The Quest for Deal Quality
At a time when the online advertising market appears to be softening, it may seem odd to suggest being more selective about the business we write as media sellers. But in my estimation, it’s not just timely…it’s long overdue.
Here’s the thing: In the early years of web publishing and advertising there was a ‘take what you can get’ feeling in the market, driven by the fact that many sites and networks simply wanted to ‘keep the lights on’ long enough to pull off an acquisition or IPO. Any revenue at all was just fine, never mind that it was at rock-bottom CPMs or in tiny cash increments. These bad habits were reinforced by the market crater and the short term desperation of the early 2000’s. And we’ve never quite gotten over it.
But today web advertising is a big business and it’s forever. Odds are, your site or network is in this for the long haul, and you’ve got to be concerned with profitability, scale and operational efficiency. Truth is, the average deal is still too small, too cheap and too hard to execute. This is sucking the sales effectiveness out of your entire team – sales and operations – and fixing the problem will help you make your numbers, keep your best people and create sustainable value for your brand and your shareholders.
What to do today?
- Establish and police minimums: Make your salespeople ask for larger numbers. Everybody chuckles nervously when you start to talk about a floor on deal size, but it’s vital. And when an RFP comes in for an itty-bitty amount, force to conversation about a bigger number. Reality says that $5,000 isn’t doing anybody much good…not you and not your client. The ultimate effect is that you end up tossing out the smallest, least efficient pieces and have fewer, bigger deals in the system. Ask your ops people how they’d feel about this.
- Monitor Deal Composition: Deal Comp is simply the ratio of targeted users and inventory to ‘audience’ (run of site/network) in a given deal. If less than 50% of the dollars are audience dollars, you’ve got a problem. If this sounds like a stretch, there’s a good chance the core value of your site and its audience isn’t well established. If buyers are only buying what they can cherry pick, you don’t have a scalable business or a bright future. Recognition and monitoring is half the battle here.
- Pay on New KPIs (Key Performance Indicators): Be creative about compensation. If you want your team to write better business, then pay them for it. Reserve a portion of compensation – or even some bonusing cash – for achieving metrics around effective CPM, deal size and deal composition.
One final note. By focusing on short term deal quality, you free up sales and operational time and elevate what they’re doing in the field. And that’s just good business.
Comments? Questions? We want to hear them.