According to the results of MarketingSherpa's recent reader survey, 88% of you are definitely interested in hearing how to sell more online advertising.
We contacted leaders from two of the most well known online ad sales consultancies in the US -- Janet Ryan of Ryan Whiteman, and Leslie Laredo and Jeff Leibowitz of Laredo Group -- and asked them the questions we figured you would ask yourselves if you were meeting with them.
Q: How can you sell cost-per-thousand (CPM) in a world that has gone mad for cost-per-acquisition (CPA) or cost-per-click (CPC) deals?
Ryan: The bottom line is, if you have a compelling value proposition, you can sell your ads for whatever pricing structure you want. It is supply and demand.
Unfortunately, Internet pricing is based on aggregate supply and demand, and there is such a massive generic supply out there that ad buyers can demand whatever pricing structures they want. If you have a value that everybody else can not offer -- such as audience differentiation or editorial strength -- it will give you some negotiating power so you do not have to take CPA deals.
Far too many Web sites get the idea that all inventory is good inventory and it does not matter as long as I get a lot of eyeballs. Every time I hear somebody refer to eyeballs, I get angry because eyeballs assumes commoditization. When you refer to them, you assume they are all created equal. The basic principal of great advertising is you pay for audience AND quality of audience. If I can get you a bunch of undifferentiated eyeballs, then I can not hold the line on pricing because there is always somebody willing to cut costs.
Your job is to sell the value of the audience as distinctive and targetable. It is not eyeballs, but specific target audiences that somehow map to the group the advertiser sells to.
Leibowitz: The trick is to understand the value of your audience and sell that value. With a large generic site, you are not talking a specific well defined audience, then why not do CPA/CPC sometimes? Smaller sites do not have the level and volume of inventory to really make any money on CPA/CPC. You need hundreds of millions of ad impressions to make any money from them.
Laredo: If you can define and therefore sell the value of the audience, it is not about the number of audience. It is about the value of the click and the audience. For example if a site gets a 1% click through compared to 5%, when you might expect the 5% to be better. In fact, if the 1% has a 50% conversion rate, whereas the 5% has a 1% conversion rate, then the 1% click through site is better.
It also depends on whether you have got the right salesperson who is trained to sell CPM. Do you have a staff capable of selling on value versus answering the phone when brokers call?
Q: How do you hold the line on pricing? So many people are selling off rate cards that many fear media buyers will not take stated rates seriously anymore.
Laredo: The industry has been whipped to death by rate card devaluation. Cards are ripped up. Buyers generally know that sites will sell way off rate card to get deals. However, I do think there are ways to justify and validate not lowering prices.
Cost justification is the way to maintain a higher CPM versus going dramatically off rate card. There are a lot of things sites can offer to add premium to CPM, including reducing the amount of clutter on the page, above-the-fold positioning, targeted positioning, not accepting competitors' ads, sequencing of ad units, the ability to do a surround-session, combination of units on the page, etc.
Ryan: It is not a question of fighting pricing wars, it is a question of structuring the entire deal as a value proposition around your audience that can not be diminished or commoditized to just the same thing as everyone else.
You could do it by having a really unique audience, or by having really interesting targeting capabilities, or some unique ways to demonstrate the effectiveness of how ads work on your site. Some sites do a really good job of that with pre- and post-awareness studies -- it is a fabulous value-add. You show it is not just about clicking, that your list has something superior about it or your editorial causes people to take the right kinds of actions.
Other things like your abilities to target say the junior high school audience at the 3-5 P.M. time -- day-part targeting is of value to some advertisers. If you are selling liquor, your ads will not be appreciated at 6 A.M.
The point is, to avoid CPC pricing or too-low CPM, you need differentiation and a distinct and recognizable value. Why do I pay more for certain brands? Perception of value. Publishers need to establish this at the very beginning of the sales planning process, in every aspect of the product development process, and demonstrate what brand quality is. It is not bolted on - it has got to be baked in!
If you are not differentiated enough, there is not much you can do to get yourself out of remnant-type pricing.
Q: What are the best practices in media kits?
Laredo: It has to be online. It is amazing to me that in our consulting we tell people 'Put the media kit online,' and they say, 'Oh no our competition will see it there.' Well, they are going to see it anyway! That is so foolish.
Some sites say we will email it to you or we will have a rep call you. That is not best practice. Media buyers are not going to wait to get it emailed to them. Make information available immediately.
If you want to collect name and email for lead generation, then provide an incentive of some type -- the latest research or more data. Be careful with your registration form, think realistically about what sort of pain level media buyers will go through before they will say it is not worth it. Name, title, company name, email and phone number should be sufficient.
Leibowitz: The pain threshold of buyers is very, very low!
Ryan: Really get yourself into the head of the buyers. Not just the media buyer, but all the different people involved in the buying process. What do they care about? What information do they want at their fingertips? What makes a buying decision?
What makes a great media kit is what makes a great sales pitch. It is not how great I am, it is how well can I help you solve the problems you are dealing with. Great sales material is all about how do I make your job better.
Some sites throw sales tools in a binder or on their site and never update it. It should be a living product. I really like MSN's media kit. They are doing a fabulous job. You can learn anything you want on any cut of that site. It is amazing.
