Local media sellers face a lot of competition in winning the ad budgets of businesses. Relationships matter. So does your expertise and ability to provide them with radio and digital together. Costs influence decisions, too. While you’d never want to compete solely on price, there are ways to offer competitive digital advertising rates.
Defining a strategy to achieve this requires looking at the nuances of your costs to sell third-party digital (retail rates) and understanding what agencies and media organizations charge.
What Should You Consider with Digital Advertising Rates?
The more it costs you to execute digital, the more you’ll have to pass on to advertisers. So, what could be involved in this expense?
- Retail cost of the media
- Technology fees
- Commission
- Ad ops (internal or external)
- Creative services
- Campaign management
Don’t Skimp on Your DSP
Not all of these will apply, but it’s easy to see how quickly things can add up. Retail media costs have some variance, but those on the very low end are going to be sketchy. The quality of your DSP (demand-side platform) affects ad performance and helps you avoid ad fraud and waste.
Streamline Ad Ops
That’s not an area to skimp on, but there are likely expenses that require you to increase your rates. One of the biggest is ad ops. This includes the logistics of trafficking programmatic ads as well as social and SEM (search engine marketing). If you have internal resources or use an agency, it’s going to be hard for you to compete and have any discernible margin left.
The alternative is to use a third-party digital platform that does the ad ops for you. They use both automations and humans to provide this. What will you pay for this? It depends on your provider. It could be extra fees each month or could be part of your SaaS license.
Preserve Commissions and Be Strategic About Other Costs
Commissions are a necessity. Keeping salespeople engaged and motivated prompts better results. It can also be a buffer against turnover.
Then, there are all the miscellaneous costs associated with selling digital advertising. Creative services position your station as a full-service partner. You can add margin to these, but ensure it’s lower than that of agencies.
Campaign management could mean things like flighting, creative scheduling and optimization. The right technology has these things built-in and doesn’t require considerable time.
Without Minimums, You Can Be in a Better Position on Digital Advertising Rates
Another angle in this scenario is minimums. On some third-party digital solutions, each type of tactic has a minimum spend for a 30-day campaign. It may be too high to justify to small businesses just testing the digital waters with you.
Your competitors may be pricing things to hit this number but not giving the advertiser the best return on their investment. You won’t have to navigate this issue with a minimum-free platform. All costs associated with the campaign are transparently listed in proposals, along with all targeting data and the time frame.
Radio Spots Can Make Proposals More Attractive
Radio spot rates are something you have more room to negotiate. The cost of goods is minimal. You’re pricing more on demand. Don’t give them away, but make sure the offer is appealing and shown as the complement to digital.
It makes advertisers think they’re getting a special deal and keeps radio in the media plan. The results will likely demonstrate the value of an integrated campaign of radio and digital. High performance translates to faster and more certain renewals.
You Can Compete on Digital Advertising Rates but Have a Strategy
As much as digital advertising has become a critical aspect of local radio ad sales, profits can still be elusive. Having a higher rate may pad this, but it may also make you appear uncompetitive.
By considering how to cut costs and improve efficiencies, the gap between expense and profit widens.
Explore more on the topic of digital ad sales profitability by reading our e-book, Is Selling Digital Advertising Profitable for Your Station? Uncovering Obstacles and Optimizing Revenue.
