Mark Levy VP/GSM mlevy@rab

1. Strategic Pricing: Is Now The Time To Offer Guaranteed Advertising Results? Mark Levy VP/GSM mlevy@rab.com Mike Mahone Exec. VP mmahone@rab.com

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5. PDF of slides • Will be available • Watch your e-mail for a link to an evaluation and the PDF.

6. Problems • Everyone is cutting rate • CPP is dropping like a stone • No integrity in the business • If I drop my rates to get the business, I’ll never get them back up • If I don’t drop my rates, I don’t get on the buy

7. Submitted For Your Consideration: What’s a better course of action for your stations’ short- and long-term health? Taking a risk on Guaranteed Advertising, the odds of which you can tilt in your favor or continuing to offer “Buy one, get one free” when the inventory demand is low?

8. An Idea to Submit foryour Consideration • These problems all stem from letting others tell us what we are worth. IF clients (and our own sellers) believe we are worth what we ask, rates are much less of an issue.

9. Rate Classes • MAY be the tool that allows us to quit being at the mercy of others who try to price our inventory for us • May allow us to get our integrity back… a weapon against “Dive! Dive! Dive!”

10. Yes, A Super Premium Rate Class Based on Guaranteed Results • Based on client/ station partnership • Station needs to have trust in the client (more on that later) • Station can charge maximum rates because CPP or CPM is not a factor

11. How Does “Guaranteed Advertising Results” Work? Based on station and advertiser agreeing that a schedule will run and something that BOTH PARTIES AGREE ON will happen Based on sales, lead generation,etc. Station runs HEAVY schedule at premium rates. If agreed upon action does not happen, station reruns schedule

12. How Does “Guaranteed Advertising Results” Work? • Necessary ingredients include: • “checks and balances” • A Set Of HARD FAST RULES • A Solid Marketing Plan • Staff Buy In • Oh yes, and a good set of spreadsheets!

13. Pros: • Differentiate yourself from competitors • Insulate yourself from ratings wobbles • Get more LARGE schedules at premium rates; • Move your stations out of “Commodity Mode;” • Develop deep, long-lasting partnerships with clients • Help reduce risk clients have in doing business with you

14. Pros: • Forces a collaborative effort between client and station (not just seller) to SOLVE CLIENT PROBLEMS IN A PROFITABLE MANNER FOR STATIONS • MUCH greater transfer of information • Takes focus off CPP, rates, etc. and focuses it where it should be: generating measurable action (not necessarily sales results) for the client

15. Pros: • Great way to drive rates • Helps SELLERS focus on writing large orders • Helps copywriters learn to quit putting filler in spots … every word counts! • Forces interaction with manager and seller  • Uniquely positions your station(s) in the advertisers’ minds

16. Cons: • Station may have to rerun schedules at no charge • You may have to tell some sellers and clients that they can’t do it. • The station may be told “your parameters for this are ridiculous!”

17. Foundations of “Guaranteed Advertising Results?” • Good Customer Match • ROI (Return on Investment) • DEEP Client information • A Solid Marketing Plan • A Set Of HARD FAST RULES • Staff Buy In

18. It’s Not Price if the Customer Values the Product … Who Values Yours? • Common Sense • Local Qualitative Research • MRI Gold Digger Reports

19. Matching Listeners to Prospects

20. ROI plays a huge part in offering guaranteed advertising results…but just what is ROI and how can it be defined? • Answer: “Return on Investment: what one should expect to gain in return for an expenditure of time, effort, and/or money. The word ‘should’ is important to the definition, as what one “pays” for something is NOT ALWAYS an indication of its value. The value, as you might expect, lies in the eye of the beholder.” Antiques Road Show

21. Good News • When used correctly -- and at the right time -- ROI can be an amazingly effective tool to “reduce the risk” a client may feel before doing business with us

22. Bad News • ROI isn’t as simple as pulling out a calculator and saying, “The numbers say you should see a big increase!”

23. ROI as a Component of Guaranteed Advertising Results • ROI’s Role in Managing Client Expectations – The History Book! • How do should you calculate it? • Units Sold, Prospects, ?

24. Why The Emphasis On ROI Now? • More competition for ad dollars (new sources) • Greater sense of fiscal responsibility brought on by Wall Street • Fear on client’s side of making a mistake … the end of the entrepreneurial spirit? • Clients smell the fear on us too • Do your sellers call clients in the middle of their flights to see if the flight is working? Why not?

