Hey CROs – Is Your Comp Plan at Risk?

The online media buying and selling process has changed – direct relationships with agencies and buyers has been reduced by the proliferation of ad networks, ad exchanges, social media platforms and RTB players that have cropped up en mass over the past twelve years, aiming to compete with a publisher’s direct sales channel.  Forrester research estimates that 30% of ad spending will be done via DSPs and RTBs in 2011, while Google estimates that more than 50% of online advertising will be done via these platforms over the next few years.

What does this mean for CROs at online publishing companies?  It means your compensation plan could be at risk.  If you are a CRO or senior digital media sales executive today, you are no longer competing head to head with other publishers to win the big RFPs.  Rather, you are competing with something much faster, and with a different skillset than your human sales team – you are competing with MACHINES.

Many of you have already embraced, or will embrace, this machine-based buying process.  You will compete with yourselves for inventory, most of the time by accident, because you lack visibility into the true value of your impressions.  In addition, many of you will compete or are already competing with machines today.  DSPs, exchanges and RTB players have the power to buy the same or very similar audiences, to the ones you represent today.  Your high reach, high frequency inventory, which used to be the reason you were so successful is now under fire by the machines and, because of this, the direct sales model of today and tomorrow is at risk.

Your revenue is at risk.

The way you and your sales people get compensated for deals will breakdown, if it has not already.

So how do you compete with something that’s faster than you, smarter than you, and doesn’t need sleep in order to be effective?

To hear what some of the leading online publishers think, come hear our presentation at the iMedia Agency Summit in Bonita Springs, Florida on Monday, May 23^rd.

Operative is hosting the Publisher’s Breakfast and will lead an enlightening, engaging conversation about the shift in online media buying and selling, and how these shifts are impacting, or will impact, your company’s revenue and compensation plans.

To help support the discussion, we brought together four of the “founding fathers” of online media – four gentlemen who are arguably the most recognized, well-respected thought leaders  in the field of digital ad sales. We invited them to participate in a pre-event Q&A and were pleased to even get on camera.  Our esteemed cast of characters includes:

• Nick Johnson from NBC Universal
• Kevin Arrix from MTV Networks
• Mark Westlake from Techmedia Network
• Brian Quinn from Triad Digital Media

During the session, you will hear this group talk about three things that publishers need to improve in order to grow their direct sales teams and drive more revenue through the channel.

These include:

1)    Plumbing – Compared to the machines, the current pipes that run water through publisher infrastructure are old and rotting – systems are fragmented and decision-making is hindered.  Imagine an Old Victorian water system, where every time there’s a leak, an entire street needs to be dug up in order to identify and locate the issue.

2)    Inventory – Inventory continues to become more complex to manage and understand, and often comes from multiple data sources. It’s rare that a seller knows exactly how much inventory is available for a segment, target or piece of inventory at the time of proposal.  That’s unacceptable.

3)    Product Packaging – It’s hard to create meaningful packages to takes to customers and impact your average price given issues 1 and 2.

We hope to see you next week at the iMedia Agency Summit…!

iMedia Agency Summit Publisher’s Breakfast Details:

-       Date: Monday, May 23d

-       Time: 8:00 – 9:00 a.m. EST

-       Location: Hyatt Regency Coconut Resort & Spa, Bonita Springs, Fl.

-       Room: Blue Heron Room

The world of creative in online advertising is constantly evolving. It seems that every month we’re reading about new types of creative that can be implemented on a publisher’s web site. While many still use plain images to do their advertising (and there’s certainly nothing wrong with that!), we are beginning to see that advertiser’s want to directly engage the user…and when they do, it leads to quantifiable results.

While Flash® is still considered ‘Rich Media’ by many, it is quickly becoming ‘standard’ creative in this day and age. Flash® ads are now so common that even as a user myself, I do not feel that it captivates my attention like many of the newer brands of creative – ads such as push-downs, interstitials, and floating ads, while sometimes annoying to the user, also present a better opportunity to capture the user’s attention.

So if you are a publisher and want to get involved in the freshest types of rich media, here are 3 things to know so that you aren’t caught off-guard by the newest creative types.

1. Rich Media Vendors are the way to go.

If you’ve yet to take a dive into the world of rich media, know that there are specialists out there whose core competency is building and serving high-end rich media. Providers such as Pointroll, Media Mind(formerly Eyeblaster) and Eyewonder specialize in this type of work, and can handle any questions you may have about rich media as well as assist you and your advertiser in the creation of your product. Operative has developed partnerships with several of these vendors as well- reach out to us if you would like an introduction!

