Impact Pricing Podcast

Ep189: How Pricing in the Broadcast Advertising Industry Works with Dominick Latorre

Dominick Latorre is the Senior Director of Yield and Inventory Management at Sinclair Broadcast Group. He used to be the Manager of Pricing and Planning at Spectrum Reach, and he’s the Assistant General Manager of the Men’s National Team in USA Ball Hockey.

In this episode, Dominick explains how they price slots for broadcast advertisements as he relates it to how airlines do pricing for their seats.

  

 

Why you have to check out today’s podcast:

  • Learn how Sinclair does pricing for perishable inventory like ads
  • Understand how it’s related to how airlines price their seats
  • Find out why it’s important that your salespeople know how to make sure that your service is priced effectively

             

“It’s educating yourself on different industries outside of yours and how you can take those concepts and those ideas and apply them to your business.”

Dominick Latorre

            

Topics Covered:

02:01 – How Dominick got into pricing

04:12 – Sinclair’s goal to improve efficiencies with the local pricing experts and revenue with pricing

06:41 – “It is not what I wanted. It’s not what I wanted to buy.”

09:25 – Relating and comparing how Sinclair does pricing to how airlines price their seats

14:46 – The factors that affect how Sinclair price the programs

18:38 – Pricing for political campaigns

23:01 – Pricing table topics: “Create real value with differentiation. Create perceived value with marketing.”

25:36 – Dominick’s pricing advice

              

Key Takeaways: 

“I’m very happy with the choice I made back in 2007-ish to get into pricing, because as obviously as you know, it’s the biggest driver of profit if you’re priced correctly, so much more than sales volume or anything else.” – Dominick Latorre

“With the various choices for marketing dollars these days, you can’t be upsetting clients and pulling multi-million-dollar deals because we weren’t priced effectively and given them a rate that from day one it should have been a premium program; obviously, the demand is there. We should be charging it based upon that.” – Dominick Latorre

“You can drive more revenue by lowering your rates, and we’ve seen that in some cases.” – Dominick Latorre

“We talk to our sellers all the time. Sell the value of the program. Don’t combine it with other solutions. Don’t sell a customer what we call a 9A4P rotator, where basically that customer spot could fall anywhere between that time period. That’s not selling value. Look at the value of our solutions and price accordingly to them.” – Dominick Latorre

“With so many marketing solutions out there and dollars to be spent, you have to make sure that you’re priced effectively. And again, talking about value, making sure that the buyers see the value in your solution.” – Dominick Latorre

                 

People / Resources Mentioned:

Connect with Dominick Latorre:

Connect with Mark Stiving:   

               

Full Interview Transcript

(Note: This transcript was created with an AI transcription service. Please forgive any transcription or grammatical errors. We probably sounded better in real life.)

Dominick Latorre

It’s educating yourself on different industries outside of yours and how you can take those concepts and those ideas and apply them to your business.

[Intro]

Mark Stiving

Welcome to Impact Pricing, the podcast where we discuss pricing, value, and the perishable relationship between them. I’m Mark Stiving, and our guest today is Dominick Latorre, and here are three things you’d want to know about Dominick before we start.

He is the Senior Director of Yield and Inventory Management at Sinclair Broadcast Group. He used to be the Manager of Pricing and Planning at Spectrum [Reach], and he’s the Assistant General Manager of the Men’s National Team in USA Ball Hockey.

Now, Dominick, I got to say that sounds impressive. Is it?

Dominick Latorre

Not so much. I’m more of a gofer for the actual GM, but we have a pretty big tournament coming up in Czechoslovakia in September. We just had a few caps on it, we just had a tournament up in Boston, so everybody’s really excited to get rolling with it. But now I’m a glorified gofer, so don’t be too impressed with the Assistant GM title.

Mark Stiving

That’s okay. What was funny was when I read that, I didn’t even know what USA Ball Hockey is. I could guess; it’s kind of like street hockey?

Dominick Latorre

Yes, it’s street hockey. Basically, street hockey for older guys who can’t skate anymore and still have the competitive urge to play with that. There are some guys with some real skill. I used to play in a league in California and there were former NHL players, minor league players played in it, and it got serious around playoff time with the guys playing. So, it was a lot of fun.

Mark Stiving

Nice. Well, let’s jump into today’s topic and start with how did you get into pricing?

Dominick Latorre

Mark, I actually fell into pricing. I actually moved out to California for the job with Time Warner to actually manage their Credit and Collections Division. And in the midst of that, in the midst of meeting with the Senior Vice President of Finance and Director at PNA, we would get together every week and we would be looking at our numbers and we’re like, “We’re writing off like around $1,000,000 a month and we couldn’t figure out where that was coming from.”

