Broadcasting Telecasting (Oct-Dec 1959)

BROADCAST ADVERTISING OPENING GUN IN BBDO RATE CHECK Agency makes queries in stiffening resistance to further increases in magazine, radio and tv rates. Move construed as polite warning BBDO is analyzing rates. The major New York agency is going back five years to study rates of radio and tv stations in the top 50 markets. This move by a major agency in the broadcast field is a key to what is obviously a build up toward a stiffening resistance to further increases in rates in national media — including magazines along with radio and television. So far BBDO is pecking away at what it believes is a continuing problem of increased costs in advertising. Specifically the agency wants to know if rate increases by tv stations — or the "failure to adjust" rates by certain radio stations — can be justified by the statistical record of audience or circulation. Dear John • As a result of its probe of the situation, those stations adjudged to be "out of line" will be sent a "Dear John" letter, which in effect will warn the individual station that "we love you, but . . ." The letters to individual stations will be sent in about 10 days. The top 50 markets were selected because the agency figures some 80 percent of national broadcast advertising expenditures are placed in these markets. The BBDO move, initiated and handled by the media department under the direction of Fred Barrett, vice president and media director, and Herbert Maneloveg, associate media director, covers both radio-tv and magazines. Letters to individual magazines whose rates are believed by the agency to be too high from the standpoint of circulation and cost per thousand already have been received. A similar letter for broadcast stations has been drafted; the media department is now awaiting the research analysis. What's Involved • BBDO's research will study the individual stations' rate structures and "plans" with an eye on basic circulation trends, audience received and computed cost per thousands for that station. While tv is the chief interest of the study, radio also will be included, because of BBDO's belief that there probably are instances of radio stations failing to compensate for a drop in circulation or audience as well as a rise in costs per thousands. What's Behind It • BBDO has been studying the problem of the increased cost of advertising from the viewpoint of media rates for some time. As expressed by Mr. Maneloveg last week: it (rate increases) "must stop some time." BBDO, he said, is not content "to sit back and watch this." Hence, the analysis, market by market and station by station and finally the letter. Network rates are not part of the study, nor will the networks be accorded the station treatment. Why? There are two reasons, which for practical purposes are related. These are (1) the agency must start some place and the stations appear to be the logical place to begin, and (2) network rates for the most part are based on the rates of the individual stations which form the facility's lineup. The agency media spokesman takes the position that actually some broadcast stations are charging what the traffic will bear rather than to anchor rates to significant rises in either audience or circulation. These rating abuses, BBDO people say, come about via a vicious circle: station "A" increases its rates, perhaps on a basis that is borderline, and then station "B" in that market follows suit but with no justification other than the readjustment in rates made by the competing station. Magazines also get involved in this rationalization, according to BBDO. A national magazine when confronted with an agency protest on a price jump will throw the ball back at the agency with the retort, "you never protest when broadcast rates go up." BBDO to Magazines • In its letters to magaiznes (against which the agency had a complaint) BBDO said in part: "We hasten to add that the print industry is not alone in this trend (higher costs per thousands forcing less frequency of advertising). Broadcasters also have been charging more and delivering less." BBDO explained last week that by "delivering less" the agency was referring to the rise in rate being out of line with the accompanying increase in circulation (or audience). The agency said in its letter to magazines that it was concerned with the increased rates because "almost every BBDO client has had to increase the cost of its product within the past few years; yet very few have done so at the same rate of increase occurring in the magazine industry." Long-range Effect • asked if the agency can expect immediate remedial results, BBDO media spokesmen felt the effects will be of long-range benefit. Stations apparently will not be warned of reprisal but subjected for the nonce with subtle pressure. Radio has advantage in co-op advertising Although newspapers come first to mind when co-op advertising is mentioned, radio has certain advantages over the print media for the manufacturer entering into a co-op arrangement with a retailer, especially in the food field, David Fenwick, vice president, Robinson, Fenwick & Haynes, said. Addressing an Oct. 22 luncheon meeting of Southern California Broadcasters Assn. in Hollywood, Mr. Fenwick pointed out that the typical food chain uses radio at all times of day, reaching various types of listeners. He added that through the relationship of the food chain and radio station, the manufacturer using radio cooperatively with the chain will frequently get shelf space and display space as well as time. Virtually all co-op advertising in the food field is commissionable to the agency, he said. He contrasted this with the situation in the appliance field, where the custom is for the retailer to consider the manufacturer's advertising allowance as his own money to spend as he sees fit, without benefit of an agency. If an appliance dealer uses radio, he generally sponsors a particular time segment of the station's schedule and so reaches only that segment of the total audience, Mr. Fenwick noted, which is not as good for the manufacturer as the food chain practice of spreading its spots throughout the broadcast day. Five name Doner Aegean Products Inc. (Grecian Formula 16 hair treatment). Fair Lanes Inc. (bowling establishments) and Bata Shoe Co. as well as two other local accounts have appointed the Baltimore office of W. B. Doner & Co. to handle their advertising. 62 BROADCASTING, November 2, 1959