25. To REALLY Do It Right… All the basics … plus • Past 12 months gross sales, at least by quarter, and if possible by month • Average ticket • Total # sales transactions (by quarter or month if possible) • Closing % • Average % of gross profit

26. Info Needed (cont’d) • Amount invested (NOT SPENT) in advertising in last year, again, by quarter and/or month, either dollars or % of gross sales to achieve past sales • How money was allocated • Projected sales for next 12 months ? • Do your sellers regularly get this information?

27. Info Needed (cont’d) • Projected Average ticket change (up or down) • Projected closing % change • Projected amount to be invested (NOT SPENT) in advertising in next 12 months, again, by quarter and /or month, either dollars or % of gross sales • Use a calendar

28. Use a Calendar (Sample)

29. Now, Let’s Look at ROI as a Component of Guaranteed Advertising Results: Tools to START you on your way • Yes, you will get working copies you can use at the station level!

31. Calculating ROI: Sales

32. Calculating ROI: Prospects

33. Promises Promises! • At the end , we will show you a more “in depth” spreadsheet to help you do “long term math for guaranteed results.”

34. Guaranteed Advertising Results: Extremely Important As Part Of Your On-Air Campaign…TO ATTRACT ADVERTISERS!

35. Marketing Tools • On-air marketing campaign (you should have one at all time – don’t give it all to programming) • Tri-folds • Stuffers in bills and statements • Fax cover pages/e-mail signatures • Website • Business cards

36. Guaranteed Advertising Results:An Integral Part Of A SALES Marketing Campaign • A positioning statement that means a heck of a lot more to your advertisers than “The Work Escape Station,” “The Home of Continuous Country Favorites,” or “The Best Mix of the ’60s, ’70s, ’80s, ’90s, and Today!” • It can do more to differentiate you from your competitors than just about anything else…if it is right for you

38. Some people put “The ROI Math” right here

39. Submitted For Your Consideration: What’s a better course of action for your stations’ short- and long-term health? Taking a risk on Guaranteed Advertising, the odds of which you can tilt in your favor or continuing to offer “Buy one, get one free” when the inventory demand is low?

40. Guaranteed Advertising withMaximum Upside and Minimum Risk- It’s All In The PLANNING And ROLLOUT

41. You Will Need to Address • Having your sellers get MORE AND DEEPER information than most sellers ever get • Maintaining creative control • Scheduling • Pricing • Agreement with the client over what good performance will look like

42. You will need to address (cont’d) • Agreement on the verification process • What you will do in the event the campaign does not produce the desired results • Rock-solid payment terms • The client’s signature on everything • Your “outs” • The fact that not all clients qualify

43. Station Must HaveCreative ControlBad Copy = No ROI!

44. Scheduling • Guaranteed Advertising should ONLY BE OFFERRED ON HEAVY FLIGHTS where you have a good chance to deliver the ROI: 50, 70, 80 commercials IN A WEEK, Monday-Sunday 24-hour equal distribution (the “2nd and 3rd shift prime” buyers) • CHILL! Clients spend $5,000, $10,000, $40,000 a day in a single newspaper, with no guarantee. We don’t get because we are afraid to ask.

45. Scheduling (con’t) • Look at doing these in the lesser demand weeks of the month (often first two weeks of the month). • Schedules are non-cancelable • This is not for all clients!

46. Pricing Based on ROI • With Guaranteed Results, we price upon our GUARANTEE that we will meet the client’s objective(s). This means a minimum of a 25-35% premium! • CAREFUL! Clients can figure out math too -- if you double your prices, they will view you as hedging your bet that the schedule will fail, and you are just “gouging” them upfront!

47. Performance • Guaranteed Advertising can be based on sales, but other things it can be based on are lead generation, web traffic, phone inquiries, requests for information, store traffic, etc. • This is the place that many stations, after looking at the past history of the client’s success, or lack of, decide to walk away.

48. Performance • HINT: If your gut says “no,” it is probably right • “Secret shopping” to back up your hunch

49. Verification • There IS an element of trust at play here, but handshakes won’t cut it! • Written agreement is a must -- legitimacy and legality • Notarized (hey -- you notarize affidavits!)

50. Payment Terms:Another way to monitor who you do Guaranteed Advertising with • 100% up front for anything less than perfect credit • 100% up front for new clients • Okay to bill really good clients? Ask, “Will they pay if we have a misfire?” You need some commitment! • You need client signature on EVERYTHING!