2. Rich Media creative is served differently than standard creative.

Standard ads are served through an ad tag on your website. These ad tags contain a specific size and directly correlate to a specific position on your page. There is very little complexity here. When delving into a high-end rich media creative, the equation changes. Take a “pushdown” for instance:  This ad is meant to load as a standard ad, but when you mouse over it, it “pushes” the content of your page down as the ad expands to a greater size. To create this type of movement, the code within the ad interacts with the code on your web page, creating this action. Obviously this can be a complicated process, which leads us to…

3. There will be some frustrations!

Most publishers can attest to the struggles obtaining creative in time for an on-time campaign launch. When using rich media, the struggle may increase. As a publisher, if you know you are going to be using rich media, it is best to plan for it! Rich media creative often require extensive testing in a custom set-up test environment (make sure you have one!) before setting the creative live to your actual web page. These ads often do not work the way you expect them to on the first try, so it’s imperative to test them before launch. This, of course, means you’ll need the creative in your hands well before the launch- so make sure you plan ahead for this when scheduling campaigns and working with a creative developer!

Diving head-first into the world of rich media is an exciting step for every publisher…and can lead to increased revenue. But know that a lot of work, and often times, a lot of patience is a part of the package! All in all however, employing rich media on your site can be a tremendous benefit to both you (higher CPMs), and your advertisers (more customers)!

For more information, please click here.

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Blogged by Christopher Lane, Operations Manager

Operative provides outsourced Ad Operations for both agencies and publishers across the globe. Chris Lane is one of Operative’s senior technical and tactical experts for all things Publisher, providing advice to publisher clients on a variety of subject matters including campaign performance to troubleshooting and product optimization.

Recently, an Ad Operations colleague at a publisher contacted me about ad discrepancies.  They started preparing for end of month billing:

• pulling their primary ad server campaign delivery reports
• pulling 3rd party ad server campaign delivery reports
• compressing the data from ad serving sources, and
• sending it all off to Finance for reconciliation. 

The publisher wanted to know, “Where exactly do discrepancies come from?  What causes them?”

After a long discussion about some of the known causes of discrepancies, including:

1. The daisy chain effect
2. Ad blockers
3. Defaulting
4. Multiple definitions of an ‘ad impression’

the publisher then said, “I’m not sure I understand what you mean by the daisy chain effect.”  In an attempt to draw a parallel between online ad discrepancies and real life, I came up with the below scenario.  Enjoy!

…and for those of you that I confused even more- I apologize- it’s not an easy concept to grasp.  For those who would like to carry on a dialog, post a message for me.

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The local high school decided to award their students with a treat. The principal called the owner of a concert hall, and finagled a deal for 1000 of his students to go see Britney live. The owner said it was OK to pay him after the show, and the principal said that was fine, he would have his assistant, Mary Pritchard, collect tickets at the door, and Erin Bain, a boy on suspension, count each student as he seated them. Then they would pay the owner an agreed price per student.

That night, Charles McSorley had kids piling up at the concert hall where he worked the door. As each approached him he gave them explicit directions to the box office, right down the hall and to the right, and added a tally of the students to his notebook. Entering the building, the concert goers approached the box office one by one, where Dr. Frank Payne checked their IDs for their age, and sent anyone under 16 to talk to Alex Nevins a little further down the hall to ask if he had any shows available for them to see. The rest were given a ticket to the Britney concert in theater 1, through a door to his left, past the bathrooms and the concessions. The Britney fans flocked to the entrance of theater 1, where Mary Pritchard collected their tickets, and gave them each a form with the instructions to write their name on it and then give it to Dr. Frank Payne on the way out if they liked the show (Payne would then take it upon himself to tell Mary). Finally, Erin Bain escorted each of them to their rows where they could watch the show, thumbing his trusty clicker as each was seated.

The following morning, the crew met up to figure out how well they’d done the night before. Charles had diligently tallied every patron, and said that he had let in 1000 people. Dr. Payne checked the register for the tickets he’d sold, and said that 150 had been turned away to Alex Nevins, and that 840 had been sold tickets to the Britney concert. Mary had kept all of the stubs from the Britney fanatics, and had 750 of them. Erin lifted up his clicker and smiled, having seated 720. Alex, with a shoe-box full of assorted receipts, rattled off three additional shows that he’d sent the youngins to, and how much he was able to talk each into paying. Frank then remembered the happy customers leaving the show, and that three of them had even handed him the form with their name on it. Mary frowned, because Frank had only handed her two of them the night before.

For how many tickets is the principal responsible for paying the concert hall owner?

For more information, please click here.

The day of ‘seller defined media buys’ will decrease as publishers understand the who, how and where in the context of a media buy.  Sellers need to not only understand the revenue picture but also the value of the audience.  

The question is not WHO owns the data, but WHAT can we use the data for? 

Advertisers and publishers hire vendors to solve their business problems.  The two sources of real data are from advertisers and publishers.  All of data is incomplete. 