Leibowitz: Most media kits tell you what you can buy. Very few of them tell you why you should buy it.
Laredo: Do not just include typical NetRatings data. Not just percent male/female, education, income. Tell why they come to this site, and attach log data to it. We know they come and spend X amount of time, and here's some qualitative data on their buying habits and their appreciation for the site from a third party study. Get panel-type data, combine it with your log file, and build a story. 'We have a valuable audience for these reasons.'
Ryan: If you want to get out of CPC, you sure better give them some more information about who you are reaching. Audit results are really like check-off lists, yes I believe you are telling the truth. I have yet to see an audit that is a good sales tool beyond that. What is the behavior of people coming to your site? How's that differentiated from others? Why might they be good candidates for your stuff? That is the bar you have to pass to be a good publisher. Price or audits alone do not help with the differentiation issue.
Q: Got some tips on working with agency media buyers?
Ryan: Previously I spent 20 years in the world of traditional media, and you absolutely called the media buyer and worked very closely with the agency, but we would have never allowed our whole sale to be in the hands of just the agency. Make sure you know the client as well.
Agencies are critical to the buying process, but you would be a fool to ignore the person who is the ultimate decision maker if for no other reason than the fact that people change agencies regularly.
Plus, if you are only operating at the media buyer's level, you have assumed the low man on the totem pole has the power. Their job is to try to make as easy comparisons as possible - tying to get an apples-to-apples comparison. 'If I can make all products equal, then we're only negotiating you down on price.' As a seller you are trying to not be commoditized that way.
Laredo: Many agencies do not have integrated online/offline media buying teams yet, but it is going to change. We are hearing about it. They are very much client-driven to put it all together. So the trend will be more cross-disciplinary buying. If you are a content company without offline, I absolutely think very strongly about coming up with it.
The print industry has done a relatively poor job of addressing it as a synergistic leveraged media buy. For example, if I buy the back cover of a magazine, what is the equivalent online? Not that online is a merchandising unit for print. We have to come up with more packages that explain why you would want both. Maybe the audience overlap is relatively small, or if it is large perhaps your monthly readers have certain requirements that happen weekly, or the audience comes to the site within X days after the issues is released. That's a great story, and I do not know anybody who is selling that way.
Q: How can I hire the best sales reps to sell online ads?
Ryan: Go back to what differentiates you. If your value proposition is 'I'm selling on price', then I want a guy who can phone pitch to 100 people a day, negotiate on prices, and move on. That's one skill set.
If your unique sales proposition is 'I can reach more pipefitters than anyone else in the universe and they buy X products,' then I need somebody who can talk much more conceptually. Probably not hard closing skills, so much as painting a picture and building trust. Making proof statements.
Look at your sales process. What kind of information needs to be imparted to be successful? We see a lot of clients going through a big change. Two years ago it was get the RFP, answer the questions FAST, and get them out there immediately. You dialed the phone 100 times a day. Today because of differentiation, you need sales people who can dig in and help an advertiser figure out how to solve marketing problems.
Some former salespeople are going through retraining, and others just are not going to be up to the task.
Leibowitz: Managers are being much more selective about who they hire. It is not just warm bodies. Also a number of sales managers do not want to hire with in-the-trenches experience. They want to hire newbies, with no disposition toward old bad habits, and train them.
In general the industry is realizing that traditional sales management practices need to take hold. So, they are trying to hire sales people with more traditional sales backgrounds and disciplines, as opposed to just taking orders or saying, 'Here's our pageviews, buy some ads.'
Salespeople need to be more educated in terms of selling an audience. There will be migration from the current approach of page impressions to the value of the audience. It will require training, coordinated research with log files, and a lot more work. Yet, it is the work traditional sales organizations have always done.
One advantage to the pay scenario now is many, many people were hired on small salaries with huge stock options that supposedly would make them millionaires in six weeks. So, they have learned to survive on a base salary of $35,000 on a day-to-day basis. You can offer them a slightly nicer pay level but they are not going to be millionaires. Everyone accepts that that goal is unrealistic now.
Ryan: If you decide to have your ads sold by a network, realize that large networks make their money based on moving the largest inventory in the smallest time. It is hard for them to get out of the cost discussion.
However, whenever I see a business plan saying 'I'm going to hire someone to sell ads' in many cases that is the wrong answer. You have to do a modeling exercise -- what is it going to cost you to ramp an in-house sales force and how long will it take you to see money. It depends. Outside sellers sell a whole lot of sites and they're all about writing orders fast. If you want to be very price elite, you don't want the speed game of 'I can get you this price if you agree today.' If your site is not in such a hurry, you can hold your prices. You have to weigh outside sales potential versus building your own force.
Q: Got an ad sales forecast for 2002?
Ryan: We are definitely starting to see a pick up in the marketplace. It is starting to climb again. It is about the whole economy. Thing's are not as overwhelmingly bad as they were a couple of months ago.
We are also seeing dollars move to online that have not been there before. Large traditional advertisers are spending 2% online. That is not anywhere as big as it should be given that about 15% of our media consumption is online. But it is up a point and a half from two years ago and it is continuing to climb. Useful links related to this article