NAB reports (Mar-Dec 1933)

guessing at what our actual operating cost is for that hour plus talent, continuity and other things which enter into it. We must know our total operating cost and the hours sold must carry the load of the ones which are not sold. On this system we are not doing anything more than any other manufacturer would do. He would figure his rent, lights, interest on investment, insurance and everything else into the cost of his product and from that cost would be derived the sales price. I think it is necessary that we have an accounting system which will show us all of these things at a glance. I hope some day to have an accounting system which will permit me to know at any day exactly what it cost to operate the entire station yesterday, last week, last month and for the year. I would like to have a system and hope to have one which will give me the actual operating cost of any hour which I wish to sell. I think one of the toughest customers we have in radio today is the chiseller. Next to him is the local advertiser who feels that on account of the fact that his market is small and that his concern is comparatively small that he should be entitled to a rate lower than the large manufacturer or distributor who is operating in a large territory. Under this heading — you will note that I have divided the subject into two sub-headings. First, local rates. Should there be two rate cards? Personally, I am definitely for a single rate which is the same to everybody under all circumstances. If we had a medium which, like newspapers, could be expanded or shrunk to meet the situation, then there might be some justification for a local rate, but we do not have it. We are either carry¬ ing a great deal of sustaining program which costs us real money or we are on the other extreme — sold out. If we are carrying the load with a great sustaining program, it is a temptation to do almost anything to get some business, how¬ ever, if our price is right and based on what it is costing us to operate, that is the lowest price we can afford to take under all circumstances and unquestionably that price should be the same to everyone. If every station, large and small, had only one rate and stuck to it, radio business should be 100% better. I personally know of accounts which have not used radio because different quotations had been made them by different people and they were so disgusted by the whole affair that they used other mediums which did have a stand¬ ard of operation. Under the second sub-heading is the question — Is there ever justification for rate cutting either national or local? Here again I want to go on record as expressing my opinion that there is not. We, all of us, like to think that we are good horse traders. The majority of us are not. The result of this in radio is that there are a number of concerns who are buying their own time direct and are going out into the field and chiseling, chiseling, chiseling until they get at a price which is often¬ times a direct loss to the station. I had a man in my office recently for two days trying to buy time on our station for less than our rate. He told me (I will not say that this is true) that of 108 stations which were being used by this company, 106 had sold time at less than their card rate and that our station and one other were the only ones which had not. I lost the account because I would not cut rates and I want to say to you now that I will lose the next one hundred ac¬ counts before I will cut rates. If our rate is too high we will reduce it, but we will make the same offer to all prospective clients and they will not have to chisel to get it. I think one of the greatest problems that every station has is to sell it’s daylight time. There are certain hours during the day which, of course, are recognized as better than others and those hours as a rule are pretty well sold, however, there are others which are more or less dead timber as far as sales are concerned. It seems almost impossible to sell them. Concerning this, you will note that I have made three sub¬ headings. The first of them is a survey of listening habits in order that we may intelligently tell a prospective client what he may expect during that hour. It has been suggested and, I think rightfully so, that the rate at various times during the day should vary according to the listening habits of the audience. . Page It seems to me that there is a great deal of money use¬ lessly spent in radio during evening hours which might well be saved if we could sell our clients on the idea of playing to a certain definite audience. Surveys have established that during daylight hours we have an audience which is predomi¬ nantly women. There are a great many products which are of no interest whatever to the men folks of the audience, therefore, I think we could well afford to use what infor¬ mation we have available, or which might be had, to sell a client on the idea of playing to the type of audience he wants to reach. For instance, I can see no good reason for talking millinery to a night audience because only the ladies are in¬ terested and oftentimes the men are bored and if we had our client on a daytime hour in which it was directed to the ladies only, we would not only do a better job, but would open up a period at night which could be sold to another client. There is a world of undeveloped business which could and should use daylight hours. For that reason I think it is very important that all of our efforts in our daylight programs should be directed toward building and holding the largest possible audience. In this way we have something very defi¬ nite to offer the client who is a prospective user of daylight time and unless we do have the audience we certainly have no right to expect him to use our station in preference to one which does maintain a good daytime program. It is true that the maintenance of a high class daytime program would very likely run the operating cost up, however, I think it would be productive of enough additional business to make the cost justified. When we take up the sale of time on a contingent basis we are undoubtedly taking hold of something hot. There has been a great deal of discussion regarding it in the trade journals. I notice that some of the stations are for it and some are against it. I do know that even the 50,000 watt stations are being importuned at all times to accept business on a contingent basis and I want to say right now that as far as I am concerned I did not accept it under any circumstances at Wichita nor will I accept it at Nashville. I imagine that radio is the only advertising medium in the world which is asked to gamble its facilities against the prospect of a return. My answer to the advertiser who wishes me to accept his ac¬ count on a commission basis is that if it is good enough to make money for us on a commission basis, he is silly to want to place it on the station that way because our regular card rate would be a bargain. If it does not produce we would not want it on the station. I think the sooner that radio is 100 % for the maintenance of only a card rate basis of doing business, just that much sooner will the wildcatters be chased out and legitimate concerns brought in. I do not mean by this that all of those who wish time on a commis¬ sion basis are wildcatters, but a great many of them are and it is hard to distinguish between them. I had a number of offers recently from concerns which wished to place an account on our station with the under¬ standing that if we take the account they would give it to us exclusively and would give us a percent of the sales of the product in the given territory for a given period of time. Of course, this is just a new angle to the contingent business, but I always treat it just like any of the rest of them. First, we do not accept such business and second, if we did, how would we ever be able to check on how much of the product is sold in the territory. As I see it, we would be absolutely at the mercy of the advertiser at all times. Possibly some of you gentlemen have had the same experience and I would like to know how you handled it. What types of accounts are not acceptable? Securities? Proprietary Medicines? Promotional Schemes? I think we can well afford to group these into one and discuss them as a whole. My thought in the sale of this type of business is that each sale should be considered on its own merits. There are proprietary medicines which will meet with the standard of ethics of most broadcasting stations and there are some pro¬ motional schemes which are purely legitimate. I think the danger in this type of business lies in a lack of careful selection of what to take and what not to take. I think one of the most important things which all radio stations have to face today is that of representation. During the past few years since radio went commercial we have been establishing precedents — getting organized to do real things 153 .