Needless to say, I was the one who kind of found the discrepancy, and it was because we were undervaluing our inventory. Our commercial ad inventory was basically just, I don’t want to say we were giving it away, but we were almost giving it away, undervaluing, and we were writing off, like I said, almost $1,000,000 a month. And they were like, “Well, obviously, we need to address this in some way.” So, I kind of got dumped into pricing and inventory management and been there ever since, and just enjoy thoroughly what we do. So that’s kind of how I got into it.

Mark Stiving

I have to say, I think the vast majority of people in pricing somehow fell into it.

Dominick Latorre

Yeah.

Mark Stiving

Very few people plan on going into pricing.

Dominick Latorre

Yeah. But I got to tell you. I mean, honestly, pricing, in media, it’s a little still very much gut intuition and we’re slowly but surely like transitioning to the software solutions and data and AI, but we still have a long way to go. But I’m very happy with the choice I made back in 2007-ish to get into pricing, because as obviously as you know, it’s the biggest driver of profit if you’re priced correctly, so much more than sales volume or anything else.

Mark Stiving

It’s incredibly powerful.

Now, you are probably the first guest I’ve had on that focuses on perishable products, perishable inventory. Now, when I think of perishable inventory, I probably think of airplanes and hotel rooms because I use airplanes and hotel rooms a lot; that’s why I think about how they price. You’re selling advertising, and of course, once the day goes by or the advertising spot goes by, it’s gone, right? You can’t put it there anymore.

Dominick Latorre

It’s gone. Correct.

Mark Stiving

So, if you’ve been in the perishable business forever, it’s hard for you to say, because I really want to ask the question how is perishable different than pricing bubblegum or pricing computers or pricing software?

Dominick Latorre

Yeah. Honestly, what I’ve always been into is the perishable inventory environment, but for me, my goal or the gold standard that I want to attain in media is the airlines and hospitality, basically what you said, and the biggest dynamic in our pricing, as those guys are in their industry, like I said, it’s basically turning a steamship in media to do that.

But I think what we’ve done over the past four years in my time at Sinclair is basically showing the sales leadership and the account executives and the entire sales organization that we can be priced effectively with the customer’s willingness to pay and using our data to drive that decision making and not use what you’ve always done. There’s a better way to do it. When we get into kind of what we call next gen TV, which is more around where it’s targeted advertising, you can’t manage that in an Excel spreadsheet anymore. It becomes way too difficult, becomes much more time consuming.

So, for us, our goal is not just to improve revenue with pricing, but also improve efficiencies with the local pricing experts so they’re not sitting behind their desk, creating rate cards where it takes them hours at a time. We have the data; we have the forecast data. Let’s utilize it and give them time back to do what they were hired to do, and that’s sell advertising inventory.

Mark Stiving

Yeah, I think that makes sense.

Let’s take a step back for a second. You had mentioned that the way we’ve always done it doesn’t make a lot of sense. So, can you describe how we’ve always done it?

Dominick Latorre

Well, yeah. Think of it like this. We’ve always allowed– we have what we call a dirty word in our business; it’s called preemption, where basically, if we have ten spots to sell, we will sell ten, we will sell 12, we will sell 15, we will sell 20. We will just completely oversell the commercial program.

Let’s say it’s Wheel of Fortune; there’s ten spots to sell on Monday. If it’s hot, we’ll sell it 10, 15, 200% over and then we’ll figure out where the bodies are buried, and give that advertiser a two for one or three for one deal to go somewhere else, when that really only upsets clients. With the various choices for marketing dollars these days, you can’t be upsetting clients and pulling multi-million-dollar deals because we weren’t priced effectively and given them a rate that from day one it should have been a premium program; obviously, the demand is there. We should be charging it based upon that.

So, we’ve always had this preemption, and it’s just not where I’m at today; it’s always been an issue in media, and it’s something that we’re trying to move away from at Sinclair. Like, literally, with our pricing and utilizing our software to literally continue to drive the rate up to where it’s almost to the point where it shuts off demand because it’s become so high. And preemptions, by doing it that way with our software solutions, we’ll be able to do that and kind of limit the amount of free options that we have.

I tell people all the time. With a preemption, I mean, imagine walking up, you’re going to a family reunion. You’re walking up to the ticket counter at an airline, and they suddenly say, “Oh, well, we sold your ticket for $50 more to somebody else, but we can give you a spot two weeks from Sunday for X amount cheaper,” and you’re like, “Well, this doesn’t suit my needs at all.” So, it’s just something we’ve always done. It’s something we need to get rid of, get away from in the industry.

