Tuesday, July 26, 2011

Walking that fine line with accounts
and some of the “things” they do

By John C. Peterson
The Peterson Group

How do you tell an advertiser, they’re about to do, for lack of a gentler expression, an unwise thing?

Now when I say unwise, between us, I mean dumb things like: Cut way back or drop out of the paper, run a real ugly ad or say something in an ad that you know is false. Also include in this category letting them buy things that you know won’t work. Then there’s the ultimate in ad revenue pain, “We’re not going to run that ad.”

Better yet, how do you tell them it’s the store, not the ads, that aren’t working?

Things like that can take all the fun out of selling advertising or running a newspaper, huh?

Of course the answer is proceeding carefully and tactfully, but the higher requirement is the conviction and guts to do it. Too many people wimp out, take the money and hope for the best. That’s certainly the easiest course, but hardly the wisest. I’ve seen more papers lose rather than gain business by going that way.

Below are some of the unpleasant situations and conversations many papers encounter.

Cutting back or dropping out is the easiest of these conversations. You explain that advertising is a process, not an event; that by advertising they’ve created mental equity that must be maintained, and they would certainly not want a competitor to come in and capitalize on their investment. People are looking for their ads and surveys indicate the majority of consumers think there’s something wrong with a business if it doesn’t advertise. Okay I understand you need to cut back, but don’t drop out. Out of sight- out of mind, that’s the worst thing you can do to your business.

In a troubled economy an account has to make even more noise in the market in the market to get what money is out there. If people are spending 40% less money on dining you need to provide them more information to make your case. Think frequency and mental equity

Selling things that won’t work. At the top of this list is, “Let me try one ad and see what happens.” The practice goes back to Moses, but the only reason it worked for him was he had some pretty big things to say. I always suggest converting the amount they wanted to spend into a program, if it’s enough money to work with. If not, walk away from the business and fall on your sword. I’ve seen more sales reps get instant respect and generally more revenue because they showed character and wouldn’t sell something they knew was wrong. It certainly gives the account something to think about when you walk away from the money. 

Yes publishers and sales managers, I said don’t sell the ad.

The other side of this coin is self-preservation. The only thing worse than not selling an ad, is selling one that didn’t work. You don’t want that person to be able to say they bought an ad in the paper and it didn’t produce a response. It’s pretty tough to counter and it could cost you a lot of ads going forward if they spread it around town.

Dumb, ugly and less than honest ads.  I think the epidemic started about 20 years ago with the proliferation of home computer and design software programs. Would-be designers and their prodigy children offered up some of the most horrible ads within four borders (actually some were even circles, trapezoids and other shapes that defied comprehension). The tactful salesperson reacts by saying, “I think it’s well done (clever?), but…” After that you can say things like unfortunately I’m not sure the majority of the people will get it, I’m not sure it fully reflects your best business, etc.

Then there’s the retailer who wants to over sell the store in the ad. Lowest prices, largest inventory, etcetera, and you know it’s not the case. Again, start off with a compliment, but work in a friendly lecture about perspective and individual realities. Disappointing consumers with misleading advertising is hardly the way to build credibility and long-lasting relationships.

“We’re not going to run the ad.” My personal gut-wrenching experience from my publisher days involved a $2,000 ad created by the son of a prominent restaurateur that was supposed to run in all editions of our summer guide. This was no kid, he was middle age, but I set myself up the year before by calling him up and telling him how much I enjoyed that year’s ad which I honestly thought was agency quality. Fast forward one year and the ad rep comes into my office with an expression that was somewhere between a smirk and extreme pain.

“Richard (last name omitted) wanted Mr. Peterson to see this because you liked his ad so much last year,” the ad rep said. With that he handed me a folder that contained one of the ugliest and totally unreadable ads I had ever seen in my life. It had large thick Old English type printed backwards. It was Richard’s idea that people would read the ad in a mirror and be convinced this was a restaurant they just had to visit. Richard thought he was being clever, very clever.

“This is a joke, right?” I asked.

“”No, and he says if it doesn’t run as is, he wouldn’t run it,” replied the rep who said he had already explained our policy about ads that challenged readership or played tricks on readers.

“We’re not going to run it that way,” I said.

“I know that, Richard’s expecting your call,” the rep responded.

Two thousand dollars is still a lot of money, but in those days it could mean the different between making and not making budget for the publication. This was supposed to be the back cover and we were on deadline, and we needed the money. But it was my rule.

The call to Richard got as ugly as the ad. He expected me to be impressed by his continued creativity and wasn’t one for rejection. He couldn’t understand why I wasn’t thrilled with the ad and questioned what happened to free speech and a free press. It was his money, and who was I to tell him what was good for his restaurant. He knew his customers, and on and on. H

All these years later I still think it was one of the dumbest ads I’ve ever seen, but I tried to be tactful.  I said I thought it was an interesting concept, but I was concerned that day trippers and people passing through the region might not have access to mirrors the way people in hotels did. My greater concern was he wouldn’t get the full value of the money he was investing because he might be missing part of the audience.

