I respectfully disagree. But I'm not at all surprised he'd believe it.
Successful sales people, driven by individual greed, are rewarded by promotion to executive positions that require collective wisdom... It's the "Peter Principle" in action; being promoted to their level of incompetence. And although CBS did become the most profitable radio chain during his tenure, it was because they already owned, or bought out, high-powered stations with a strong presence in major cities... Not by having more sellers on the street, which counter-intuitively has the effect of suppressing revenue per commercial sold.
A Bud Light "Real Men of Genius" commercial parody... At the time, in 2006, the people who produced this worked for the largest radio group, Clear Channel Communications. Odds are they don't anymore.
Earthquake, tsunami,
How does having more sellers on the street counter-intuitively suppress revenue per commercial sold?
ReplyDeleteIt's a question of supply and demand.
ReplyDeleteHaving more commission-earning salespeople creates a greater demand for a supply of commercial availabilities to sell. If management grants that demand, it will demand in return that those slots be filled with something that produces revenue... Any revenue.
When supply is increased (increasing commercial capacity is increasing supply) price decreases because sponsor demand is inelastic -- it doesn't automatically increase to keep pace with the supply to be sold. Since radio "time" is perishable (tick, tick) it is impossible to "store" capacity (commercials), and so its supply is also inelastic.
In the face of unsold perishable inventory and inelastic demand, the natural tendency is to sell cheap and discount price on the increased supply decreasing revenue per unit sold. Adding commercials also depresses ratings, creating a further downward spiral for revenue. It's a lethal combination.
Would they really get fired for making that?
ReplyDeleteOh yeah... Hopefully those guys had something else lined up before they left the studio.
ReplyDeleteClever, but there's a real sting to it.
ReplyDelete1. Do you know who did this?
ReplyDelete2. Are there more?
1. I don't know who made this parody. But the original campaign is the brainchild of Bob Winter (a copywriter at the DDB Needham agency). The somber-sarcastic announcer is Pete Stacker. The singer is David Bickler of the band Survivor, a personal friend of the musician who wrote the "cheesy '80s music" used in the commercials.
ReplyDelete2. There is a collection of the original spots and a few more parodies at The Fun Times Guide.
It doesn't appear that the link still works, but I'm fairly certain this was the parody I created. Hope you liked it and yes, I no longer work there. I did not have anything lined up before I released this...and you'll love to know that it was a sales guy who did the singing in this commercial!
ReplyDelete