December 19th, 2007

Online and Print Ad Sales: Time to Cut the Cord

by

I can’t count the number of times I’ve listened to print publishers debate whether to use a dedicated online sales staff or use what Borrell Associates calls “convergence sales,” in the report 2008 Local Online Outlook: Convergence Era Ends, Stand-Alone Sales Skyrocket. “Convergence” means, in the worst (all too common case), print sales reps tacking on online ads as an after thought, or — in one of the all-time great “shoot yourself in the foot” ad sales strategies — as “added value” (ad sales euphemism for “free”).

Even as recently as last year, I’ve heard publishers make strong cases in favor of convergence selling, e.g. one rep owns the whole advertiser relationship, no bothering advertisers with multiple sales calls, single point of accountability, etc.

Now, as print publishers confront the reality that their center of gravity needs to shift to digital (let’s leave aside for a moment the critical question of how long it will take), the overwhelming evidence is that the only way for the online business to become self-sufficient — and ultimately carry the whole business — is to free it from being the bastard stepchild of the print business.

It’s time to cut the cord.

The smoking gun from the Borrell report is that pure-play online media is eating the once monopoly-protected lunch of local print media — these online players don’t have to worry about supporting, protecting, not competing with, or creating “synergies” with a print media business. They can just focus on maximizing advertiser value.

borrellmarketbreakdown.jpg

(Chart and hat tip: Alan Mutter, chronicler of the news business)

But what about competition between online and print? What about the loss of ACTUAL synergies? What about the real risk of annoying advertisers?

Fuggetaboudit

Imagine your online publishing business is a plane trying to take off, but you’re worried that you’re going to run out of runway before you achieve takeoff velocity — that brick wall at the end of the runway is your legacy cost structure. And you’ve got the 4th Estate on board the plan.

So what do you do? Do you slow down to give yourself more time?

No, because then you never achieve sufficient velocity — and it doesn’t matter much runway you have. You still hit the wall.

Instead, you give it full throttle.

That’s why publishers need a dedicated online sales staff — to give the online business full throttle. Every publisher celebrating double digit percentage growth in online advertising knows they need triple digit growth…full throttle.

Local print media have sales channels that should be the envy of every pure play online publishers — instead, they have one arm tied behind their backs by the print business.

I know this is easy to say. But I’ve sat in on sales calls where online had to jockey for attention. I’ve seen the sales rep incentive plans and rate cards — weighted towards higher priced print inventory. And I’ve given workshops for local advertisers about online advertising — they are a lot savvier and can “get it” a lot quicker than many reps probably give them credit for.

Convergence ad sales means talking out of both sides of your mouth — no advertiser is going to slip their money 50/50 between online and print. One has to lose. And publishers have been so focused on keeping print from losing that they have never given online a real chance to win.

Competition between online and print reps may seem like the equivalent of civil war — but competition, if done right, could be the burst of speed that allows the digital business to take off.

As for print — it has not choice but to fend for itself. There’s no more market protection externally — how is it sustainable to provide market protection internally? The print business doesn’t have to die — but it does need to be radically restructured as the online business grows.

Of course, the other missing ingredient is a burst of speed — in terms of growth and innovation — on the product side, so that an empowered online ad sales staff has more audience and more inventory and more high value marketing solutions to sell.

That is a topic for another (perhaps the next) post.

For now, step one — cut the cord.

Comments (19 Responses so far)

  1. Most print ads point to a website. Its hard to say whats more effective. But both work together pretty good if done right.

  2. [...] Online and Print Ad Sales: Time to Cut the Cord. Scott Karp says it’s time for newspapers to set the online ad reps free and let them aggressively go after local advertisers, even if it means competing with their print compatriots. I agree. [...]

  3. [...] Online and Print Ad Sales: Time to Cut the Cord – Publishing 2.0 “Local print media have sales channels that should be the envy of every pure play online publishers – instead, they have one arm tied behind their backs by the print business.” (tags: advertising) [...]

