What this week’s earnings reports say to me

In headline after headline last week, we saw the publicly traded companies share their quarterly earnings reports, and there was a consistent pattern. Take out last year’s summer Olympics and core revenue is basically flat across the industry, maybe up just a tad.

That’s in a GREAT economy, with nearly full employment, a booming stock market, and so far not much disruption from an auto slowdown that we think is on the way. Could it be that these will be the good old days?

If a flat business doesn’t bother you, you should probably go back to paying attention to Sunday Night Football. But I know a lot of the leaders in our industry, and flat revenue bothers the hell out of them. It bothers me, as well.

In the simplest terms, we’re in a time of change. Actually, it’s been going on for a little while now. We used to be a business where demand exceeded supply. Like many of you, I grew up in that TV business. It was easy to be brilliant. Now, I realize that I wasn’t as smart as I thought – I just had great timing.

Today, it’s the opposite. We have way too much supply and not enough demand, especially in a year with no political or Olympics. If you look at the significant drop in national and the ongoing slippage of our auto revenue, 2017 is the year where the reduction of demand is becoming especially obvious.

Lower demand is scary because an entire market starts to scramble for the available business. When I share with a group of managers that the TV business “manages to take a 5% reduction in demand and successfully negotiate it into a 15% reduction in our business,” I hear a laughter of identification.

So, at all levels of our business—sales managers, general managers, and corporate—our focus needs to be on how we can increase demand.

The Demand Factors:

1. Ratings. As sales leaders, we have little control over this one. But, like many of you, I’ve worked for dominant stations and those that are “ratings-challenged.” There’s no question there’s more demand for the dominant station. Great ratings create demand for sure.

2. Owning KEY accounts. These are the station’s largest accounts. If you have truly built partnerships with the actual decision makers here, that has impact.

3. The size of your sales staff. Many reading this remember when Mel Karmazin took over the CBS TV stations in the late 90’s and forced them to double the size of their sales staffs. I thought there were lots of flaws in how they did that, mostly because it became a “survival of the fittest” with little training, but Mel was inherently right. Ten people will produce more demand for your inventory than five. Having a bigger sales staff is a huge demand factor. What’s your plan?

4. Structural sales staff changes, with a goal of increasing sales call numbers. I applaud the groups that are looking for ways to do this. One major company is adding back sales assistants to help AE’s get out more. Many have moved the non-DMA local business away from local AE’s to free them up for more development time.

5. Superior AE selling skills. If your people can’t sell, then adding more AE’s and restructuring to increase call counts is like rearranging the deck chairs on the Titanic. I think this is a real biggie. Because the last 20 years in our business have been so focused on demand management, rather than demand creation, most of the AE’s in our business today simply aren’t anywhere near strong enough at the basics of selling. Some companies are already focused on this and my sense is we’ll all need to ramp up this effort even more. It should be a priority for everyone.

6. Management relationships with clients. Ever compete with a station where the management is deeply connected to a lot of clients? It’s a real demand factor and one on which we can work. Regular readers of my commentary know I strongly believe in GM’s and sales managers spending more time out of the office interacting with clients. This is why. It can help you increase your demand.

7. Quality production. Not pretty production, but having a team with the ability to produce ads that work and therefore renew. Here’s one of the saddest things I see. A client new to TV doesn’t get the results they deserve because production produces pretty ads that don’t sell. This is a fixable problem.

8. Customer-focused digital sellers. A decade ago, our digital people were usually brought into a client by that client’s current TV rep. Today, I see more and more situations where it’s the opposite. Let’s face it. Digital services is becoming more and more a commodity business. That makes smart digital sellers, who truly understand how to solve client marketing problems and are also great communicators, critical. We have massive churn in our digital products (a subject for another article), but when a station has a great digital sales team, they create client loyalty. And loyalty is a demand factor for sure.

9. Promotional selling. We have to create revenue with great ideas. I know of stations that create ideas for big industrial accounts. Another has experimented with someone who knows how to access grant money. Another station encourages their AE’s to get creative with a cause they personally feel strongly about. Promotional selling today is way more than creating a Holiday retail package or selling your one-hour special 4x a year. Every station will need to have a budget for this kind of selling as we go forward.

10. A new business program that’s on steroids. Do you think you’re good at new business now? How would you double that? It’s not just about increasing the number of calls. It’s also about working to get higher closing percentages and to increase opening order size, and making sure that a big piece of the compensation for everyone in management is tied to success in this area.

11. Creating an UPGRADE mentality. Our Jim Doyle & Associates training program is called UPGRADE Selling®. We believe that the easiest way to grow revenue is from existing clients. We’re fanatics about new business and we teach AE’s how to ask for bigger dollars in new business than they’re comfortable with. But if you asked me for the quickest way to grow revenue, it’s from existing clients who already believe in TV and your stations, and have a relationship with your people. But that will not happen without a plan.

That’s my list. I’m sure you might put other things on it, but the real question is what should you do as a result of moving towards managing the demand factors you can control?

A simple exercise might be to work with your sales management team on a “Demand Creation SWOT” exercise – Strengths… Weaknesses… Opportunities… Threats.

Some of the things on this list (and anything you might add)…
  -What are we doing well?
  -What do we need to improve?
  -What should make us nervous?
  -What of the Demand factors would give us the biggest lift in sales?

The business growth guru, Dan Kennedy, always says, “Little action=Little results. Massive action=Massive results. That was his advice to the entrepreneurs he coached in the recession and it’s my advice to my TV colleagues today. Kennedy believes we have more control over our destiny than we think. You can call me an optimist, but I agree with him.

We can continue to take relatively incremental steps to solve the demand creation problem, but this week’s earning reports suggest we might want to step it up. We’ve got 14 months before we hit 2019. Most of us will have a great 2018, so that gives us a window to get a whole lot better at creating the demand we’ll need to help grow our revenue in the future.