Subject: Re: No more affordable cars
I think these guys are all being sold the same "plan" by McKinsey. rather than really looking at what they are doing.

Probably the best summation of what’s going on than anything I’ve read on the interwebs in years.

I remember when Westinghouse told us to stop taking low-ball and trade advertising because they wanted “the sales margins” to go higher.

“But, but, but we produce 16 one minute vacancies every hour of the day or night, and if we don’t fill them we have zero revenue instead of “some” revenue.*

“Doesn’t matter,” they said, “we need to show the street that our sales margins are improving.”

Westinghouse went under about five years later.

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There are all kinds of advertising: the one most people know is “You pay me X dollars, I run your commercial.” Read about it all the time for Super Bowl ads and such. There are lots of others:

1) I have this product, I’ll sell it for $29.99 and give you $10 out of each sale. The station may get rich, or more likely will get a few bucks for a slot (just like and airline seat that flies empty) instead of nothing. This is “direct response”, with a 1-800 number

2) I have this product, 5,000 units. I’ll give you $100,000 and you run this commercial until I’m sold out. This is also “direct response”, with a 1-800 number.

3) “You have a restaurant we’d like to eat at. I’ll give you advertising at retail price, you give us “trade” at retail price”. We eat good, you get ads for the cost of raw materials.

4) “We need news cars. We’ll give you ads, you give us a couple cars”. Again trade, no money changes hands.

Those are fairly straightforward. It gets trickier when a concern promoter comes in and gives you 100 tickets in trade. You can then 1) send your workers to the concert, 2) offer them to other clients for goodwill, 3) do a contest on your own station to increase listenership/viewership, 4) offer them to other clients to use in a contest of their own.

There’s more, but you get the idea. You could turn bad or unsold inventory into *something*, and often use that something to induce cash advertisers to come aboard. Take that away and you’re in the position of selling spots-4-dollars, and nothing else. Then everybody wants your prime time and nobody wants the crap time which you used to fill up with trades and low-ballers.