Radio stations are growing their revenue by selling digital ads. They are an excellent complement to radio spots. Radio delivers reach, and digital allows advertisers to target specifically. The industry, however, isn’t seeing the profits it would expect. To ensure that your revenue translates to profits, you can employ these strategies for improving your digital advertising margins.
What’s Working Against Digital Advertising Margins?
Many factors dictate how much you gain in margins. There are costs associated with any ad units you sell, but digital has more than over-the-air ads or your own digital inventory. No matter what ad operations (ad ops) framework or digital advertising software you employ, these expenses are unavoidable. How much they cost you can vary, though.
There are several cost groups associated with digital advertising sales:
- Cost of the media/goods
- Sales commissions
- SaaS fees
- Ad ops
- Managed service fees
- Monthly minimums
With the right approach, you can minimize the impact of these expenses on your profits.
Use a Platform That Does the Ad Ops for You
Ad ops includes the life cycle of executing a digital order. Depending on the type of ad, trafficking happens in different places. Anything programmatic goes through a DSP (demand-side platform). CTV/OTT ads use an SSP (supply-side platform). Social media ads and SEM (search engine marketing) require execution directly on the websites.
Doing this in-house or via an agency quickly drains your margins. Full-time digital ad ops personnel are expensive, and agencies will leave you with pennies. The best option is to use a digital advertising system that does this for you. These platforms have automations for some of the trafficking but also have dedicated resources for custom and complex ad buys. The cost for ad ops is either a SaaS annual fee or just a percentage of the sales.
In most cases, you can see relief on your margins by up to five digits, depending on your overall sales. You’ll also have peace of mind that technology and expert teams are executing your orders.
Compare Media Costs to Find the Best Price and Quality
Not all DSPs are the same. Some may have lower-cost inventory, but the quality could be questionable. You don’t want your customers’ ads relegated to clickbait sites that have poor UX. It will impact the ads’ performance and your renewal.
Instead, compare reputable DSPs that digital advertising software integrates with, asking questions about how they define quality. Then, review the retail costs and if there are any opportunities for better rates based on volume and spend.
Keep in mind that some inventory has a higher price tag. For example, OTT/CTV is a premium tactic. Display and geofencing cost much less.
Review all the elements that affect retail media costs and the quality metrics before making your final decision. Also, using one solution usually means you’ll save money compared to using multiple ones.
Avoid Providers with Managed Service and Other Junk Fees
Another reason digital advertising margins shrink is because of all those hidden fees. They’re in your contract and monthly invoices, but they still seem to sneak up on you. There’s really no reason you should have to pay a managed service fee to your software company. It’s pure profit for them with little return for you.
The managed service fee could include technical support, or they may charge extra for that, too.
There are other fee categories you might encounter, including:
- Integrations
- Strategic support
- Training
- Custom reporting
- Data storage or access
All of this should be part of the SaaS price or your overall agreement. Otherwise, it’s nickel-and-diming you out of profits.
Say No to Monthly Minimums
Many digital advertising platforms have monthly minimums. These influence your digital advertising margins in two ways. First, if you don’t book the minimum in a month they’ve set, you could have to pay more for inventory or a managed fee.
Second, minimums could keep you from being able to sell smaller ad buys. For example, a local advertiser just starting out may only be comfortable with a $1,000 budget to start. The minimum for a campaign could be $2,000. Since your platform has this restriction, you completely miss out on the revenue.
You don’t have to settle for this. You can find a solution that has no minimums, so you can sell what you want at any price point.
Growing Digital Advertising Revenue: We Protect Your Margins
We understand the importance of digital ad revenue to radio. It’s what’s fueling growth and enabling stations to diversify finances. That’s why we built Marketron NXT. It’s the only third-party digital advertising solution designed for radio.
It does the ad ops for you, comes with no junk fees, provides access to high-quality content at fair prices and has no minimums. You also get dedicated onboarding, on-demand and live training, a library of resources, and technical and strategic support.
Our roots are radio, and our future is ensuring the industry can flourish by delivering modern technology that protects your margins.
You can read more about digital advertising and profitability in our e-book: Is Selling Digital Advertising Profitable for Your Station?
If you’d like to learn more about NXT, explore here.