  4. [...] Karp looks at some new research data, and makes the argument that print may be dragging down publishers who should be focusing more on their online revenue: “…pure-play online media is [...]

  5. Scott – this seems to be the challenge of integration. During a market shift, at what point do you drop a system that has been honed for decades, in favor of what amounts to the wild west for many?

    Are you seeing any traditional publishers that have made the break to online as you describe, and seeing results that makeup for any loss in print revenue?
    Thanks…. have a nice day.
    -Dan

  6. As a buyer of print and web, I find myself disagreeing somewhat…. My marketing strategy tends to be integrated – print and online – and I don’t like having to deal with multiple reps of a single brand to launch a seamless campaign. That being said, what I want – a rep who can handle both well – isn’t always easy to find today, either.

    And I do think that – among those reps who carry both – there is a shifting of the tide. In many cases, they are selling online harder and holding the lines stronger.

  7. Scott –

    Great piece… cutting the cord may be somewhat drastic, but snipping it a bit and allowing the best to hang on may work!

    http://www.pubexec.com/pubtalk/pubtalk.bsp?var=story&sid=84368

  8. Thought provoking opinion, but the way we sell, we take into consideration first the client’s goals and then craft an advertising program that helps him achieve them–increasingly that involves an integrated proposal that includes some combination of print ads, eNewsletter sponsorships, website banners or section sponsorships, event sponsorship and even direct mail. If one rep does not own that client relationship, that proposal turns into a cat fight between reps who represent print vs. digital. It has to be about the client’s needs.

  9. Dan,

    I don’t know of many publishers who have fully cut the cord, but I do know of some publishers who are on a much steeper online revenue growth track than the industry average.

    Marcus,

    You’re absolutely right that publishers will be challenged to provide integrated service to a client you who buys both print and online. That said, you might stand to benefit from the competition between print and online. Assuming you’ve committed a particular budget for that publisher brand, if the online rep is able to earn (and I do mean earn) more of that budget, that may not be a bad thing.

  10. Michael,

    “If one rep does not own that client relationship, that proposal turns into a cat fight between reps who represent print vs. digital.”

    I the print and digital reps are cat fighting to see who can BEST serve the client’s needs, then the client can end up better served than the typical gerrymandered “integrated” proposal.

  11. Absolutely true, but despite our high-minded intentions, I do not want single-focus (print OR digital) reps who may be forced into a situation by an aggressive client to sell against their colleague’s offering just so they can make their bogey. I’m reminded of Baruch’s Law: When all you have is a hammer, everything looks like a nail.

  12. Michael,

    Think of it as if it were two different media companies. When two publishers compete, it’s typically the case that one has an offering that better serves the clients needs. Clients don’t always make the smartest decision, but many of them are capable of learning when they’ve made a poor decision. And then they shift their dollars accordingly.

    The market sorts itself out.

    The publishing and media industries are going through a massively disruptive period — taking an approach that reduce near-term pain will likely lead to longer-term pain.

  13. having just left an “integrated” business for a pure play, I have seen so many cases where proposals were stuffed with unrequested print and the fight to justify print then dominates the subsequent conversations. When I left I saw the print pages used as value add on banner plans to keep share. Times have changed

    The other issue is that the execs in integrated firms made their careers in print. Saving print is their mission!

  14. Whether you decide to “cut the cord” or go with a convergence model one thing is certain… you can really screw the pooch either way.

    I think Scott has done a great job of illustrating how the convergence method can screw the pooch… now let’s imagine how the “cut the cord” model might fail.

    I’m an online rep involved in a big sales competition with the print dorks in my publishing company. I meet a buyer through a friend at a party. The buyer is introducing an under the radar product that would play really well in one my company’s print titles. However the print guys are just too far ahead of us in that sales race and I really don’t want to see that damn Smith get that trip to Mexico.

    So what do I do?

