result only in the elimination of all discussion about any controversial issue on Radio and (to a lesser extent) TV.

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Back To The Future

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A friend last week re-introduced me to Think And Grow Rich by Napoleon Hill. I had read Hill’s uplifting message many years ago; revisiting it in the wake of the economic earthquake we’ve just experienced provided some interesting insights.

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The Case for Yield Management

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It’s shocking to me that some stations in the 21st century aren’t taking advantage of yield management strategies. In lean economic times, pricing your inventory based on supply and demand makes more sense than ever before.

The best argument for utilizing yield management comes from reviewing an unsold inventory report (assuming your traffic system can supply such a report). For stations without yield management, it’s typical for 30 to 50% of each month’s inventory to produce zero revenue.

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Adios, 2008

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As of midnight tonight, we bid farewell to a troubled year. There’s no need to recount the issues that face our country and our industry; if you’re in Radio you probably go to sleep at night worrying about poor sales, cutbacks, and what the future may bring.

It might make you feel better to know that our country—and Radio—has faced bad times before. During the Jimmy Carter years, inflation was in double-digits, gas prices were climbing rapidly, and the economy was in the doldrums. Many were pessimistic about the future.

But better times were in the offing. We were just a couple of years away from the Reagan Revolution and a revitalization of our economy. However, it’s important to note that Radio didn’t wait for a change of fortune. Through sales and programming innovation, a positive attitude, and a willingness to try—to beat a bad ec0nomy, no matter the odds—Radio was poised to take advantage of the boom times when they finally arrived.

Consider that Radio—from among all the major media—is best positioned to deliver results for local direct advertisers. TV is far too expensive, the newspaper dinosars are facing extinction, and direct mail costs continue to escalate. And local business doesn’t see the kind of results from the Internet that Radio can deliver.

So bring on 2009 and new challenges. I’m betting Radio is up to the task ahead.