Before the call ended we not only lost that ad, but all of his business which was a good $20,000 a year. Richard even stopped talking to me at Chamber of Commerce meetings.

The morale of the story? Think twice about creating personal monsters; there are plenty of them out there already. My effort to stroke Richard the year before clearly cost us the account.

Some days you’re the ringmaster, some days you’re cleaning up after the elephants.  Damn rules.

Next: How do you tell accounts the ads are fine, the real problem is with their business?

Tuesday, July 05, 2011

Measured, educated response
best way to handle
cut-throat competition

By John C. Peterson
The Peterson Group

Many community publications are suffering severe and sustained revenue loses at the hands of desperate competitors it seems will do anything for a little cash flow.

It’s hard to be smarter than your dumbest competitor.

That gem was not an original thought. I heard it from Dan Burke, then president of Capital Cities/ABC in a publishers’ meeting many years ago.The comment came after a publisher was lamenting revenue loses driven by the low rates of a competitor’s start-up. Think about it for a minute, it’s a beauty.

Dan’s comment couldn’t be more appropriate in today’s operating conditions. Many papers are doing some pretty foolish things in the name of cash flow. Some do it in the name of “value-added packages,” special offers, or just plain unabashed and reckless price cutting.

So how do you respond?

If the consequences weren’t so severe I could be amused by one metro daily’s “January-only” limited special rate that continues as I write this in late May. You can buy a full page black and white ad in any Sunday zone for $400.00. Process color is an additional $100. No contract or commitment is required. The normal price for a black and white ad is in the $1,500. range, with a contract.

So how does a 35,000 news weekly respond when its 52-week contract price for a full page is near $2,000? They couldn’t produce that ad for $400.


The last thing you want to do is cut your price. You sell value and effective circulation, local and relevant content. They may have more circulation but you’ve got the copies that count. Your circulation saturates the area; it’s not spread over a remote massive county with aggregate readership that has limited benefit to a local business.

You risk your credibility and account relationships if you cut price. Your regular loyal customers who have been with you for years will wonder if you can sell it dirt cheap now, have you’ve been screwing them in the past. How will you ever get back to real prices?

It’s like a punch in the gut if you’re a struggling community paper. This daily is likely trying to generate cash flow and snag a few new customers. They’re attracting bottom feeders and people looking for deals, you’re there for the long haul. The daily is taking away business with its crazy pricing but those rates are not going to last forever. You have to wait it out because when that daily tries to sell real rates it will lose a lot, if not most of that business. You’ll still have your integrity and real rate.

The metro’s January-only special has become a January-February-March-April-May special and shows no signs of stopping. Extended by popular demand? Right...

Not only have they made a joke of their rate structure, but what have they done to their integrity? Makes you wonder how many of these “special deals” contributed to the poor first quarter results some of the larger newspaper companies.

This specific situation has clearly hurt the local weekly competitor. Small accounts thrilled with the lure of a metro Sunday edition for such a cheap price dropped out of the weekly to try it. The weekly lost a lot of revenue before accounts realized the difference between price, value and response and the difference between circulation and effective circulation.

Your best protection is to do a good job educating your advertisers about the value of your product before you have a challenge. You’ll have more credibility when it comes time to confront the “great deal” offered by the competition if you’ve already told your story. With reps trained to sell value, reps who can clearly differentiate your publication from the competition, you’ll be in a much stronger position. If you have a rate card with integrity your sales reps can also sell with more conviction.

The temptation to fight price with added value can be a risky proposition. Accounts will wonder why you can do it now when it wasn’t there before. Roll it into a new commitment if you can, but don’t make it look like they’ve got you on the run, and never do for one account what you’re not prepared to do for every account at that level.

There are two things to keep in mind. First, a precedent can easily become a principle. I remember listening to an agency buyer on a panel a few years ago who said newspapers should never send him a special rate they were not to prepared to live with forever. Makes sense, you just set the value of your publication. If you did it once why can’t you do it again? And again and again…

Secondly you can never increase prices as quickly and drastically as you cut them.

Your pricing and every decision you make about it reflects on how you value your product. Any adjustments you make along the way send a message to your customers.

Think long and hard before you do cut price, because it’s a pretty good bet you will risk value if you have to adjust your costs to compensate.

As difficult and threatening as these situations may seem, don’t blink. If your product is strong, you will prevail. In the end, it’s about response, not price and that’s a song you need to sing to accounts on a regular basis as preventative medicine.

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