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(UPDATE) It's As If You Don't Want to Raise Rates

(by Ed Ryan) Before posting the John Dickey story yesterday about raising rates and limiting negotiations, we were hopeful readers would take this as a positive sign, a goal every manager and seller could look on as a positive. Pride in your product. Instead the naysayers found a soap box to complain and they took advantage of it. Like them or not, Cumulus is the second biggest player in the industry and it's better to hear Dickey say the company is going to work toward raising rates as opposed to the alternative.

Radio managers and sellers should never be happy with being identified as a cheap medium or satisfied that 7% of the overall revenue pie is OK. Many of you are so proud that Arbitron continues to tell you that 93% of Americans are still wit you. That number means nothing if the revenue stays static. If you have confidence in your product, a relationship with your client and a station that produces results you should be able to stand your ground on rates. If you lack the confidence in your product, question whether you can produce results or have to apologize for being in radio (Listen to Podcast below) a client will see that and eat you for lunch.

After all, if everyone decided to hold their ground and even raise rates, all would benefit and make more money. Too many people would rather argue why radio is and should be negotiable while others are hung up on complaining about Cumulus, which gets old real fast. Here are just a few comments we actualy agreed with. Many others are below the story.

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From Roger Morgan
"There isn't a single Account Executive in our organization with the authority to negotiate a rate lower than the published rates. One of John's assignments is to put an end to this practice. If it takes more than 5 minutes to implement that rule, something's terribly wrongin the Cumulus organization."

From Phil
"The pathetic, limp-wristed, noodle-neck, spineless wimps of salespeople comments posted here tell me that radio is lucky to be selling anything. Sales is not negotiating, it's persuading. Fortunately, few of the commenters will be employed in radio in 1 year. Go play with the internet."

How many times has a salesperson come into your office with a piece of business, at a lower rate, that you've signed an accepted? You know the rate is too low, yet you sign the order and bank the bucks. Your seller has convinced you the client couldn't afford the higher rate and was willing to walk from the order and go across the street to your competitor with his money. This has been going on in radio so long that some radio clients dictate their own rate to salespeople. Cumulus' John Dickey says one of his assignments is to put an end to this.  After all, he says, you are not allowed to walk into Starbucks and haggle on the price for a piece of blueberry cake. Why should anyone be allowed to do it in radio?

Cumulus Co-COO John Dickey is on the next cover of Radio Ink Magazine (release date August 27th). Dickey covers a lot of ground, including Arbitron, consolidation and Cumulus' partnership with CBS Radio on sports. He also tells us about how he would like to see the radio industry gain revenue ground and to do that, he says, it all has to start with the rank-and-file on the street.

"If you think about the thousands of salespeople in our business, they are out today pricing access to radio stations, selling inventory. Quite frankly at whatever they feel like selling it for, within reason. They have that kind of autonomy. Thats a bad thing. You can't walk into Starbucks and have the person behind the counter negotiate with you on how much a piece of blueberry coffee cake is. Prices are posted. There is no impression that is given that you have an opportunity to haggle that price. You pay and you leave. In our business, it doesn't work that way. That's been hurtful. If we have 50,000 units of time to sell on our radio station in 2012, in 2013 we are going to have 50,000 units to sell. Thats not going to change. We have to do a better job of selling all of those units, but we also have to do a better job of selling these units at higher rates. Our sales system, our proprietary enterprise software that we've developed is helping us to solve that problem, but it is a work in progress."

Dickey says, radio needs to increase rates if our business is going to flourish. "We are very focused on inserting ourselves in the rate issue in each of our markets. Its a part of our business that had never been managed effectively as our industry consolidated. It hasn't been managed effectively by corporate or by ownership. Those decision on what we sell our stations for have been done at the salesperson level. There is probably no other industry where salespeople have autonomy or leeway in the price at which they sell a company's goods or services. That is alive and well in our business and has hurt our business. I think one of the great benefits of consolidation is innovation and using technology to manage our business. Well get a handle on this pricing issue and have more control over pricing down to the market level, the account level, the sales rep level. We are working hard to make that happen."

When asked about rate cutting to get business, Dickey admitted every company is doing it. "I think everybody can put their hand up and admit to that. It would be unfair of me or anybody else to say one company is better or worse at it than the others."

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