service exchange for Radio advertising

T

tssdetailing

New member
I'm currently discussing with a radio station an exchange program where I would pony up 25, $200 gift certificates (a value of $5000), which they would sell during "half-price friday" promos for $100 each until they make $2500 in sales-ALL of which they keep. They also promise the following:



In return for a cash-free investment, you receive more than $5,000 in on-air promotion, web presence and added value. On-air promotion runs for one week prior to your certificates going on sale.

• Bank of (20) commercials ran for only 1 week dedicated to your business.

• (2) LIVE :15 giveaway mention Tuesday-Friday during PM Drive (2 per week).

• (20) prerecorded liners ran for only one week from 6a-12mid.

• Weekly feature segment about your business prior to the on-line certificate sale during Afternoon Drive

with Christopher (example: “This week, the FOX Cyber Saver is proud to feature”).

PLUS

• Email Blast to WOFX database

• Your business showcase on the Cyber Saver storefront and foxcincinnati.com

• One year presence on foxcincinnati.com recognizing your business as previous partner in the FOX Cyber

Saver program. Link and logo will be active.



I'm reading it like i'm giving away my mid-level (stage II service) across 25 gigs doing nearly a months worth of work for free. I feel like i could get bankrupt. Am I not seeing the big picture here? Could each free gig net 2 or 3 paying gigs due to radio saturation over the course of just ONE WEEK?
 
sounds like they r geting the best of the deal I would pass. That is a lot of free work U have to think how long will it take to make ur mony back. Besides how does it look or sound when a radio station is selling ur gift cer for half price. Remember free does not pay the bills.
 
I may be wrong, but from reading your past posts I think your target market is the car enthusiast and higher end customers. With this promo you are likely targeting the bargain hunter soccer mom. Is this a market you are after? If so, it might be worth it...if you are slow during the winter then all you have to lose is your time (and a lot of it) and maybe a couple hundred bucks in product/fuel, etc. IMO if you want to stick to higher end customers this is probably not the promo for you, but that is just a hunch.



If you decide to do it I would be curious to know how it works out for you.
 
I guess it depends on how busy you are and what all you would do for a $200 gift certificate. I can tell you that you are not getting "$5000" worth of air-time--that is like the MSRP, nobody pays that. So if you did the same, and kept your time spent per car to a minimum, it might make sense if things are slow. But you aren't likely to get repeat customers doing a $200 job in a $100 fashion, and I doubt you'd do that anyway.



Can you control the timing and content of the air promotion? For example, if you could have the ads run a month before fathers day, with a plug that this is a great fathers day gift, you might successfully dodge the soccer-mom minivan that has been trashed for the last 5 years and will not be coming back for repeat business no matter how good of a job you do. If not, I'd pass.
 
I can't see how giving away that much time and money is going to help you reach your target market. The biggest problem is the time doing the details takes away the time you need to make money. Reminds me of a car dealer who called me a few years back. Told him my basic details start at $150, he wanted them at half price and I said I can't make money at that rate. He then said "I'll have 10 cars a week for you to do", which meant 10 cars a week I can't do for private owners. He just couldn't seem to understand how the more cars I would do at half price, the more I'd lose. I told him I'm always booked and I wasn't turning away full price customers to do half price work and he said "not even for 10 cars a week?". :wall
 
As others have noted, how many paying details will you book? If would ever give anything away, I'd better get 5x in return. Even if you would settle for 3x, do you think that you will book 75 additional details?
 
Barry Theal said:
Walk away!
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Agreed. Sounds like way too much of a cost for such an advertisement... plus you're losing time AND money! Not that I'd opt for either, but if I had to choose, I'd rather pay them $5k for the advertisement and charge full prices for all the clients. You never know though, but this isn't something I'd do for my business at this time.
 
Need more info. What's the listener counts for the radio station ? Listen to the radio station yourself, what other types of ads are you hearing on there ? What's the target demographic for listeners ? What are their "normal" advertising rates ?



I won't be as quick as everyone else to say "walk away" at this point. Personally, if it were me, I'd want more information about the station before making a decision.
 
Here is the demographics info:



216,500 men are 18+ (Which i don't care, i have more female customers than men)

77% likely to drive a caddy

187% (not a typo) likely to drive a mercedes

53% likely to drive lexus

37% likely to drive a BMW



92,000 men make $75k+

1 in 4 make $100k +
 
There's no info on female listeners ?



What's the population of your city ? More specifically, what's the population of the area that is within reception range of the radio station ?



I'm going to do some numbers for you. But a few things I need to know about the advertising you're getting in return:



- The bank of 20 commercials, how long (time wise) is each commercial ?

- The LIVE 15 giveaway mentions, a bit more info on that ?

- The 20 prerecorded liners, how long (time wise) is each one ?

