local media insider
Case study

Agency model yields 60% revenue growth at OAOA.com

Alisa Cromer
Small market savvy: Oaoa.com hosts a healthy variety of local advertisers

Site: Oaoa.com, the site of the Odessa American,  owned by Freedom Newspapers

Traffic: 1.65 million monthly pageviews; 148,000 unique visitors

Market size: Population 100,652

Key executive: Stacey Ream, Director of Advertising and Marketing

Summary:  Great online initiatives are coming out of Texas these days, one of them in the small city of Odessa. The Odessa American's OAOA.com shows the kind of sales approach that is a good model for small markets. Interactive revenues grew from 8% to 13.4% of advertising revenues between 2009 and 2010, with the 61% growth helping to offset a 10% drop in print revenue, primarily from national advertising. Ream points out that local print sales have not dropped in 2010, and he is a strong defender of print as a healthy base of revenues in the future. 

Challenge: Organize the revenue department of a small newspaper to grow digital revenues enough to replace double digit losses in national sales and position the company for the future.

Strategy: Rather than employ digital specialists, the Odessa group has streamlined operations so that all product managers who touch clients report through the revenue side - and can be deployed on four-legged sales calls. Here is a breakdown of how their model works:

•Sales reps are trained to represent a broad set of products, from banner ads to direct mail and email marketing services.

• Three product managers report through the revenue channel:  Interactive manager, marketing manager and creative services manager. All three report to the Ad Director and spend about 30 to 50% of their time in the field with sales representatives.

“This avoids publishers herding five or six managers toward a sales-oriented agenda,” says Stacey Ream, the American’s director of advertising. As anyone who has run cross department meetings knows, getting everyone on the same page can take a lot of time and effort, with middle managers juggling multiple priorities that are not transparent to the team. At the American,  marketing and creative managers report directly to Ream, and receive bonuses based on sales increases. This means they are clear about their mission to grow digital sales, and are less likely to be distracted by objectives that compete for their time and erode the focus on developing customers.

This is critical because managers who report to publishers tend to get "sucked into" other projects, due to staff shortages, "project creep,"  and whatever they think they "signed up for" when initially hired.

•No hunters. Unlike the rest of Freedom’s newspapers, The American does not use of online-only “hunters." Ream says he ruled out this corporate initiative because of the conflict it creates internally; issues about whether to pay double commissions to avoid this distraction and confusion over territories. The bottom of the issue, for Ream, is trust. “Every moment a reps spends worrying is a moment they are not selling product for you.”  A variety of executives on this site disagree with this approach, but Ream's concerns are very real and if the organization has strong enough leadership and organization, this structure looks like a great solution. 

•Broadcast-style Share-of-voice (SOV) pricing to maximize sell-through. Gone is the rate card, since prices increase as the site hit  sell-through targets. Instead Ream posts Odessa’s sell-through rates (60%-79%) on a white board in his office and raises prices as soon as the sell-through target is hit.

•  The compensation model includes both an overall goal and an online goal. “If you make one and not the other, you make a lower percentage from dollar one” Ream says. “If you make both, you make 2% to 3% more on every dollar — even the print dollar.” (Note: Across Freedom, compensation models are moving toward a flat online commission plan with 10% for online sales versus 5% for print sales). On-going training helps reps speak conversational “geek" (see the Geektionary here)  and covers digital sales topics in weekly meetings.

•Selling an extensive product suite. The suite includes pay-per-click, search engine optimization, search engine marketing, video, e-mail and deal of the week. As it evolves toward an agency model, the effort is aided by a distinctive digital name, oaoa.com, that is already a recognized local brand. Communications like Ream's e-mail signature line help promote the new brand:

Internet Marketing / Yahoo! Marketing / oaoa.com / Pay per Click / Search Engine Optimization / Video Marketing / E-mail Marketing / Monster.com Job Listings / Resume Databases for Employers / Vinyl Banners / Poly Banners / Business Cards / Letterhead / Pens / Glossy Books & Magazines / E-mail News Edition / Behavioral Targeting
•Anything with a logo on it = Specialty Products
•Multi-page & Single Sheet Inserts = Print & Delivery
•Ad Notes = Sticky Notes on Front Page of Newspaper
•Rack Cards = Mini-Billboards on Newspaper Vending Machines
•COMING SOON - Mobile News and Sports Apps - iPAD Edition - Deal of the Day

Conclusion: For small and mid-sized markets the "selling product manager" approach makes a lot of sense - as does having managers report to the ad director. Instead of additional hires, some of the field support may already be inside the company; and new hires will understand their role includes spending 30 to 50% of their time in the field with clients. Simply put; its more efficient thatn hiring "specialists," who are really just better trained sales people, to support the legacy representatives in small markets. Having key digital product managers - outside of producing the actual newspaper which is an industrial act - report to sales is a great way to streamline customer-centric internal organization.

Alisa Cromer

The author, Alisa Cromer is publisher of a variety of online media, including LocalMediaInsider and  MediaExecsTech,  developed while on a fellowship with the Reynolds Journalism Institute and which has evolved into a leading marketing company for media technology start-ups. In 2017 she founded Worldstir.com, an online magazine,  to showcases perspectives from around the  world on new topic each month, translated from and to the top five languages in the world.