Could this alternative method of selling spots work?

Why couldn't a station issue "loyalty cards" similar to the ones that many stores issue. They could sell spots for commission instead of a flat fee. When a "loyal listener" has the bar code on his radio station tag on his key ring scanned when making a purchase, the station gets a percentage "commission" from the store for the transaction. The advertiser would know exactly how well his ad pulled. If it doesn't generate measurable sales, he pays nothing. If his ads bring in a huge amount of business, then the advertiser pays more, but he knows he's paying for genuine results.

Well spots are kind of a racket anyway... Not to mention, a big portion of major market radio is comprised of national spots, or spots that really do not generate revenue to a specific business model. For example: "Tonight, on CBS...."

fordranger797 said:

Well spots are kind of a racket anyway... Not to mention, a big portion of major market radio is comprised of national spots, or spots that really do not generate revenue to a specific business model. For example: "Tonight, on CBS...."

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I won't dispute that. But at least some spots are sold to local and regional vendors. I remember in the olden days when it was common to hear broadcasters say, "Tell 'em you heard about it on this station" or "Tell 'em I sent you". I presume that was to reinforce with the clients that it was the radio spot that got them the business. I'm just suggesting taking that principle to the next level, using easily available modern technology. It wouldn't help with national spots, but there are still a lot of local and regional spots sold, right?

Avid Listener said:

I won't dispute that. But at least some spots are sold to local and regional vendors. I remember in the olden days when it was common to hear broadcasters say, "Tell 'em you heard about it on this station" or "Tell 'em I sent you". I presume that was to reinforce with the clients that it was the radio spot that got them the business. I'm just suggesting taking that principle to the next level, using easily available modern technology. It wouldn't help with national spots, but there are still a lot of local and regional spots sold, right?

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Theoretically, if you were part of a smaller market setting, and could get your listeners to participate, it could work. However, these days many advertisers are not getting their moneys worth out of their investment.

I'd really like to see it tested though! It seems like a cool theory (and if the advertising was working, it might lead to some real benefits). My only concern is that some of the advertisers will become aware that their ad is useless.

gr8oldies said:

That would just be a different kind of "PI", per-inquiry advertising which is all over radio and TV.

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Exactly. Those 1-800 numbers you hear are based on responses to the ad. The station only makes money when listeners call the number.

And yes we also have special discounts when listeners show their card at certain stores. And we do online coupons. There are 52,000 ways to sell airtime.

I'm asking this because I've never heard of it happening with any radio station in any market I've lived in since the technology existed. Are there any radio stations that have "member" cards of any sort that have a scannable bar code on the card that can be scanned at a store check-out register? I'm aware of using special 800 number extensions to track responses for businesses that want to track phone responses. I'm talking about something similar, but different. I'm talking about tracing an actual sale of a product directly to a listener's station membership card at the time of purchase.

fordranger797 said:

Theoretically, if you were part of a smaller market setting, and could get your listeners to participate, it could work. However, these days many advertisers are not getting their moneys worth out of their investment.

I'd really like to see it tested though! It seems like a cool theory (and if the advertising was working, it might lead to some real benefits). My only concern is that some of the advertisers will become aware that their ad is useless.

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That's why I included the other aspect of the test. The advertiser would pay the station commission based on the dollar volume of trackable purchases. If there are no purchases tracked back to the scanned card, the ad would cost the advertiser nothing. But if the ad is a whopping success, with lots of tracked purchase volume, then the station would earn a healthy commission. It could help smaller market convince advertisers who are skeptical to give radio advertising a try.

For example, a local grocery store might advertise a special discounted price for all listeners of a given station on a certain popular commodity, like the store's house brand of charcoal right before a major local sporting event that has lots of tail-gating. Station listeners would already have cards because the store would have promoted them in advance for discount tickets to concerts or other station-sponsored events. If loyal listeners used their station cards to buy the store's house brand charcoal, the store would have stats captured on how many customers used the station's card, how much charcoal they bought, how much additional merchandise they bought on the same shopping trip, and whether or not the customer also had the store's loyalty card or not. That latter would tell how many new customers they attracted.

That's a risk for the station, since it might demonstrate that ads on their station don't work. Then again, in this scenario we're talking about a grocery store or chain that usually doesn't buy ads at all, so worst case for the station is that they gave away some spare airtime. Best case, they prove that their ads are worth buying, so they get repeat business.

Avid Listener said:

Are there any radio stations that have "member" cards of any sort that have a scannable bar code on the card that can be scanned at a store check-out register?

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Sure. We were doing it years ago. Right now, most of our advertisers prefer to have their own cards and keep the user data for themselves.

A local hardware store used ONLY radio for a campaign, then in exit-polling asked customers where they found out about the offer. Some of them said "the newspaper".

We retain advertising messages in our brain; in the case of radio, the more we hear it, the more we remember. We don't always remember how or when we heard or read it.

My experience has been that asking listeners to mention an ad for a discount does not work well. We may be too shy to mention it, we may have forgotten how we heard it. What radio can do, and do well, is get the customer into the store. The store then reinforces the offer with signage, not necessarily in the front of the store, but somewhere where the customer sees it as he/she walks around.

Also, asking listeners to mention an ad to get a discount can bite you in the butt. The advertiser then can say "I tried radio and it didn't work".

The "membership card" idea is nothing new. The "Music Of Your Life" station here (now a sports talker) tried such a gimmick back in the 80's; I don't think the cards were bar-coded but they were individually numbered. (I may even still have mine somewhere!) You showed your card at various merchants for a discount, and they would draw a number daily and award a gift certificate or similar prize. Back in the 60's, a local TV station ran a lucky-number promotion connected with pinback buttons mailed out to kids who watched "Bozo the Clown." The Bozo-button gimmick ran for years; I'm not sure how long the "Music Of Your Life" promotion lasted. They're nice while they last.

The membership card has been used and works in select instances. It is tough, however. It works best as a discount card.

Radio listening is much more passive that other media. That is the big risk.

I sold radio advertising. This is a real life example. A new boat rental company opened up at a popular lake. I sold them a schedule centering on weekends, specifically around the paydays of the first and fifteenth of the month. The only other advertising they bought was in a Fishing Magazine preceding a fishing tournament at the lake. The owner asked every customer where they heard about his boat rental. In first place was the Fishing Magazine. Second Place was the newspaper (he did NO newspaper advertising), Third Place was the Yellow Pages (his business was too new to be in the phone book and the internet was not around) and in last place was radio. The owner considered the phone book and newspaper responses to be from radio as they were local residents that were renting boats.

The result was most people had no idea where they heard about the boat rental company but locally, it had to have been radio since that was the only place the business was ever mentioned in the localized area. Granted a membership card would have changed those numbers.

A Dairy Queen that never advertised on radio did a one time schedule for their popular red beans and cornbread lunch special. The special was $2.50 back in 1980 when we tried it. Our advertised price was 99 cents if you said radio. Nobody said radio and paid $2.50 per the owner although the owner said it was the busiest they had ever been. They never bought again on the station I was working for because in their mind, radio didn't work. I made a mistake. I focused on people asking instead of customer count. If we had focused on customer count instead, they might have become a regular advertiser.

My Dad was questioned by me when he managed a bookstore. He advertised on radio. He noticed sales were up when he did advertise but in years of advertising on several stations, it was always the same: an increase in sales that dropped when the schedule ended. In all those years he never came across a single person that was there because of radio, as far as the customer knew. As new customers he knew they heard about the store through radio advertising. He did not buy print, ironically.