Five fatal flaws in local Internet ad sales
Dave Chase, one of the founders of Microsoft’s Sidewalk.Com who has gone on to be an independent investor and sales consultant, tells what it takes to build a successful online sales organization. He eats his own cooking at what he says is his own profitable local website in Idaho, SunValleyOnline.
By Dave Chase
Too much time is being spent discussing ways to reduce production costs or find new ways to fund journalism. While that may help, I'm convinced the only path to long-term economic viability is to address directly the revenue problem.
The level of innovation happening on the production and funding side of the equation needs to be matched by innovation on the revenue side. Unfortunately, I have observed five fatal flaws in generating revenues that will lead local Internet plays to fail as many before them have. These are entirely avoidable but most are falling into these traps. Laid out below are the flaws and a high-level summary of how to avoid those fatal flaws.
1. Farming Hunters
I have blogged previously about Farming Hunters and Hunting Farmers, which is a common mistake present in sales organizations. That is, people who are skilled at managing an existing customer base (“farming”) is a far different talent than “hunters” who know how to find new business. We strongly believe in having clear role definitions throughout the sales process with accompanying job descriptions and compensation models. We define four main types of reps — Lead Qualification, Acquisition, Development and Retention. In our experience, many of the newspaper organizations we’ve worked with only have “farmers” that have managed a book of business for a long time. They not only are ignoring 80% to 90% of the advertising market that has been out of the reach of newspapers but they simply have a different skill set than those with capabilities to develop new business.
2. Expensive sales people and processes for low-dollar advertisers
It’s a mistake to think an advertiser still relatively new to online advertising will spend at the same level as an advertiser who has been in the newspaper for the last 20 years. The aforementioned 80% to 90% of the local advertising market that didn’t advertise regularly in the paper generally is going to spend less per year. Nonetheless, traditional and expensive shoe-leather sales models are the rule rather than the exception. In my consulting business, I have seen technology and media companies closing business into the low six figures via phone-based sales models. With the dramatically lower cost of sale of a telesales organization, one can service a segment of advertisers that previously was out of reach of most local media organizations. Unfortunately, most media organizations have little experience building and managing a telesales organization, which is fundamentally different than a field-based sales organization. I’m convinced that building or buying this competence is absolutely vital and should start tomorrow.
3. Inability to quantify the value of your audience and articulate a return-on-investment to a prospect
For most local advertisers who are relatively small businesses, Internet-based advertising still is quite new. They have a hard time understanding online advertising. Consequently, they don’t know what to make of the numbers thrown at them by a typical sales reps. (Some reps further confuse the issue by not knowing the difference between "hits" and "page views" or "unique visits" and "unique visitors". Potential advertisers might ask themselves “is a million page views good or bad?” or “if they have millions of page views, should I expect hundreds of thousands of visitors when I advertise?” A successful online seller needs to not only know the basics of his or her site (e.g., quantity of visitors, demographic summaries, etc.), but the rep also needs to have data specific to a typical advertiser’s business to calibrate expectations of what a marketer should expect in an online campaign (hint: it’s probably closer to dozens of customers vs. hundreds of new customers). It is vital to use this information to show the advertiser his likely return on investment.
4. Cluttered sites with postage stamp-sized ads
I’m not the first one to write about this but it is still the norm for most local media websites. They are extremely cluttered with tons of ads per page. One of experiences from my last role at Microsoft was being on the Executive Board of the Internet Advertising Bureau (an industry-funded trade organization) following the dotcom bust. I was integrally involved in forming the Universal Ad Package ad standard. In order to arrive at that standard, we did a boatload of effectiveness research about ad sizes, placement and quantity. The short version of the findings is that fewer, bigger ads not only perform better but also sell better.
5. Rate card as afterthought vs. a strategic selling tool
The typical way an online seller deals with a rate card is just lobbing the rate card across the transom without explanation. To make it a strategic selling tool, there are two elements that are critical. First, it is important to recognize that a drawback to online advertising is you can’t tell the advertiser to look at page A6 or watch the News between 5:30 and 6:00 p.m. Unless it’s a permanent sponsorship slot, it is likely that Murphy’s Law will rear its head and the advertiser never will see his ad when he goes to the site. One way to combat this is to sell your site at a more granular level than most sites. This increases the odds of the advertiser seeing her ad, as well as giving your site a range of ad prices depending on the advertiser’s appetite. Second, creating scarcity by only allowing a certain number of advertisers in a particular section creates a sense of urgency that is often absent in online advertising, where inventory seems to be limitless to an advertiser. The deadline of print creates urgency, whereas online is viewed as having no deadline. Done right, this can also set the stage for improved advertiser retention, as you should be able to over-deliver against the impression levels that originally caused the advertiser to invest in the campaign.