• by Joe Mandese  @mp_joemandese, October 2, 2003

The radio industry made several important strides in terms of its business practices with Madison Avenue this week, including the unveiling Thursday of the industry's first national spot radio electronic invoicing and verification system, a development that likely will improve the speed and accuracy of spot radio ad buys and one that will also reduce the amount of manpower involved.

Separately, a task force of the American Association of Advertising Agencies and the Radio Advertising Bureau has agreed on and codified a universal set of terms for radio ad negotiations, a step which in itself should improve the radio purchasing process for agencies by establishing industry standards.

The new invoicing and verification system, while not a fulfillment of the full promise of Madison Avenue's long sought after goal of EDI (electronic data interchange) represents a significant breakthrough for the spot radio marketplace. The system, dubbed RadioExchange, which was developed by spot radio giant Interep with input from media buyers, was unveiled Thursday during the National Association of Broadcasters Radio Show in Philadelphia.

For the radio industry, the system will help eliminate a "stock objection" that spot radio is often too labor intensive to process and steward for agencies, said Marc Guild, president of Interep's Marketing Division. "Advertising agencies have expressed the need over and over and over for an electronic system for billing and reconciling of invoices," he added.

For agencies, the system is expected to facilitate both order placing, as well as payments to stations, said John Keanna, CFO at Carat USA. "You get me your invoices electronically, I'll get you paid faster," he said, clarifying a position some broadcasters believe agencies might be loath to take, even with EDI.

In fact, a survey of radio station financial executives conducted in 2002 by the Broadcast Cable Financial Management Association found only 13% were using electronic invoicing systems and that none of them felt they were getting paid faster by advertisers because of them.

However, a quarter (26%) of respondents who did not yet have electronic invoicing systems, believed such systems would facilitate advertising payments.

Yes     No 
Use Electronic Invoicing:                               13%    87% 
Do You Get Paid Faster Because Of It:                    0%   100% 
Non-EI Stations Who Believe They Would Get
Paid Faster:  26%   74% 

Source: Broadcast Cable Financial Management Association

Now that the radio industry and Madison Avenue are getting their machines to speak to each other, another important document released by the Four As and RAB task force has created a common language for station sales reps and media buyers to talk on the same page.

The new guidelines take common radio negotiating terms such as cost-per- points and run-of-schedule and give them explicit, agreed-upon meanings.