Mark Stiving

Yeah. It is not what I wanted. It’s not what I wanted to buy.

Dominick Latorre

Exactly. And it doesn’t do best for you and it’s not good for their business. I mean, it may be something that doesn’t really drive traffic into their business that’s changing what we want to do for them.

Mark Stiving

Yeah. So, when I think about the airline pricing; let’s just talk about airlines for a second.

Dominick Latorre

Sure.

Mark Stiving

The way I believe they do their pricing – not 100% sure – is they take any given airplane trip and they watch how fast the seats are booking up. And they know how fast they should be booking, and so if a trip or a plane is booking slower than usual, they’ll probably charge a lower price; they’ll reduce the price.

Dominick Latorre

Right.

Mark Stiving

And if the trip is booking faster than usual, then they’ll raise the price so that they’re getting more money from the customers who book later, because there’s some reason the demand is high for that specific trip, whatever that is.

So, are you guys doing something like that?

Dominick Latorre

We are, except where we’re trying not to, we call it fire sale. If we’re lowering the rate, we don’t want to lower the rate too much and kind of condition our buyers to kind of wait us out to lower a rate if the demand is not there. For us, if we’re lowering it, maybe slightly in order to drive artificial demand to get that rate back up. But yeah, our software allows us to look at demand forecasting based on historical, based on trends so we can see, to be able to make sure that that rate is priced effectively.

Again, and in some cases, you can drive more revenue by lowering your rates, and we’ve seen that in some cases.

Mark Stiving

Yeah. And so, when you have an empty seat; we’ll just call them seats because I know how to talk about seats.

Dominick Latorre

That’s how we do it, too.

Mark Stiving

Is it? Okay, good. So, when you have an empty seat, you have somebody to put in the seat. So, you have an ad, your own personal ad that you could put in that seat. Is that a true statement or not?

Dominick Latorre

That is. We would rather run a station promo than kind of losing our rate integrity for that final seat just in order to sell the seat. We would rather, like I said, have a station run a promotion, promoting their television station versus just dumping rate for that one spot in order to sell it and then ultimately losing rate integrity for the station, for the program. And again, you talked about it earlier – value; having that and making sure that we have the right value, the correct value for that final spot to not just fire sale and give it away.

Mark Stiving

Yeah. So, the airlines have I’m going to say it’s an advantage, but I’m not sure that it is, where they have customers who need to travel tomorrow. And so, they’ll do last minute booking and they’ve got very low-price sensitivity, so high willingness to pay.

Dominick Latorre

Sure.

Mark Stiving

They end up raising prices as they get closer and closer to take off time.

My guess is you guys don’t have that, that there aren’t many companies who say, “I need a slot tomorrow.”

Dominick Latorre

No, we don’t have much of that. But if that’s premium inventory, whether it’s on news, sports, kind of specials, if that inventory is a premium, we will hold rate for that because we will get last minute buyers if the ratings are there that justify. If it’s a hometown pro, a hometown team that suddenly has one or two extra avails, we’ll hold them out in order to sell them at the last second.

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Mark Stiving

Nice. And so, are you using each TV show? I’m not exactly sure what the right word is, but are you using each TV show essentially as a plane or a trip to say we need to fill this show?

Dominick Latorre

We are. We look at each television program, and within that program, we have capacity. So, yeah, using the seat airline analogy, basically, each program is its own flight and we need to make all flight each day, each time of day. So that’s why my goal is to use the airlines because it is very similar to how we price and how we want to price moving forward in the future.

Mark Stiving

Yeah. Pretty fascinating.

What about, how big are the price changes? So, you said that you’re not going to lower your price by much because you want to maintain some type of fee integrity. How much will you increase price?

Dominick Latorre

It really depends. I mean, it depends on the program. Usually, with programs that are, say, less than a capacity of ten avails to sell, each one of those units that are sold, really, we’re trying to drive the rate because we have such limited capacity. But when you look at our daytime programs or our overnight programs where the demand is not there and we just have a boatload of inventory to sell, we will tend to a lower rate there because we have just so much inventory to sell. So, we’re looking at it differently. Whether we package it differently, how we price it, it’s definitely looked at differently. And we look at weekends differently than Monday through Friday. We look at Saturday differently than how we price Sunday. So, there’s all different kind of factors that we take into account when we’re pricing these programs.

Mark Stiving

So actually, I find that fascinating.

Let’s just talk about Saturday or a weekend versus a weekday, and we’ll talk about a 1:00 spot somewhere in that ballpark. It would seem to me that what you cared more about is how many people were watching and who was watching; so, the demographics. Is that how you price it?