    I hard sell the buyer on some of our online products that don’t quite fit.

    One of two results come next:

    I make a sale, the campaign brings in sub-par numbers compared to the print campaign they ran somewhere else and the buyer ends up stopping all potential buys from my company for the next year. I just screwed my publisher’s name and reputation… to win a trip to Mexico (or to keep Smith from winning a trip to Mexico).

    OR

    I don’t make the sale and rather than refer the lead to my internal print rep Smith (like I said, I can’t stand the idea of that idiot getting that trip) I let the lead quietly go to another publisher.

    Ultimately there is a disaster scenario waiting down whichever road you choose. The trick is to know what your people can do, what your products can provide, and what your market will accept. Once you have a real understanding of where you are, you can begin to chart a course for where you want to be.

  15. Here’s my issue…

    I am one of literally THOUSANDS of smaller publishers that do it all. The cover shoot and audience analysis done by “In Style” magazine is more revenue than I will see in ENTIRE issue of my magazine.

    That being said, I exist, survive, pay the bills and every now and then go on vacation (Killington, here we come).

    For BIG publishers, the plug may or may not be pulled…or the day may come when it’s pulled for them!

    For tiny publishers like me (concretewavemagazine.com) I’ve already made my decision – I am going to let a THIRD PARTY handle most of my web stuff. Sure, I still have my site, but the real big web stuff goes down at another site called silverfishlongboarding.com.

    In exchange for a page in my magazine, they allow me to have a forum and post a blog at their massive website.

    How massive?

    Silverfish is getting over 53 MILLION pageviews a month. I let them enjoy the ad revenue from their site (a number of their advertisers also advertise in Concrete Wave).

    For a small publisher like me, I have outsourced my internet presence and it is liberating.

    There are some who will say “but you’re missing out on that revenue.” To them I say, look what I gain:

    1. thousands of folks who I’d never reach on line

    2. my magazine becomes the official “program” or memento to be on-line

    3. I build a foundation to grow and spread ideas

    4. no matter how much I put into my own website, I don’t have the time, energy or ability to reach what silverfish has achieved

    Again, if you work at a big publisher, I can understand that my ideas might be a little out there…but trust me, I have my hands full handling subscriptions, dealing with editorial and oh yeah, SELLING ADS!!

    happy holidays
    the skategeezer

  16. [...] If some of these questions give you pause, that may be a sign that your web sales efforts are leaving alot of revenue on the table. Scott Karp at Publishing 2.0 is getting alot of feedback from his recent post about this very issue. Check out the comments on his great blog here. [...]

  17. Scott,

    Was great to see you do a post about this issue. The Borrell report certainly got me to write about this topic on my blog as well.

    While a separate “attack the mothership” strategy is best, traditional media will struggle with the challenge of hiring a quality, web-only sales staff, and how to deal with clients that want one point of contact.

    I suggest a near-term hybrid approach; train/motivate traditional sellers now, modify sales commission structure that encourages web sales, and start process of creating a web-only sales staff.

    Mel Taylor
    http://www.MelTaylorMedia.com

  18. A very interesting case example you should look at is Autotrader in the UK. They moved to having separate and competing print and online sales force.

    It has been a successful strategy with online accounting for over half of last years profits.

    Having the same sales force selling print and online will always come up against the problem of the sales team selling volume first. It is very hard to make that team competitive with an online only sales team.

  19. I have been with a company that has been doing online B2B publishing for almost ten years. The online programs represents 85% of the company’s revenue. It’s a venture capital play so it’s rather stressful at times. I have spoken with some of my long time friends in publishing and realize how far behind they are in new media. Online publishing programs that are successful require expertise that print people just don’t have. Both media are selling “audience,” but the way you connect with that audience online is very different than traditional print. I think a well trained digital sales staff as well as a dedicated content developer would be the play to make if you want to hit large dollars. I believe the clients will be glad that such a service is offered because they will get the results they want.

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