How Do You Set Your Prices for Radio Advertising?

by Scott Howard | Mar 6, 2015 | Marketing and Advertising Insights, WOWO Fort Wayne Radio Advertising with Scott Howard

It’s a question I was asked this week by an advertising partner.

“How Do You Set Your Prices for Advertising?“, he asked as we were reviewing options for a couple of events this month.

I’ll tell you what I told him.  And a bit more.

Like all businesses, we have certain fixed costs to operate. Some we can control, others are out of our hands.  The number of employees is flexible. The electric bill, not so much.

I work for Federated Media which owns and operates a bunch of Indiana radio stations including WOWO radio in Fort Wayne which is my focus, along with our ESPN Radio stations.  Federated Media also has a digital solutions division, an entertainment division and they also own the Elkart Truth newspaper.

It’s a family owned company.  No big Wall Street Bankers to answer to, just the Dillie family.

Our company is supported solely by the sale of advertising and marketing products.  Everyone in management, in the office, on the air, all the support people are an expense.  The sales people are responsible for bringing money into the company to pay everyone. Not just themselves, but everyone and everything.

That’s the way it works in most businesses.  You have to sell stuff to pay your people and pay your bills.

With that background, let me answer the question, “How Do You Set Your Prices for Advertising?“.

We charge what the market will pay is a general guideline.  That is how we came up with the $100 per minute guideline on Fort Wayne’s WOWO radio.

There are other factors that come in to play too.

We have a limited number of minutes for commercials, as do all radio stations, and tv stations. When we are close to being sold out, our prices are the highest.  While most of our inventory is sold on long term, annual agreements, we always have enough to add shorter term advertising schedules.  But if you wait too long you will either have to pay a premium (over $100) or miss out.

Unlike other places, we don’t have last minute sales and drop our prices for advertising for next week.  We have advertising partners who have in their contracts with us, the ability to get their ads in those otherwise unsold spots.

Now when you compare our prices with other Fort Wayne radio stations, we are appropriately priced for the market when looking at raw numbers such as total number of listeners your ads will reach.  But in some cases, we are truly a bargain and should be charging more.  Like I’ve said before, I know what the other stations charge and some of them are really overpriced for Fort Wayne.

But some stations will go the other way and charge less, way less it seems.  There are reasons for that.  I used to work for some stations in Fort Wayne that would take whatever they could get.  The reason they offer significantly lower prices is usually because they have significantly fewer desirable listeners.  What is a desirable listener?  Depends on who you as a business need to attract as a customer. Most businesses need adults age 25 and older.

According to the latest data from the rating service we subscribe to, WOWO has over 123,000 total listeners age 12 and older in Metro Fort Wayne.  97% are age 25 and older. That’s almost 120,000 different people who listen to WOWO each week who are age 25 and older.

There is one other station, according to that same data that has over 100,000 listeners each week. WJFK has about 115,000 according to the Fall 2014 survey from Eastlan.  How many are desirable listeners for businesses that want to attract adults age 25 and older? Just 40%. Less than 47,000 adults age 25+ listen to WJFX.  There are eight other Fort Wayne radio stations with more adult listeners than WJFX, and WOWO leads the pack if that is the desired demographic for your business.

Another reason some stations charge significantly lower prices is they are unproven.  Last year nearly 1/2 the Fort Wayne radio stations changed format or frequency or name or all of the above.  My company, Federated Media, has done none of those with our Fort Wayne stations in a very long time.  WOWO is nearly 90 years old and has been a News Talk station for around 20 years.  The biggest change we made a few years ago was we added an FM frequency so listeners can hear us on 92.3 FM along with 1190AM.  You can listen online too.

Did I answer your question?  Is there anything else you would like to know?  Ask me:

Advertising Scheduling Hacks

by Scott Howard | Mar 5, 2015 | Marketing and Advertising Insights, WOWO Fort Wayne Radio Advertising with Scott Howard

Yesterday, I shared my Common Sense Advertising Scheduling principles I usually use with my station, WOWO Radio in Fort Wayne, Indiana.  Today I couple of methods to create an alternate perception of reality.

That sounds almost scary, “create an alternate perception of reality,” but it’s not.  It’s simply a method to help you stretch your advertising dollars if you need to.

As a News Talk radio station, WOWO listeners are active listeners.  They are less likely to mentally tune out when advertising comes on the radio.  We are accustomed to hearing talk and the news talk format is brain food, not escapism entertainment.

I have discovered that with a tight advertising budget, it may not be possible for some businesses to buy the ownership schedule a mentioned yesterday.  That option is one ad per hour during a 3 hour radio program on WOWO, 5 days a week.  15 ads per week.

If those 15 ads per week were priced at $100 each, that ads up to over $75,000 per year.  If we were to only use my secret sauce of shorter messages at 1/2 that price and we are still pushing $30,000 annually.  That may be too much for a young start up business. 

So besides varying the length of the message, there are a couple of Advertising Scheduling Hacks that I sometime recommend:

• 3 weeks per month.  Instead of every week, we may be able to knock 25% off by scheduling an off week each month.
• 4 days per week.  Instead of every day, 5 days a week, what if we did 4 out of 5 days? This would reduce the cost by 20%.