Dominick Latorre

It’s a factor in how we price. We’ll look at ratings. We used to be able to look at set top box data to see who is actually watching them. It’s a component of the factors that we use to price, whether it’s Saturday at 1a.m. or 1p.m. in an afternoon on a hot summer day. I mean, chances are that inventory is going to be wide open because nobody wants to be stuck in our house watching television. So, we may lower the right there in order to sell that spot. Because again, chances are we have just a plethora of inventory to sell. Again, we don’t want to give it away. We’re trying to teach, really educate our sales folks what pricing is, kind of knowing what programs have the premium and what do not in order to make sure that we’re priced effectively.

Mark Stiving

You just made me smile with something you said, so I have to ask this question.

Dominick Latorre

Okay.

Mark Stiving

Do you price differently based on forecasted weather?

Dominick Latorre

We do not, but I will write that down because it is something that we should. I mean, seasonality does play a factor into it, because if you notice, there’s no really new programs that are launched in the summertime because chances are people aren’t around to watch the television. So, for us, we look at seasonality. We look at quarter to quarter, year to year. Automotive is a big category of ours. Weeks three and four versus pricing weeks one and two of a month, that’s when automotive dealers generally get their co-op dollars to use for their marketing. So, I don’t want to say flood, but they will spend their money very heavily in weeks three and four, so we need to make sure that if we know that these auto dealers are coming in to these programs because the demand has always been there, to make sure that our rates are high enough, not high enough, but rates are at a decent increase to make sure that they’re not buying it low and then getting preempted by somebody else that comes in.

Mark Stiving

Yeah. Since you brought that one up, talk to me about pricing for political campaigns.

Dominick Latorre

It’s the gift that keeps on giving these days.

There’s a lot of FCC regulations with how we price a candidate. Basically, I want to make sure that they’re not being gouged versus a normal, regular core advertiser. So, we need to make sure that if they ask, they’re entitled to what we call lowest unit rate within a program. So, we want to make sure that when pricing, like right now, we’re really heavily already, we’ve been looking at the general election for a long time, we want to make sure that our rates are stair stepped throughout the election, so that when you do get to a couple of weeks prior to the election, our rates are sufficiently increased to make sure that we’re maximizing revenue with that.

So, political. I think every year is a political year for us now. There’s a lot of planning that goes in that with myself, my team, and really the local pricing experts at the station that say, “Look, let’s make sure that we’re not leaving money on the table because we’re not priced effectively enough.” So, we use some third-party data for some other resources to be able to help us kind of gauge where the political dollars are going to be spent. But political, obviously, these days, is the biggest category for us. We’ll do over $300-400 million in political advertising this year.

Mark Stiving

Nice. And so just to make sure I understand it and everybody who listens understands it, I think what you said is we have to give the price to a political candidate that is as low as the lowest price we give to anybody else for that offering, whatever that happens to be.

Dominick Latorre

We have to offer to a local candidate, yes, if they ask for it.

Mark Stiving

Yes. And so given that we’re going to give them the lowest price, what that says is we don’t want to lower our prices for anybody.

Dominick Latorre

Correct.

Mark Stiving

So, we hold our prices up. And so that’s probably why during campaign season, we never see the other ads. It’s just all political ads.

Dominick Latorre

No. Right. Because usually, if a core advertiser is used to paying $1,000 for an ad, and suddenly, the advertising that they’re used to buying is now 1500, 2000, $3,000 for a 30-second spot, they will wait or they’ll buy somewhere else, whether it be a digital solution. The smart advertisers and our account executives, they need to have those conversations well in advance to look to make sure that we don’t completely have an advertiser pull off during a political window, but look for alternative solutions for them that they’re not normally used to buying but still gets them the effective traffic to their business to make sure that they’re going there. So, for us, that’s what we call political crowd out. I mean, you’ll see, depending on where you’re sitting, you will only see political ads. PA, Vegas, like, it’s just insanity right now.

Mark Stiving

And most of us viewers hate that. Just thought I’d point that out.

Dominick Latorre

I’m aware. I get it. I mean, I look at it, too when I’m in Pennsylvania during the primary and I see every ad that’s coming on, it’s just one political ad after another. I mean, I’m smiling on the outside, but I’m kind of cringing on the inside.

Mark Stiving

So, last question before we’re going to start to wrap this up.

Dominick Latorre

Sure.

Mark Stiving

Talk to me about auctions. So, the way that Google sells ads feels like a really smart way to do it. Are you guys thinking about or is there a way that you could do auctions for the time slots?

