9-17-2014
By Jeff Schmidt
Imagine if Erica Farber stood in front of the radio station owners at this year’sRadio Show and asked for their help and support to eliminate ratings fraud. Imagine if the Wall Street Journal published a report saying that somewhere between 36 and 50 percent of diaries or PPMs are frauds — not actually humans listening, but machines manipulating the system. If any of that happened, all hell would break loose. Thankfully, the radio industry is better than that.
That is not going to happen.
This is. The Wall Street Journal, March 23, 2014, headline: “A ‘Crisis’ in Online Ads: One-Third of Traffic Is Bogus.” Subtitle: “As Digital Advertising Climbs Toward $50 Billion This Year, Marketers Battle Fraudulent Visitors.” The article goes on to say that billions of dollars are flowing into online advertising, even as marketers are confronting an uncomfortable reality: rampant fraud. According to the WSJ, the market for online ads is expected to cross $50 billion this year. The clear implication — which isn’t stated explicitly, but also never refuted — is that online advertisers are being collectively defrauded of $18 billion.
Interactive Advertising Bureau Chairman and Ziff Davis CEO Vivek Shah called on the industry to recognize the problem and clean up its act. “The industry will never realize its potential if it doesn’t take the matter seriously and fix it now,” Shah said.
Shah cast the net of blame widely, implicating not just unscrupulous actors but also publishers and agencies. “We’ve got to stop devaluing digital media,” he told a room full of online publishers, agency executives, and ad tech vendors at the IAB Annual Leadership Meeting. “It’s simple: No more traffic fraud. Let’s end it.”
According to Shah, a full 36 percent of all Web traffic is nonhuman traffic. Other ad execs suggest the figure is closer to 50 percent. “There’s nothing more damaging to our industry than fraudulent traffic,” Shah said.
Meanwhile, radio and TV stations are jumping into the digital space with both feet. Who can blame them? There is a ton of money being spent there. Do stations know what they are doing? Do sellers know what they’re selling? Or are we simply trading dollars and hurting radio by adopting digital strategies? As we embrace this platform, these are some of the questions that must be answered.
Today, the amount of money being spent on digital advertising is growing at a head-spinning pace. In 2012, it topped $102 billion worldwide. An article inForbes magazine says this about the future of ad spending: “Digital now commands nearly one in five ad dollars, the market researcher notes. What’s more, it’s continuing to grow at a rapid clip, forecast to stay at double-digit increases through at least 2015. This year, eMarketer reckons online ad sales will rise 15.1%, to $118.4 billion. And by 2016, digital ad spending will pass a quarter of all ad dollars.”
Compare that to the money spent on TV advertising in 2012, at $63.8 billion, and radio, at $17.6 billion, and you can understand why broadcast companies are trying to figure out digital.
In preparing to write this story, I had the pleasure of interviewing some of the best radio directors of sales in the country. Their answers were insightful and helpful, and show what successful radio people are thinking about digital these days.
Amy Leimbach is the director of sales for Alpha Media in Portland, OR.
What are the challenges of selling spots and digital in a digital world?
Leimbach: Advertisers these days are confused by those choices. We sell advertising for our business and we are supposed to understand what our competition is doing every day. Imagine what it’s like for an advertiser trying to run a business and their core competency is to be running, for example, an HVAC dealership. Their number one task of the day is to try and figure out how to get their salespeople to sell more air conditioning units right now. A lot of times advertising and marketing falls down the list. So it’s easy for them to be taken advantage of, I think. They don’t understand it, but then all they hear is, “Oh, you gotta be in digital, you gotta be in digital,” so they tend to be confused and they buy in to the bright shiny object out there.
How important is brand strategy in the digital space?
Leimbach: This is the biggest problem with digital: You have to have a brand before you get there. So people think they can just use digital, but once the consumer gets online, how are they supposed to decipher the right brand to go to? So you still need to have radio to build recall. Because once you’re online, you have to go, “Oh, yeah, that’s right, I heard of Dick Hannah dealerships on the air, so I’m going to click through to that one when I’m going to make my purchase for my Kia. I’m not going to go to this one because I’ve never heard of it before.”
Spending on digital advertising is not showing any signs of letting up. Where is that money coming from?
