local media insider

2010 PNA conference: Changing monopolistic thinking

Where to allocate limited resources: For the most impact.

What if the problem for local media companies is not really too much free editorial on the web, or a simple mathematical dimes-for-dollars issue?

What if the problem is that monopolistic pricing has lost all relationship to value? What if monopolistic thinking by managers is so ingrained that it prevents the development of better business models that can compete with a host of new competitors sucking up millions in pay-for-performance advertising?

And, if this is the case, how should local media companies respond?

This scenario was explored in one of the most interesting presentations  at the Pennsylvania Newspaper Association's annual conference last week. 

Bill Day, who delivered the presentation, is  Strategy Director at Howell Creative Group and a veteran of Gannett and Tribune's national sales departments.

Three of his slides help illustrate how deep and far back the disconnect between local advertising and local business really goes. The first, below, shows that pace of spending on newspaper advertising compared to the growth of retail sales (in purple) and  GDP (in green)  began to diverge as early as the year 2000:

The second slide shows how prices increased even as circulation declined, making the value proposition even more out of wack:

I'll get to Day's third slide in a moment.

Only by defining the problem differently, Day says, can media companies can get beyond simplistic answers and look for ways to get back into the game of providing real value. Not value based on cost, or value based on what media wants to take out of the market, but value to their customers. 

But losing the monopolistic approach to advertising sales is harder than that it looks. This disruption is only partly about price; it is also about achieving measurable results.   Meeting both price and results components may require acknowledging that the low end of the market will no longer sustain an outside sales force, but require sophisticated self-serve products -  granted with telemarketing support and CRM systems - and self-serve dashboards that track performance.

"Facebook and Google sell millions of dollars out of local markets without hiring a single person in those local markets," Day points out. "Newspapers don't spend enough time thinking through what does that mean. You can't compete given your current cost structure. You can't do it by putting a sales rep in a car." 

Solutions like Riverside's EmediaWaves BCLocalBiz directory and Chron.com's AdReady that use self-serve models are headed in the right direction. Deseret Media Group is also aiming for a sales force that is one third outside sales, one third inside sales and one third self-serve, according to its Harvard prof-turned-CEO Gilbert Clark. 

"Lots of interesting models out there. Newspaper really need to just pick one,"  Day says, and set pricing on what the market will bear, not on numbers invented to make the models look better on paper but which are still too high to take on the disruptors.

Day's third slide (shown at the top of this blog) shows how the division of resources allocated to small, medium and large businesses needs to change so that the most sales resources are deployed where they will have the highest impact.  As a former national sales rep, Day talks from experience when he claims that  not only are a disproportionate amount of the sales force pointed at small businesses, but also too many are allocated to sell to national businesses.

Large companies like Walmart and Target, he argues,  will never be receptive to sales pitches but simply "buy what they buy" and stop buying when they stop buying, regardless of what the sales reps brings to the table.

So  Day advocates redeploying top sales representatives - a scarce resource for sure - to sell "middle tier" customers that are both the most responsive to a high quality sales proposal,  have the most dollars to spend and which has been under-served and underspending.

In my opinion, he's not only right, but sales organizations should go one step further and retrain to identify the value proposition for each of these valuable customers, agree on a measurable result and track these in some kind of system, even if its a piece of paper tacked on the wall or a one sheet delivered by each rep at sales meetings.

There are numerous instructions on this site as to how to go about creating results driven campaigns: The Ultimate Digital Sales Needs Analysis shows how to identify concrete challenges, Palm Beach Post's ad agency team models how to come up with big ideas that fuel real results, and a sample of how to collect dates to share results is here.

But while almost every manager I talk to agrees that collecting results and sharing the information is valuable,  no one has committed to implementing this as a standard program (with the possible exception of the Palm Beach Post, which justify its new creative services team of non-sellers by showing the accounts served- and these are the mid-tier accounts we are talking about - bought advertising collectively at  90% above prior year).   We are not talking about collecting customer approved glowing testimonials, but tracking each of the quality accounts by requiring the sales representatives to turn in a set of written objectives, or Key Marketing Challenge,  for the client, what the creative and buy strategy is, and how the results ultimately measured up.  

Why don't local media executives do this?  I've heard a number of reasons, mostly starting with "it's too hard to..." and then fill in the blank.

That's why Bill Day is right on the money. The problem is not how to increase sales, but to understand how the value proposition has fundamentally changed and get into the game of delivering value. The lost opportunity may be that the media may be delivering value that is not even counted and that sales representatives are going on calls with the advantage of knowing the full range of possible results that advertisers can achieve. 

pna, bill day


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