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Business Media Ad Sales Is No Easy Gig

Yesterday we began a discussion on the future of b2b by raising some questions about the viability of the old editorial model in the digital world.  I will come back to this in later posts.

Meanwhile, lets also start thinking about the advertising sales model and surface some of the issues that we face.  Business magazine sales people have spent most of their working lives pursuing something called market share.  Their boss will laud them with praise if their measured market share increases at the expense of their competitors.  This is of course nonsense.  The measure used is based on counting ad volumes and incentivises the sales teams to build volume at the expense of profit.  I shall come back to this in future post and discuss how this can be remedied.

Whilst the sales teams have been discounting to fill pages, the advertiser has been questioning the effectiveness of magazine advertising.  They question this because they wonder whether magazines are being read in the way they once were.  If you look at the paid circulations of business titles, they have in the main, only fallen in the last ten years.  Although some of this decline has been the result of changes in the way the magazine retail trade has operated, much of it is the result of a change in reader habits.

We might consider  that if paid ciruclations are declining then so too is free readership.  Most publishers long since gave up on the ubiquitous bingo  cards because advertisers were beginning to spot that response rates were falling – probably because readership was falling.  There used to be a plethora of joint industry readership surveys in b2b.  Most have vanished leaving the poor old media buyer with little to rely on other than gut feel, the ABC certificate, the old habits and the relationship with the sales team.  How do you persuade an advertiser to increase spend with you when the facts of the matter are, your circulation and readership is lower than it was three years ago, you are publishing less content than you were three years ago, you lost muchof your job advertising and less of the advertisers competitors are still advertising in the magazine?

As I argued yesterday, for largely understandable reasons the editorial cost base has shrunk over time and it is naive to believe that this does not have an effect on the “pickupability” of magazines.  By coincidence I picked up a copy of Computing today.  It was just 24 pages thick – and this after a “merger” with its inhouse rival IT Week.  Is Computing more or less likely  to be read than its ancestor of ten years ago which was 100 pages thick and packed with jobs?

So what have sales teams done?  Mostly, although I will accept not universally, they have dropped the price of advertising.  A growing proportion of time is spent “closing the issue” which is code for discounting.  To prop up the model, sales people have been doing a largely good job in selling sponsorship to events.  The problem now is that those event sponsorships are feeling like a bit of a luxury to many clients.     Good events with real returns for sponsors will still thrive if not grow, but many will vanish in the haze of recession.

In online we have to seperate what has happened in recruitment from what is happening in display.  Lets leave the whole recruitment sector to one side for now. I will return to it later.  Here is a shocking fact. The Industry Standard website reported a couple of weeks ago that the price of remnant advertising had dropped in the 4th quarter by 48% to a shocking 26 cents a thousand. Remnant inventory is all that traffic not sold by the direct sales team.  For most people in b2b, thats most of it. A price of 26cents may not be typical yet in the UK, but there is no doubt that online prices are falling and from a low base.  Just think about 26 cents for a moment.  If you ran a web site  with a monthly traffic of  5m page views delivering a total of 15m ad views a month an average cpm of 26 cents would produce revenue of less than $50000 a year.  Thats not a business model.

Why am I telling you this and why does it matter? The growth of ad networks and backfill in digital consumer marketing is a result of three things.  First there is too much inventory chasing too little advertising.  Second, direct sales teams have failed to offer compelling online ad solutions that persuade advertisers to pay a premium price.  Third, site owners have been happy to take back fill on the argument that any money is better than no money. (It isn’t by the way).

What can we learn from this in b2b? How can we stop the market destroying the digital business model before it is even out of nappies? Magazine teams are mostly pretty bad at selling digital.  Digital ad sales is not like selling display advertising and yet many b2b websites do it in the same way.  Too many b2b sites are hoping to sell tenancy or run of site sponsorship because it can be presented in familiar language.  It won’t work.

The are many aspects to getting this right and I will come back to some of them in detail but lets start with some basic rules that from experience make sense to me.

1) Get yourself a head of digital sales who knows what they are talking about.

2) You wouldn’t ask a vacuum cleaner salesman to sell magazine advertising without training.  Don’t ask a magazine salesman to sell digital without training either.

3) Think very carefully about whether keeping digital sales as part of the responsibility of offline sales is a good idea.  Only very rarely will it be.

4) Change your pricing strategy for everything you sell.  Another big topic we can explore over time.

5) Change your editorial model don’t just follow revenue collapse with cost cuts.

6) Don’t give up on digital.  And stop thinking about digital as if you are a magazine publisher

4) Change the way in which you think about inventory.  You need to prove, as ever that the users of your site are the decision makers your advertisers need.  Second you need to offer advertising experiences that will deliver what your advertiser wants. Dirve home the mantra every day that advertisers don’t want advertising, they don’t want leaderboards and skys and MPUs, they don’t even really want clicks.  What they want is good leads.

In short, what we have,we sell too cheap, what we sell is too often what we have  and not what the advertiser wants and too often we do it with people who are not really sure about what they are doing.  For these three reasons there are many challenges ahead.

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January 30, 2009 Posted by | Advertising Sales | , | 4 Comments