Thanks to Sean Reilly (CEO, Lamar Advertising) for his recent comments at the JP Morgan Conference about the challenges of getting a rate increase in this current ad sales climate.
This is one of the toughest challenges we face at any time. My strategies aren’t a “silver- bullet”, but a specific path to improve your rate increase success.
Contracts are renewed 52 weeks a year. Always be servicing as though your client WON’T renew. Sales managers (In collaboration with sales reps) should courtesy call the annual advertisers on a regular basis (in relation to the advertiser’s value/potential) to assure renewals. You shouldn’t be blindsided by a client cancellation because you haven’t been servicing/communicating with them closely throughout the contract.
Begin the specific rate negotiation at least 100 days before the contract ends. It allows time for the negotiation process and, if need be, puts the unit(s) back in inventory no later than 60 days before the end of the contract.
Clients make up their mind about your rate increase based on how thoroughly/confidently you make the request. An advertiser can tell if you believe in your products/pricing/rate increase. Sell yourself as the value-added in continuing the contract.
In the Client-Hat/Company-Hat scenario, you need to be on the client side. The rate increase isn’t coming from you, it’s being dictated by market demand. Your company’s rates are a direct reflection of your branch’s collective sales strength. Build rate increase strength by building your customer base.
Clients must understand that because we are one of two mediums that is expected to grow in 2023, there is a lot of pressure on our inventory.
Always deal in assumptive terms, don’t ask “if” they’re going to renew. Proceed as though they are renewing and you’re just working out the details.
Upsell your client by showing advantages/options/pricing for buying a bigger program. If you share the business with a competitor, this is the time to negotiate for market share.
Give the advertiser a comprehensive recap of the contract to set the stage for valuing your product. Show the extraordinary service elements you’ve delivered over the course of the contract including a complete override report showing the amount of over-delivery they received.
You must always get a rate increase, even a nominal one. It is impossible to recoup lost rate increases later. 00H companies and clients always discuss rate increases as a percentage. It is more palatable for a client to accept a $90 dollar increase on a $1000 unit than a 9% percent increase.
Don’t use national info about the advantages of OOH to get an increase. You must have tangible “local” business reasons for the increase. If your manager/company doesn’t provide that, you need to dig it out.
The most compelling business reason for an increase: your company is doing a better job of getting results for local advertisers thus there is much greater demand on inventory.
Illustrate other important facts like:
- your average lease cost has increased X%
- you’re reaching more prospects because your market population has increased X%
- your plant average weekly impressions per unit have increased X%
- major improvements/maintenance/upgrades to boards, lighting, production processes, etc.
- your average overall cost of branch operation has increased X%
An incumbent advertiser may be getting their unit(s) too far below market value. Don’t be afraid to sell those units to a new advertiser at a higher rate rather than continuing to grandfather at a low rate. Create urgency: explain there are other advertisers looking at their unit(s).
If an advertiser simply cannot afford the rate increase, you may have to come to the difficult conclusion that your product’s value has outgrown the advertiser.
Don’t fall for the line that no one else is increasing their rates. You can think out loud: “I wonder why they don’t have more demand on their inventory?”
Kevin Gephart leverages his years of OOH media ad sales into practical, interactive sales mentoring and training designed to help OOH sales reps/companies sell more faster. Learn more at OOHSalesFaster.com or contact me at KevinJGephart@gmail.com
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