This month, two issues have been on my mind, both relating to generating revenue. Since summertime offers us the occasional opportunity to sit back, relax, and think, I encourage you to ponder these points and then apply them to your own situation.
#1: Charging Interest On Accounts Receivable
Psst...Hey Mr./Mrs. Business Owner! Do you want to know how to get an interest-free loan for 90 days or more? Just advertise!
That's right! Your local TV station will broadcast your commercial message to hundreds of thousands of viewers, and you don't have to pay them a penny until a good three months have passed since the last spot ran! How's that for a deal?
I don't get it. I can't pay my phone bills, my mortgage, or even my garbage collection bill a nanosecond past the 30-day mark without incurring a finance charge. And, I don't have a problem with that. Each of those aforementioned service providers did something for me...and now they expect to be paid for it. I can't blame them for that.
Their terms and conditions state that if I don't pay them on time, then I owe them some more money. Not a lot more--but just enough to motivate me to take care of business on my end on a timely basis.
If that's the case in the real world, why hasn't it been applied to our industry? I have my theory. For example, advertising agencies serve as a middleman in the vast majority of airtime buys. They negotiate for and purchase commercial airtime on behalf of an advertiser.
Their role does not end when the buy is made. In most cases, the advertising agency receives the station's invoice each month after the commercials have run. Then the agency checks the bill to make sure that they got what they requested. If everything is OK, they send along that approved invoice to the advertiser. The advertiser either pays the station directly, or they give the money to the agency, which then remits payment to the station.
I understand that reviewing and approving invoices takes time. But three months? I bet this process would rise on the priority list if it was costing someone money somewhere along the line.
I think a fair compromise would be to assess a finance charge after 60 days. That gives everyone involved a reasonable amount of time to get their job done. The station invoice should clearly state "Amount Due" and "Amount Due after [60 days from issuance]," to avoid any confusion.
Would a policy such as I've proposed cost a station some business? It shouldn't. Tell the complainer it's a choice between the 60 Days plan or a new gasoline surcharge because of the increased expenses for your news cars and live trucks!
#2: Raising PUTS
How can a TV program that is growing in popularity actually suffer a ratings decline? It's easy--when the total quantity of available viewers is reduced.
Ratings are actually the net result of the relationship between two measurable quantities: The number of people using television (P.U.T.), and the share of those persons, as a percentage, who are watching a particular program (Rating = PUT/Share).
If the available audience (the PUT) declines, then the program's share must increase accordingly just to deliver the same rating as it did in the past! That's why it's time for a new industry wide effort to promote TV viewing. Higher PUTS, or more people watching more TV, is good for all of us--broadcast and cable camps included.
This isn't such a crazy idea. Trade groups spend a lot of money with us to promote the increased usage of their products. Such an effort would be criticized by some, but I'm not saying we should band together to encourage more viewing of Jerry Springer. When's the last time you ran a spot that addressed why watching TV news creates an informed populace? Instead, we fight for share of an often times shrinking pie...and blame Nielsen when the numbers aren't what we want them to be.
