Rep Firms Respond To Growing Challenges
The top executive of a large TV station group is blunt when speaking of the three independent rep firms that sell spot advertising on behalf of hundreds of stations around the country. “They have to reinvent themselves,” he says. “The business has pushed reps to a place where now they are mostly transactional.”
He misses the days when it was common for rep firm executives to help his station sales people see agency planners – key decision makers -- when visiting New York. Now, the introductions don’t go beyond the buyer level for the most part.
And referring to the amount of business that is now conducted electronically, rather than in personal meetings, the broadcaster adds: “It’s my belief that a really highly paid assistant could do the same work.”
If one were to create a “TV rep satisfaction scale” from the comments expressed by group execs contacted for this story, that source's opinion would fall on the “exasperated” side.
The executive is not alone. While some of his peers are satisfied with the job the reps are doing for them, many others grumble that they are not doing enough and press for improvements.
Top officials at the rep companies -- Cox Reps, Katz Television Group and Petry Television – acknowledge that they are far from perfect, but they insist that they continue to play a critical role in maximizing stations’ advertising revenue, and they say they have already begun implementing strategies designed to insure their relevancy deep into the multiplatform future.
“The demise of national spot has certainly been exaggerated for many, many years,” says Val Napolitano, CEO of Petry TV.
Jim Beloyianis, president of Katz Television Group, believes the reps may actually grow. In five years time, he says, it’s very possible that some of the network O&O in-house rep firms will turn to the indie firms for representation.
Part of the reason is that the national spot business is no longer concentrated in a few agencies in the top markets, Beloyianis says. “If you’re a good rep company, you have to maintain as many offices as possible to service the agencies, knowing that there will be a shifting of funds from one to the other.”
Before taking a look at the promise and perils ahead, it pays to understand how the rep business has changed. A few decades ago, there were more than 25 firms repping stations, and national spot made up 50% of all spot advertising. Rep commissions were in the low double-digit percentages.
Today the business has dwindled down to the three indie reps and five network O&O reps. What’s more, national spot has declined to about a 35-40% of station revenue. And hard-driving broadcast groups have negotiated down rep commissions to about 6%.
Many factors triggered the changes: the dramatic consolidation of station ownership, massive competition from cable and alternative media, the rise of duopolies and the integration of increasingly more sophisticated electronic back-office systems and the economic dips.
Among the looming threats to the reps is an initiative championed by the 4A’s advertising trade association. Called Project Reinvention, it’s trying to commoditize the buying and selling of spot TV, broadcasters and reps say.
All three independents underwent layoffs during the darkest days of the most recent recession. After losing some of its major client-groups, Petry has largely shut down its venerable Blair unit.
But thanks in part to the economic rebound and dramatic improvement of spot business last year, the downsizing is behind them, execs at all three firms say. They are now focused on the future and in implementing digital strategies.
Katz has 17 offices and reps more than 500 stations through its Eagle, Continental and Millennium units, as well as a direct-marketing, paid-programming group.
In 2009, Katz went through a round of layoffs like its competitors, but it also added 15 more people to its digital Web unit, Katz 360, and it created a six-person new-business-development group called National Marketing for Local Media. “We plan to dramatically increase [those two newer units] as we gain more billings in those areas,” Beloyianis says.
Meanwhile, Petry reintroduced a business model it had employed in the 1970s, according to Napolitano. “We went back to that general idea that ‘less is more’ – fewer television stations, but more in terms of being able to provide focus for those fewer TV stations. And ultimately that translates into improved or superior performance,” he says.
Napolitano says one of his company’s main priorities is making the backroom processes more efficient, then taking the cost savings and applying them to the sales team.
Petry also has formed a Petry Digital unit for Web sales. “We’re going to evolve it as the agencies evolve,” says Napolitano, who expects that the silos that exist within agencies separating digital planning and buying from traditional media will eventually disappear, allowing rep firms to more easily sell multiplatform opportunities.