Loyal listeners who are listening daily or nearly every day, are not going to notice this.  I recall talking with a friend who swore he heard one of my advertising partners every day, 4 or 5 times each day.  That was his perception.

Reality was that they advertised 4 days a week, 12 ads each week, 3 weeks each month.  However we created an alternate perception of reality with this loyal listener.

Now before we wrap up this subject today, I want to warn you about an Advertising Schedule Hack that you don’t want to try.

The same software programs that take the listenership data from the ratings companies are often used by advertising agency media buyers to craft the perfect schedule.  They use terms like Gross Rating Points and other criteria that ignores the human relationship principles and habits and they come up with some really weird schedules.  When I worked for another group of radio stations and worked with a lot of media buyers, I would have to play their numbers game, but I usually would send them a Common Sense Advertising Schedule too.

Beware of media salespeople who can’t explain in simple terms you understand the advertising program they are recommending.

Common Sense Advertising Scheduling

by Scott Howard | Mar 4, 2015 | Marketing and Advertising Insights, WOWO Fort Wayne Radio Advertising with Scott Howard

Back to my continuing series on advertising on WOWO radio in Fort Wayne, Indiana.

Today, I’m going to strip away the radio jargon and secret formulas that advertising sales reps and media buyers often use to create an effective or recommended radio advertising schedule.

First the background. Radio stations and advertising agency media buyers usually have access to radio station rating information for their market.  In Fort Wayne, we have two companies that provide us with this data.  One is Nielsen Audio, which is the old Arbitron Radio ratings service that Nielsen purchased in 2013 for $1.26 Billion bucks.

The other company is Eastlan Ratings, which started surveying Fort Wayne a few years ago.

Each Spring and Fall, these two companies survey people living in Metro Fort Wayne about their radio listening and that information is then sold to stations and media buyers along with the software to make it possible to dig in and dissect the information.  You, as a business owner don’t have this information.  But that’s okay, because I’m going to introduce you to Common Sense Advertising Scheduling.

This method was the one I started using years ago when the radio station I worked for in Detroit didn’t subscribe to the ratings services.  It is a very expensive investment and they didn’t want to fork over the dollars.

The Common Sense Advertising Scheduling principle uses human behavior guidelines and relationship principles that are universal.

Most of us have predictable habits.  For example:  5 days a week, Dad works in an office from 8 to 5.  Mom also works about 25 hours each week and the three kids are in school most days.

Dad hops in the car, drives 25 minutes from home to work and about 40 minutes back in the afternoon.  He always listens to Fort Wayne’s Morning News on WOWO during his commute because he will get all the latest updates on everything he needs to know along with a quick interview with a local newsmaker.

Mom also listens to WOWO in the morning but also visits WOWO.com to check on school delays.  She is a fan of Glenn Beck and tunes in to WOWO on 92.3 FM around the house or in the car.  When she is at the gym, she listens to Glenn via the TuneIn App on her phone which is also set to WOWO.

These are just two examples of thousands of folks who listen to WOWO every week.  The thing to remember about this, to apply to the Common Sense Advertising Scheduling principle is that we are creatures of habit.  We also have our own personal preferences.  Some people need a blast of country music to start their day, so they listen to K-105.  Or pop music is their favorite so WMEE is part of their radio listening habit.

With a news talk format, WOWO is very personality oriented.  Some people are big Rush Limbaugh fans and find a way to listen between noon and 3 every afternoon.  Others think he is a blow hard.  The same can be said for Glenn Beck between 9 and noon or Sean Hannity who is on WOWO between 6 and 9 pm.  Pat Miller, our local afternoon talk show host has his loyal fans and those who could care less.  Same with Charly Butcher, the Fort Wayne Morning News host/ringmaster.

Each of these programs are 3 hours long except Fort Wayne’s Morning News which is 4 hours.

Each program has thousands of listeners every day.  Odds are the people who listen to Pat Miller on Monday afternoons, also listen Tuesday, Wednesday, Thursday and Friday afternoons too.  It’s because of the relationship bond that is built between the radio personality and the listener that motivates the Mom, Dad, or whomever to tune in.  And it becomes a habit that is also created by the other habits of a persons life, such as work schedule etc.

So, with all of this background on human relationship principles and behavior, it is easy for me to create a Common Sense Advertising Schedule.

First we pick a program. There are 4 shows between 6am and 6pm, WOWO’s Primetime that are 3 hours long.  Two shows air between 6pm and midnight.  We pick a 3 hour program that will feature your ads.

Here are the three options I usually present:

• Ownership.  Once an hour your message is on WOWO.  15 times per week. Every hour a loyal listener to _____________ show will hear about your business.
• Dominate. This is where you are going to be heard 2/3rd’s of the time.  10 times per week out of 15 possible, you are going to be heard by the loyal listeners to the  _________ show on WOWO.
• Presence.  I usually do not recommend this option by itself.  5 times a week your message is presented to loyal listeners of the _______________ show on WOWO. If I keep it limited to a 3 hour show, that still means you are missing 2/3 of the opportunities. Tomorrow, I’ll show you how I can adjust this and still make an impact for your business if this is all you can afford.

Often I will expand these options too.  Let’s say you want to reach the people who listen to two or more of the radio shows on WOWO.  We just duplicate this Common Sense Advertising Scheduling to a 2nd or 3rd program on WOWO.

Want more info? Contact me: