Radio Auctions can be a good thing or your worst nightmare. It is how you use this tool that determines its success or failure. You should give intense thought to the guidelines.
1) What is the size of your market and what size radio audience do you have? If you have enough listeners to really sell items on the air at the minimum bid almost every time, you have something to work with. If the audience is smaller, you need to really consider what you sell on-air.
2) Who gets to participate? Is it open to all? There have been stations that have done this fulltime with levels of success that exceed the typical revenue of a competitor. There have been others that almost went bankrupt. Who can participate and why is the key.
There was a station in Maine that automated the format. They were one of a cluster of stations. I understand you had to refuse cash advertising to qualify. Then they would sell for merchandise. It made businesses believe in radio as these 'not sold on radio' people got ads across the group of stations with one of the stations selling the product they traded for ads. There were tangible results for the business and an advertising campaign over several stations that increased awareness and the bottom line. It was a genius idea.
Another station only took merchandise from clients that had not paid their advertising bill for at least 90 days. Every Saturday morning they sold the items they obtained as payment for past due balances for whatever they could get. The problem was, these clients talked. Almost overnight cash flow suffered as people wanted to pay in merchandise, not cash. In addition, a fine example of the issues they faced was a struggling carpet cleaning business that offered coupons for their advertising. The competiting carpet cleaning company that was buying spots cancelled because they felt the station was undermining their business by selling their competitor's service for half the price they charged.
3) Selling merchandise on the air means big discounts. In essence you get 50 cents on the dollar. This means you get 50% of every dollar you bring in. Selling $200 in cash or $500 in cash takes virtually the same time as it does to sell for merchandise, so the work is double for the same income. Plus, there is logistics in selling items. You must have excellent inventory control and good follow-through from the buyer. The best stop-gap is making listeners pay via credit card the instant they buy, having a dedicated person doing this on the fly.
4) What will you offer? Certain items might seem alright but how many of your listeners need the product right now? Car dealers are always advertising but how often do you buy a car? If you bought one 6 months ago are you going to trade it in when a dealership offer $5,000 off list this weekend only? Sticking with frequently used, mass appeal products is always a good idea.
5) It takes time to establish. It is sort of a chicken and egg thing. You must have the product to sell and you must have the listeners knowing they can buy and how they can buy during the first show. Maybe a good time to start is heading in to Christmas.
6) How will cash sponsors feel about this? What if it is a competitor. Will cash sponsors want to convert to only merchandise?
7) Can a business do this indefinitely? My thinking is no. First time or careful exceptions would be most wise. Perhaps the merchandise idea is restricted to first time advertisers, new business start-ups and your cash sponsors as an added bonus.
8 Center on businesses where customer sampling is a priority. For example, restaurants will give meals away all day long because they know a percentage will become regulars and they have to dine there once to become a regular.
If you are a non-comm, this might be an excellent option, but I wonder if an off-air auction might be a better opportunity. An event with food and some other offerings plus a live auction at a supporter's venue might net the greatest results. There is a rather 'magical' thing that happens because of urgency. The 'want' seems to outweigh the mind's ability to reason and in the heat of the moment, a couple of bidders become competitors with a mindset of 'win at any cost', sometimes overpaying for an item. And when they do, there are ahs and oohs from the crowd showing their pleasure in your generous donation to this non-profit they all love.
Certainly merchandise sold to your listeners can be a win-win-win (radio-business-listener) but care must be taken to keep it from turning on you. For the non-commercial station I can see it opening doors to clients who try to insist you can say 25% off to your listeners in the script and you won't get caught, then get upset that you want their money but restrict what they can say in their spot. They might gladly give you merchandise at retail for underwriter announcements knowing they gain awareness when you sell the item over the air or website. In their eyes, they might be looking at half price advertising. And, you get a no turned into a yes, some revenue and a happy listener or two.
THE BEST THING selling merchandise over the air does is prove radio is a viable advertising medium. Radio always suffers from a lack of tangible results and the selling of merchandise is tangible results. Let's be honest, how often do you tell retailers when you heard their commercial on the radio, say their ad on TV or in the newspaper? Most of us aren't sure where we heard or say the advertising but we are in that business that advertised. Likewise, most businesses don't have a clue what advertising really works for them; they only know they need to advertise because it works.