Leimbach: I feel like all those newspaper dollars, where we were fighting to get a piece of the market for so many years — I mean, the poor newspaper industry, whatever, I don’t feel that sorry for them because they got their share for a long time — but that money literally leapfrogged over us and went straight over to digital.
What do sales reps need to know about digital?
Leimbach: I think that reps need to remember that using digital is just using one of your tools in the toolbox, and it’s helping you execute a wellthought- out campaign. It starts out on-air, and the online is one of the execution pieces of it. They need to remember that it starts on-air; it starts with a traditional brand. I think people sometimes think of the tactics first and they should think of the strategy first. To me, that’s the most important thing: Think strategically about what you’re going to do to try to accomplish your clients’ goals, and then put the tactics behind it. Don’t go in with the tactics first.
How do you teach sellers the fundamentals of advertising and radio, brand marketing strategy creation, and then digital?
Leimbach: You have to lead by example. I think that sales managers need to be out on the streets with their salespeople. I think that’s the best way for them to learn. Most sales managers were probably really talented salespeople, so if they go on more calls, they can hand-hold and walk through the process with their sellers so that the sellers feel comfortable with it. If you’re leading by example, then they end up learning it.
What’s your greatest frustration with digital?
Leimbach: The clients seem to be so dazzled by something that they can’t even put their finger on it. [Laughs] I’ll have car dealers who, without a bat of the eye, will drop 20 grand on some shiny new object with digital. We ask them to spend 20 grand with us and it’s like extracting teeth from them sometimes.
What’s working best so far in terms of generating digital revenue for you in Portland?
Leimbach: Adding streaming to our buys is adding the most new revenue. Then, really, the good old NTR programs that we’ve done for decades. Instead of using entry boxes and printing up little flyers, we just use digital to execute all these ideas now. We have lots of success tied to NTR dollars. I feel really good about those dollars being tied to digital because that’s how we are making the programs live.
Cory Cuddeback is the director of sales for Beasley Broadcast Group in Las Vegas.
What are the challenges of selling spots and digital in a digital world?
Cuddeback: Well, with selling digital, my sales reps aren’t real comfortable selling it, because they don’t really understand it. Obviously, what we want to do is use our existing relationships to sell our clients digital, and the sales reps are intimidated because they are afraid if they sell a digital package to an existing client, and there are any challenges with execution or results, they could damage their existing relationship and it could possibly cause them to lose a good spot-buying customer.
Are you asking them to sell digital as a standalone product or digital tied only to a traditional media schedule, such as with radio?
Cuddeback: Both. There are a lot of clients that don’t do radio and we are trying to get in the door using our digital assets in hopes of also selling them radio time. With existing spot buyers, we are trying to incorporate different digital assets into their buy. So the plan moving forward is to start as many conversations as we can, and if we need to use digital as a wedge to get in the door, that’s what we are doing. What we are finding out is a lot of clients just want to do digital, but we are also finding clients that, once we can start establishing a relationship by talking about digital, we can start having a conversation about radio as well.
Here’s the deal: I can build a beautiful website for a client. If that client doesn’t tell people, via radio, TV, electronic media, about their beautiful website, it doesn’t really do any good. You can sell just digital, but there is no better advertising than word-of-mouth, and digital can’t create top-of-mind awareness or get a good buzz or create word-of-mouth about a business. The only way to do that is with, in my opinion, electronic media. I can’t create a jingle in the digital world and have someone remember a business through audio, through a jingle.
Where is this new digital money coming from?
Cuddeback: It is coming from everywhere. It is coming from radio. It is coming from newspaper. It is coming from TV. That’s all people talk about now, it seems like. There is a car dealer in Vegas that moved from TV and radio and now spends 100 percent of his budget on digital. When you see things happen like that, you have to pay attention and get into that space.
How do you prevent your sellers from trading dollars?
Cuddeback: That’s a really good question, because trading dollars from radio airtime into digital costs me money because of the hard costs of the digital products that we are selling. Although I am saving my airtime and able to sell my airtime to another client, it’s kind of a Catch-22. If I’m dealing with a radio station that has a lot of demand and typically in a sold-out situation, and that seller is trading dollars for digital, I am OK with it, because it frees airtime for me to sell to somebody else. In most cases, I don’t have a problem if they are moving off-air into digital.
You talk about salespeople being intimidated and salespeople not understanding. How do you fix that?
