• Alec Drake

Are You A Pound Of Feathers Or Gold?

While a pound does equal a pound, the value will always be the critical differentiation.

Photo by Jingming Pan on Unsplash

The Same and Different Simultaneously

If you only had a pound of inventory, whether it be gold or feathers, you would still need a strategy to manage the demand variables in the market, the sales negotiation, and the price sensitivity of customers. Gold and feathers fluctuate in price and respond to market forces, much like your OTA (over the air) inventory. OTA represents a major share of revenues for most radio groups (50% to 80%); how you price and sell this traditional inventory will impact the top-line and bottom-line results significantly.

Weight Vs. Value

In a previous post, "What Nine Factors Determine Price Sensitivity?" we promoted differentiation and substitution as two of the nine factors that play a pivotal role in sales negotiations and pricing decisions. This conflict between buyers who see you as the same (weight) vs. those who appreciate the difference (value) can also be managed with the customer segmentation strategies we featured in "What Terms and Conditions Support Yield Management?" Having a standard set of terms, and being aware of price sensitivity to navigate negotiations, will support increased revenue from the same amount of inventory.

Photo by Nick Fewings on Unsplash

Manage Discounts Front to Back

To further increase revenues, we need to understand how the rate curve for a station's inventory can segment opportunities and work with the list of terms and conditions. If you only have a pound of inventory based on our example and capacity is fixed, the pricing curve can stimulate demand via controlled discounts on the front end and deliver maximum revenue on the back end.

Unnecessary discounts on the front will cost you later in the selling timeframe. Early sellouts will cause you to miss premium pricing as demand hits its peak. Make it a resolution to avoid unnecessary discounts. Look at your annual agreements for opportunities to add terms to limit your exposure to discounts closer to sellout conditions.

Are You a Pound of Gold?

While a pound does equal a pound, the value will always be the critical differentiation. The sales department must be equipped with the proper tools, narratives to build value, and solid yield management practices to deliver the revenue goal. If you have the right expertise involved and the support of top management, you can exceed your revenue goal and be a pound of gold.

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About Alec Drake:

As President of Drake Media Group, a content creation and sales consulting company, Alec is on a mission to share his unique perspective on best practices to enhance sales performance and drive revenue. The company offers a range of consulting expertise, including sales operations, team and individual coaching, yield and revenue management strategies, event sponsorship formats, and sales marketing.

Drake Media Group, LLC retains exclusive rights to the original content in all articles written by Alec Drake, contained in any podcast appearances, or articles published on third-party platforms.

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