HIVE EXCLUSIVE: With Advertising Cheap in the Downturn, Retailers Are Calling Their Own Spots26 Oct, 2001 By: Joan Villa
A serious nationwide advertising slump has turned into a boon for independent video chains that now find their dollars go further and ad sales reps will negotiate rates to keep their business.
“The smaller your market, the bigger fish you can be,” says Joe Kaminski, v.p. for 10-store Bradley Video based in Petaluma, Calif.
The “big fish” theory is especially true at radio and cable television outlets, where rates skyrocketed and then fell back to Earth, mirroring the up-and-down fortunes of technology companies.
“The radio stations were [so] high on the hog a year ago with all the dot-com advertising that their rates became unworkable,” reports Ron Bookman, president and c.e.o. of 11-store Massive Video. “In Boston, rates climbed as high as $1,200 per spot, then they called it $600. [Now] they're ringing my phone off the hook.”
Although not all markets have experienced the pinch to the same degree, retailers say their sales reps are more attentive, offer more incentives and even slip extra spots into the radio or cable TV schedule if they have unsold time to fill.
Bradley Johnson, deputy editor of Advertising Age magazine, confirms retailers can now “call the shots” because advertising across all media is in its first recession in a decade. The latest figures show ad sales in July declined 10% year-over-year after steady growth throughout the 1990s. Right now, “if you are an advertiser with money to spend, you can drive a hard bargain,” he notes.
Television and radio are especially vulnerable to shifts in spending because they have a set amount of time to sell. “You have a fixed amount of advertising inventory,” he explains. “It's like a seat on a 737, if the plane flies with the seat unsold there's no revenue.”
Newspapers and magazines, on the other hand, are less likely to negotiate rates because when advertising declines, they simply reduce the number of pages, Johnson says.
The fact that direct mail and newspapers won't negotiate in Movie Merchants' home town of Harrisburg, Pa., doesn't bother co-owner Janie Robins. “This year we decided print wasn't working for us,” Robins explains. “We didn't see huge growth.”
She believes radio better attracts the “generation X” customers who have families of their own, but don't rely on daily newspapers like previous generations. So six-store Movie Merchants took its $30,000 annual ad budget and negotiated an entire year's rates on the town's two top radio stations, one aimed at a predominantly male audience and the other at women.
While the prices they negotiated back in April weren't a “bargain,” Robins admits, “what we are getting is more name mentions and branding for our company. We say we're willing to spend $3,000 a month on your station, and they're more willing to do special deals all year.”
The spots can be shifted into months when Movie Merchants holds sidewalk sales or wants to participate in deejay contests, ticket giveaways or remote broadcasts. Robins found that as co-op ad dollars dwindled, studios were still willing to supply soundtracks, videos and DVD players for on-air contests. For the release of A Knight's Tale, clerks dressed in period garb for a live broadcast that gave away tickets to the local Renaissance Faire — an event orchestrated by the radio station.
Bookman agrees that “value-added” promotions make radio especially well suited to video retailing, since the medium's excitement screams “entertainment” to customers.
“We used to do radio almost exclusively for many, many years — especially during our growth period — and we did that because we always got added value. For ‘x' dollars you got your ads, bonus spots, tickets to something, a remote at a store,” he recalls. “We stopped doing it because the rates just got too high.”
Bookman plans to return those unanswered calls from radio sales reps, but for now the chain favors television ads to the tune of $3,000 to $5,000 for approximately 50 spots on cable channels Disney, USA, Sci-Fi and others that echo the theme of the movies they're advertising.
“They'll give you some bonus spots and if they've got dead time, they'll give you a spot, although it might be at midnight,” he adds.
At Bradley Video, advertising and promotions coordinator Michelle Coleman says radio is “best suited” for store openings and drive-time specials like “kids day” Thursdays and “happy hour” Fridays and Saturdays featuring free popcorn, snacks and beverages. Like other retailers, she says once they signed a contract, the radio stations were quick to offer remote broadcasts and extra branding on-air.
Although Bradley's advertising strategy also spans direct mail, parenting magazines and cable television, Coleman believes radio has the most leeway to work special deals for advertisers. Last month, a decline in co-op reimbursements forced Coleman to halve the number of spots planned for one radio station and the sales rep “panicked a bit,” she recalls. “She wants to talk to me about lower rates.”
The drawback to both radio and TV is the difficulty of tracking results, retailers say. Robins can't tie Movie Merchants' 10% boost in business this year to her radio campaign. And Bookman accepts that he may never know cable TV's impact, but since in the past he's also spent $5,000 to $6,000 on zip-code targeted direct mail that's returned a measly 75 coupons, he says he's willing to take the risk.
“When a regular customer says they've seen our ad, that's not necessarily what I want to hear; I want to hear from a new customer that they've seen our ad,” he asserts. Nonetheless, “If all it does is cement in our customers' minds that Massive Video is there and Massive Video has this title, then it's done its job.”
Carefully planned, radio can boost store traffic and excitement even if it's hard to measure, adds Robins. Four times this year, Movie Merchants gives away 100 free movie rentals to one winner per location, but customers must register in store. The promotion lasts three weeks, culminating in an attention-grabbing live remote broadcast.
“It's a great promotion, because it makes us ‘little independent retailer' look big,” Robins notes. “Can you imagine the six winning customers going anywhere else to rent movies? Plus they tell all their friends.”