Cuddeback: Well, right now, the way I am trying to fix it is to hire someone as a full-time digital director for my cluster that can show the other sellers that it is OK, they can sell this, and nothing is going to go completely and horribly wrong. The answer is really to have some of my sellers gravitate more to selling digital products and to hire someone who has been doing it for a number of years that can hold their hand and help them through the process.
What do salespeople need to do differently?
Cuddeback: I want every salesperson that I have to be a solution provider and to be able to sell everything I have. That would be the ultimate goal, to really be a consultant and to be able to walk into a business and talk to the owner and have all of these solutions for them. That would be my ideal world, but I am not sure I want reps to be able to go into a business and say, “Here’s radio and here is how it works. What’s going to happen when I run your radio schedule is people are going to go online and do their research. So, why don’t we help you with your website? Why don’t we help you with your search engine optimization, and do everything all at once?” In fact, we have a client now that is waiting to do radio with me until his website is right and until he has everything digitally where he needs to be, because he understands that he doesn’t want to spend a bunch of money in radio before his digital presence is correct. That’s kind of where I want my sellers to be.
Why do some people think radio doesn’t work anymore?
Cuddeback: In today’s world, when I run a radio commercial, when it relates to getting business for that customer, guess who gets the credit? The Internet. I run a commercial, and you know how it goes. They hear 10 to 20 percent of what the message says. So they go on Google. They do the research. They find the business. They call the business. The business asks “How did you hear about us?” and the person says, “On the Internet.” That’s the big challenge. That, I think, is really damaging our business.
But aren’t we feeding that monster?
Cuddeback: Yes. Because the businesses that want to find out where their customers are coming from, over the past few years, the Internet is their number one source for getting their clients. They forget that they have spent the last 10 years advertising their brand on radio. They forget that people have heard their commercial and are influenced by that commercial, enough so to go find them, search for them on the Internet, and then the Internet gets the business. In most business owners’ minds, all this business is coming from the Internet — when the fact is, it started way before the Internet.
As a manager, how do you keep track of all of that, and how do you manage your people and their level of knowledge?
Cuddeback: It drives me absolutely crazy. You know, 20 years ago, we sold radio. That is all we sold. Now the salespeople are spinning 20 plates at one time and it is hard to focus on any one thing. There has been such a push to sell digital because of what is happening around us — a lot of focus has left the pure radio play. That is really, really scaring me, because our eye is off our main source of revenue, which is radio. Managing the time that sellers
spend learning and selling digital versus pounding the pavement selling radio, is really scary. My boss, in fact, just the other day, asked me what percentage of our time I thought we should focus on digital. If you look at the big picture and say, “Well, look at how much more money is being spent digitally, now surpassing radio,” you would think that a lot of your time would be spent selling digital. But then you’re putting your core business of radio in the back seat. And that really has me nervous.
Traci Northrop is director of sales for the Milwaukee Radio Group (Saga Communications) in Milwaukee.
What are the challenges of selling spots and digital in a digital world?
Northrop: Well I think digital provides two opportunities. One is often forgotten, and that is that it’s an extension of our brand. It’s a way for us to reach our listeners on a level of “Hey we’ve got this weekend special going on,” or “Hey, join us at this event where we are going to register you to win a Harley-Davidson.” That’s the one we often forget about because everyone is just looking at this as a revenue stream. I don’t think we’ve figured out, as an industry, how to capitalize on it, or that we completely understand it, but we just know we should. So we are all just jumping on the bandwagon right now.
How does digital fit in a well-executed marketing campaign?
Northrop: You have to be consistent, and it has to be an extension of something that brings it all back home. Like, “I heard about the fact that I can win this prize, this Harley- Davidson, and now I received a text showing where I can now register to win it, and then I look at the website and I can see the whole list of events of where I can go.” We use it really well, and that’s how we have to teach our clients to use it, the same way we do. Fully integrated. Not as a standalone, but as part an overall campaign.
How do you monetize it in Milwaukee?
Northrop: First of all, we won’t sell social media for the sake of pure advertising. Like, “You should buy a car at this particular dealership.” But if we are going to be at that dealership and it’s a station event, then we can use our social media to help bring that traffic around and use it as one of the tools to increase our success at that event. For example, we won’t sell an ad on our Facebook page saying, “You should call these people to cater your summer picnic.” We won’t do that. We will post on Facebook that we are going to be at this particular car dealership and you can meet this personality. So it’s definitely interwoven in everything. But it’s not a standalone. Otherwise it’s kind of like a sellout.
