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.

  • 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.

  • 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.

  • 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
    www.MelTaylorMedia.com

  • 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

  • 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.

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