Dominick Latorre

We’ve kind of kicked it around. It may be something that we look to do in the future with some programs, maybe pilot or do a POC on an auction-based selling. It’s not something that we’re actively engaged in.

Mark Stiving

Okay. It just seems pretty fascinating to me to have that.

Alright. Dominic, this has just been fabulous. I’ve enjoyed this immensely. It is now time for us to play pricing table topics.

Dominick Latorre

Already.

Mark Stiving

So, this is a Toastmasters thing, if you’re familiar with it or not. And what we’re going to do is I’m going to randomly shuffle my cards, which thank you, by the way, for ordering a deck. I appreciate that.

Dominick Latorre

I did. Absolutely. I’m looking forward to getting to use them and educating myself, my team, our sales organization, because like I said, pricing is a big driver of profits so we need to get better on it.

Mark Stiving

Okay. I’m going to randomly pick a card for you. So, we’re going to pick this one. You’re okay with this one right here?

Dominick Latorre

I am okay with it, yes.

Mark Stiving

You can’t read it. I’m going to read it to you. So, I’m going to read this, and you get to speak for one to two minutes on this topic – “Create real value with differentiation. Create perceived value with marketing.”

Dominick Latorre

Well, value is value is a key; we talk about it all the time. What is that inventory? What is the customer? What is the value to that specific customer segment, right? I mean, we can put out a rate that we believe, based on all of our historical data and our future looking data, that that’s a rate that we should be getting. But what is the value that our customers are willing to pay for that inventory? That goes a lot into how we price. Because it does us no good if we put out a rate card and the rate is $1,000, as an example, and we’re not getting anywhere near that and customers are only paying at $500, we kind of lose kind of that credibility with putting out a rate card.

So, for us, we talk to our sellers all the time. Sell the value of the program. Don’t combine it with other solutions. Don’t sell a customer what we call a 9A4P rotator, where basically that customer spot could fall anywhere between that time period. That’s not selling value. Look at the value of our solutions and price accordingly to them. So, we have a lot of conversations and a lot of education at Sinclair around the value of our programs.

Mark Stiving

Nice. That was beautiful, Dominick. You went for a minute and 30 seconds. Right in the middle. Nice job.

Dominick Latorre

Oh, wow. Okay.

Mark Stiving

Hey, I want to end with a final question that I always ask.

Dominick Latorre

Sure.

Mark Stiving

What’s the one piece of pricing advice you give our listeners that you think might have a big impact on their business?

Dominick Latorre

For me, it’s educating yourself on different industries outside of yours and how you can take those concepts and those ideas and apply them to your business. I think for us, like I said, for me, I’ve looked at the hospitality, I’ve looked at airlines, I looked at others outside of perishable inventory. And how can you use those concepts in how you price your business?

Mark Stiving

I love that piece of advice. That’s awesome. I often, in fact, I watch all industries and pricing, and I try to figure out why is it that they’re pricing that way. And so then just the whole thought exercise makes me a better pricer.

Dominick Latorre

Yeah, I agree with that wholeheartedly. Like, why not educate yourself, and again, “borrow” those concepts for your business. But I think as we get smarter as far as pricing, it is pricing. You know, as it matures in everybody’s industry and everybody’s frontal lobes that, like the importance of pricing in business. I mean, like I said in media for years, it was kind of almost like an afterthought. But for us, with so many marketing solutions out there and dollars to be spent, you have to make sure that you’re priced effectively. And again, talking about value, making sure that the buyers see the value in your solution.

Mark Stiving

I could not agree more.

Alright. Dominic, thank you so much for your time today. If anybody wants to contact you, how can they do that?

Dominick Latorre

I’m very easily looked up on LinkedIn. I’m also a member of the Professional Pricing Society; you can find me there as well. But yeah, please reach out to me. I’m very passionate about what I do. I love that I fell into this industry. Just please reach out and I will gladly speak to you about pricing inventory, whatever you want to.

Mark Stiving

Alright. Thank you so much.

Episode 189 is all done. Thank you for listening. If you enjoyed this, would you please leave us a rating and a review? Just sign up to https://ratethispodcast.com/impactpricing; that will make it easier for you to figure out how to rate this podcast, and we would hugely appreciate it.

And by the way, if you can get one of your friends to listen, if everybody gets one of their friends to listen, we would double the audience. Wow, that’s how math works. And finally, if you have questions or comments about the podcast or pricing in general, feel free to email me: mark@impactpricing.com.

Now, go make an impact.

Tags: Accelerate Your Subscription Business, ask a pricing expert, pricing metrics, pricing strategy

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