- Weekly feature segment, how long is your company mentioned ? Is it simply "This week, the FOX Cyber Saver is proud to feature TSS Detailing", or is it more like "This week, the FOX Cyber Saver is proud to feature TSS Detailing, your one stop shop for making your most prized possession look like new. They offer everything from blah blah blah blah blah, call them today at xxx-xxx-xxxx or find them on the web at www.whatever"
 
K, I said I was going to do some numbers, so I’ll do some numbers with a few assumptions.



First, you get 20 commercial ads run for 1 week. In my town (population 25,000), a 30 second radio ad cost $38 (you have to buy them in minimum bundles, but that’s the individual price). Larger markets tend to be more expensive, but let’s run with $38 an ad for now. So that’s $760 in ads.



Giveaway mention is probably rated as a 15 second live ad. For live you’re looking at about $200 per 15 seconds. So there’s $400.



I’ll assume that prerecorded liners are also 15 seconds (15 by the way is the minimum amount of airtime you can purchase in radio). It’s $28 per 15 second ad, so that’s $560.



Being featured on the weekly segment will depend exactly how long they “feature” you. Meaning the amount of time they talk just about your business. I’ll assume it’s probably at least 30 seconds (15 seconds is kind of short for a true feature), which runs around $900. Now this could go WAY higher depending on the particular show you’re being featured on and how many listeners they have on it, time of the day, etc. But at a minimum, you can benchmark $900 for this.



Can’t really put a value on the e-mail blast, that would really depend how many people it gets sent to, what that demographic is, how they got the e-mail addresses, etc. For the sake of putting a number to it, let’s say it’s worth $100.



The 2 offers of online presence aren’t really much to brag about. They probably won’t attract much attention, but let’s peg a value of $100 each, so $200.



So, add it all up, at you’re looking at a MINIMUM of $2720 in advertising there. Make some adjustments to reflect your city’s size, and it’s not out of this world to figure that the total cost will be around $3000 to $3500. Now, the radio station is selling off $2500 in gift certificates, worth $5000 to you. 25 of them. Let’s go on the super high side and say that you get an 80% rate of return on the certificates. That’s 20 people redeeming. So to you, that’s $4000 worth of services. You can see where your cost of advertising is coming a lot closer to the amount of money you’re “giving away” in services. To be honest, if I felt that radio was worth doing, this isn’t that bad of a deal considering you don’t have to actually spend any physical money to pay for the advertising. Basically, you have to think of this like a financing method.
 
extrabolts said:
I can tell you that you are not getting "$5000" worth of air-time.
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Not unless the rates for this radio station are somewhere around 60% cheaper than everywhere else. Granted yes, there is some margin of difference, but you have to look at it this way, tss doesn't have to spend a dime to do this, so it's more like a financing model. Just like interest, you always pay more if you don't show up with hard cash.



Barry Theal said:
Walk away!
Click to expand...

And the reason is ?



Scottwax said:
I can't see how giving away that much time and money is going to help you reach your target market. The biggest problem is the time doing the details takes away the time you need to make money.
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I don't really understand the rationale here ? Yes, this particular deal would take time away from doing details that pay money. But if tss simply paid for the advertising, would he not pay for it using money earned from doing details ? So in the end, he was doing those details for nothing too ? Isn't it the exact same thing, just a different way of looking at it ? I do however completely agree with you that this method of advertising may not help tss get to his particular target market, that I don't know because I don't know what tss is after.
 
I have done several runs of this type of advertisement and would make 2 suggestions.



1. only have the certificates for $50 towards are LARGE service at your business. First time I did this I just had $50 certificates and a good deal of the people that bought them were just bargain hunters that bought the $50 certificates for $25 and said give me whatever $50 will buy me as opposed to coming in and putting it towards what they actually needed. Adding the stipulation that it must be towards an interior shampoo or a full detail brings in people that actually want a detail done and allows you to at least recoup some of the costs of the job being performed.



2. Only do runs of $2500 at the most and not too close together. Last thing you want is a flood of people coming in to get work done that you aren't getting paid for all at once. We did this in the fall and mid-winter a couple of years ago during our slowest season. I would NEVER do this going into the spring or summer.



Further to my first comment, you will be attracting a lot of bargain hunters with these promotions - people that NEVER buy detailing services and are only buying this because it's a deal. Make sure you have conditions clearly stated in the deal limiting what the certificate can be used towards. The first run we did I didn't limit what the certificates could be used for and got a couple of huge losers that came in with complete garbage cans that needed $300-$500 of work and demanded our smallest service because that was all the certificate would cover. Ended up having to throw one woman off my property because she got lippy. Would I do it again? Maybe if I was slow but with radio advertising it has to be continuous to be effective. Think about an ad you can remember hearing on the radio - probably hear it a lot right? That's the key and that is where it gets expensive. Good luck with it
 
Does it state anywhere what they (the customer with the gift certificate in hand) will get in exchange for $200 ? If the gift certificate is simply going to be used as "cash" against the end final bill, you could always charge a little bit more to those customers, depending on the condition of their vehicles and what they want done.
 
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