Summary:

• Just as manufacturers "cut out the middleman" and offer products directly to consumers, your Radio station can "cut out the back end" and sell to your listeners instead of just carrying advertising for others.
• Direct-response marketing is responsible for many millions of dollars in advertising income for Radio...but those advertising dollars are a small slice of the potential revenue that could come from direct sales.
• Other media and other industries have embraced the direct sales channel for additional profit, including TV shows that offer uncensored tapes and grocery stores that sell private-label merchandise.
• In addition to increased revenue, your station will also acquire tons of detailed information on your audience, such as purchase intentions, buying patterns, and so on.

The Listener Base: Radio's Treasure Chest
Direct-Response Marketing is Your Station's Path to NTR Gold
It’s a concept that most Radio sales professionals are familiar with: Radio’s most valuable asset is its listeners and the loyalty they feel to their favorite stations. We sell it as a benefit to our clients every day. For as long as Radio has had commercials, we’ve positioned ourselves as the middleman between product/service providers and their customers, delivering the marketing messages of others.

Of course, no one is suggesting that we stop doing this – it’s the bedrock of a station’s traditional revenue. But what about non-traditional revenue? You often hear of a manufacturer "cutting out the middleman" and offering products directly to consumers… what if your station were to "cut out the back end" and satisfy some of your listeners’ buying needs directly? It’s a radical concept, but one that’s worth considering. Your audience is a potential gold mine, and you can start gathering some of that gold with direct-response marketing.

"The big boys in television are very keenly aware of their medium’s power to generate direct sales… it’s time Radio learned the same lesson."

-- Buck Robinson, Pres., Mondial Marketing, Inc.

Direct-Response Advertising: a Primer
If you’ve ever jotted down a phone number or a Web address from a billboard while stuck in traffic, called to get your very own Popeil Pocket Fisherman or can of Miracle Hair after a jag of late-night cable viewing, or mailed in a contest form from a magazine, you’ve experienced the power of direct-response marketing (DRM). A study released by Interep Research in December 1998 showed that the DRM industry is growing 20 percent annually, with Radio’s 1998 share approaching $48 million, eight percent more than the previous year. Moreover, that’s just the revenue Radio earned from DRM advertising airtime; that’s only a small slice of the sales revenue that airtime generates (perhaps an estimated $200 million just in first-time sales...and that amount doesn’t include the extra possible revenue from long-term repeat business).

Cutting Out BEING the Middleman
Selling directly is an idea that’s not without precedent. Buck Robinson, President of DRM company Mondial Marketing, Inc., remarks, "Think about the supermarket industry. Supermarkets have razor-thin profit margins and a finite amount of shelf space, so they have to squeeze out every possible dollar of revenue from every square foot. They used to be, like Radio, a business that offered consumers the products of others – until some bright owner got the idea of developing "house brands" and putting them next to the national brands, for a little less money…and generated a LOT more profit for themselves in the process."

Another example is the recent trend of TV shows using some of their advertising time to sell videos of the same show that viewers are watching, but offering "uncensored" footage. Viewers that respond to these DRM pitches often find themselves signed up for "Tape-of-the-Month" clubs, generating ongoing revenue for the show or the network. Robinson adds, "The big boys in television, like Rupert Murdoch or Barry Diller, are very keenly aware of their medium’s power to generate direct sales…it’s time Radio learned the same lesson."

Leverage Your Audience With DRM
Imagine your station using 60 seconds of unsold airtime to air a commercial featuring a product that you "own." The ad features a call to action, urging listeners to call an 800 number or visit a Web site, so there is a way to capture the customer’s order and information. The ad runs and the phones start ringing! You’ve seen it happen for your advertising clients time and time again…you know it can happen for your station.

Taking the scenario a little further: the phones are ringing and you are excited. Why? Because people are buying the product your station is selling on its own airwaves, right? Right – but the reason you really should be excited is that if you play your cards right, deliver what you promise, and offer good products that your customers want, maybe they’ll keep buying those products from your station long after the ads have faded to distant memory. They might even like that first product so much that they’ll ask you, "What else have you got?" In other words, a well-developed customer relationship between you and your listeners can generate cross-selling opportunities and an ongoing revenue stream – a stream that’s independent of your airtime!

Another aspect of the DRM picture is data. Even if you’re unsure if this new revenue stream will ever amount to much, it’s also important to remember that with every response the ads generate, you’ll collect valuable data about your listeners’ purchase habits, shopping preferences, consumption patterns...data that you can use when selling traditional advertising.

Of course, your station may not want to take such a drastic step, or may not feel qualified to deliver an unfamiliar type of marketing. In such cases, it may be a better idea to explore partnering with an experienced DRM company. The DRM firm can handle the back-office tasks, the station can deliver the customers, and they share the revenue stream. Either way, stations with vision should be able to see the potential of this idea.

Mondial Media Network, a division of Mondial Marketing, Inc., contributed to this article. For more information, contact Mondial’s President, Buck Robinson, at (800) 511-6538.