Do broadcast companies have an advantage with digital platforms?
Northrop: There was a report out from Twitter that something like 8 percent of their online usage, or 23 million users, are actually bots! So how do you know what you’re getting? If you’re looking for numbers, they can generate massive numbers, but are they real? I would rather sell something I can believe in. That’s a combination of radio with the right amount of digital added on, when it makes sense. People are oftentimes asking for it and they don’t know what they are asking, or it’s just that shiny new thing.
That’s why we have to value our likes and our people more, because we’re not creating fake profiles to boost the numbers. These are actually people that said, “I love WKLH.” These aren’t bots, they are people — real people — real traffic. Everyone that is engaged with us on social media is a real person. That’s why we have to value it more too.
What sort of training do reps need, and how do you provide it?
Northrop: Well Saga has an interactive digital sales support team. We receive help from a platform basis where they will send out ideas and contests. We get good support with questions on how to understand things. We have people come to the market that show us better ideas, better ways of doing things. Then our digital guy, our website guy, is actually in our building. That’s another Saga great thing; not a lot of people can walk across the hall and talk to their Web dude. Which is what we call him: our Web dude.
Are radio and TV stations making money on digital?
Northrop: I think we’d like to think so, but we don’t take the time to stop and actually figure out how to best charge for this and then get all of us on the same page. Some of us aren’t charging for it and just handing it out, number one. Number two, some people are acting like they are charging for it but they are not actually getting more money, they’re just reclassifying it in the budget line. So we are bamboozling ourselves.
So in some cases, when it’s a condition of being on the buy, if one group relents and says, “OK, yeah, we’ll do that,” it kind of puts the rest of the groups in a bad position. Here we are trying to value what we have and what we’ve built, literally built from one user on. We’ve built our own Facebook page and we’ve put great content on there and we engage our listeners. And you’re going to give it away for free?
So we’ve got to unite and say, “You know it’s not worth nothing, but it’s not worth top of the rate card. Somewhere in the middle, we have to meet.”
Are there dangers to selling digital?
Northrop: If you lose sight of the fact that radio is your main product and this is just another great way to help reach your audience to generate traffic for your client, and to make your client memorable. Then you’re losing sight of everything. Then you can just go work for a dotcom company. If you’re in radio, you have to sell radio with digital. The message is clear. Stick to the core, but digital is something that can definitely help radio be more effective for ourselves and for our clients.
What digital products are working best for you in Milwaukee?
Northrop: Saga does a really good job of maintaining our text clubs and giving people rewards for being members and engaging the customers. We have a process. If someone wants to get out a text, it’s not an “OK.” We go through the program director and say, “Does this make sense to you and can we encapsulate it in the amount of characters?” Texting works reallywell, Facebook works really well. Those are the two things I’ve found get the best results when used correctly.
Is digital here to stay?
Northrop: It’s amazing, it’s like everyone is in a panic to participate. It’s like when all the radio stations went out to buy a PT Cruiser as a station vehicle, they were all the rage. You couldn’t even get them, they were in such demand. Now I don’t see anyone excited about PT Cruisers. Digital is like the PT Cruiser, except that it’s not going to go away. But it’s part of a five-course meal. We’re just adding courses and more ability to reach and engage people to get results for advertisers and to provide content for our listeners from our brands. The more we can engage, the more loyal they will be to us.
The consensus appears to be that digital offerings of broadcast companies are first and foremost an extension of your own brands. It allows them to connect more deeply and more frequently with their audience. As a result of that connection, they allow advertisers to utilize the digital presence of the station for their own marketing strategies. Stations, in turn, have a new source of revenue beyond traditional advertising.
My first foray into selling digital, back in 2006, was clearly a case of trading dollars. I felt I needed to leverage digital with radio because nobody believed in digital at the time. I know I didn’t. Today it’s hard not to believe in digital advertising’s ability to extend an already strong campaign. We have to resist, however, making digital more than what it is. It’s a tool.
Jeff Schmidt is EVP and partner with Chris Lytle at Sparque Inc.
You can reach him at
Je**********@Sp*****.biz
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Twitter: @JeffreyASchmidt
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