Does data equal revenue? 

Are we managing data to get a stronger revenue stream? 

Data ownership is a false paradigm.  It is all about how we USE the data.  We must be respectful of the consumer and prevent legislation at the same time.  If we eliminate data and data usage, it will cause everyone more problems.  Controls are important for both publishers and advertisers.

Advertisers want to buy on frequency and modeling for maximum reach of a targeted audience.  We need a combination of trust and responsibility.  The holding companies want to be transparent and open.  

Big publishers and holding companies are afraid of start-ups who are doing non-ethical things that effect the revenue model for everyone.  But the truth is that big players need to take a lead in the marketplace.  There is a big disagreement between agencies and publishers as far as who can do what with data.   This is a fundamental issue that might not be solved for years.  Right now data is all over the place, no one trusts each other, and advertisers want to buy on an audience basis. 

So, what the value of targeting without context?  

What can publishers do to protect themselves moving forward?  

Don’t work with ad networks. 

Create a business policy on any 3rd party tags. 

Consider search and the influence of site indexing. 

One great way to think about inventory and data, is that we need to evaluate opportunity cost for each partnership.  The first step for everyone has to be transparent throughout the buying and selling process.

For more information, please click here.

A publisher has to decide:

1. All in- is it brand advertising? or

2. Are they optimizing for networks? 

A media company is based on the content and the sales force.  It is practically impossible to have a hybrid strategy and not lose value for your brand.  Most companies work with zero partners or more than 5 partners. 

86% of network impressions are brought in from the top 100 publishers.  This has a direct devaluation of publisher content.  If you are going to sell premium inventory, you have to know that your premium product won’t have the same value off your site.  Premium sites need large units, high reach, integrated advertising products.  There are a couple of ways to get reach: optimization, Tweeting, social media, possibly M&A, or aggregation.

In 2010, 25% of dollars will come from ad networks.  If publishers move to optimizing for ad networks, the trend will be to reduce of most of the premium sales force.

For more information, please click here.

Bryan Wiener , CEO, 360I

Bryan is convinced that we are in the golden age of needing an agency for these 3 reasons:  

1. Consumers are in control

2. Content is everywhere

3. Innovation is critical

Yes, the current agency model is broken, but it can be fixed to become more relevant than ever before.  Currently, agencies (as a whole) are not servicing the client or the consumer in a relevant manner.  Think about this- 25k Tweets are sent out in 10 minutes and they are all about products and brands.  This consumer control is unprecedented.  Today, advertising is evolving from an interruption to providing more value and engagement.  Everyone in interactive advertising has to work together to create increased value. 

One major problem is the agency holding company structure.   Most traditional agencies are smart and well mannered, but the structure and compensation does not fit with today’s market.  The problem right now is the struggle between full service agencies and specialized agencies.  Too many agencies leads to chaos. 

3 ideas. 

1. The best defense is a good offense.  Allow consumers to be part of the brand.  Consumers are affecting brand reputations every day.  “A brand is what they say about you when you are NOT in the room.”  We can no longer protect our brand like we used to.  One person can change the vision of our brand, so as marketers, we need to allow the consumer to become one with the brand.

2. Committed relationships and not one night stand.   The wedding is not the end game.  We need to have continuous conversations to build a brand, not just one campaign.   If a brand represents a transaction, you are in trouble.  Any agency that wants to add value must foster relationship. 

3. The agency of the future needs the marketer of the future.  Both sides must help each other gain success.   If agencies want to radically impact the ecosystem, it will change the way marketers work. 

All of this brings us to the agency of the future.  It is all about the client needs.  The model with the most success does not exist today.  We should worry less about being the lead agency and more about the dream agency. 

The agency of the future will need to cultivate a core skill-set in order to win:

1. Excel at using the internet as a focus group.

2.  Search, social and mobile must be core.

3. Agencies must be willing to be platform agnostic.

Digital agencies are going to be extinct if nothing changes.  If you don’t like change, you are going to like irrelevance if even less.

For more information, please click here.

The Internet is allowing people to report, read, comment and blog about the news.  The web has encouraged opinion editorial and not just facts.  This landscape is changing the way we consume content.  The Huffington Post averages 2 million comments a month.  Consumers want a chance to interact with the news and to allow people to share it and be social. 

For the Huffington Post, technology is allowing them to run a much smarter and more efficient business.   

If it is the golden age of news, why is Huffington Post more entertainment?  The answer is all about what the consumers want to read.  If they like pop culture, HuffPo can offer more of that. 

Quality journalism…is it in the eye of the beholder?

For more information, please click here.

Tolman Geffs
Co-President
The Jordan, Edmiston Group, Inc.

In the last 2 years, there has been a major drop in acquisitions in the online advertising industry, but we are starting to see a rebound in activity and value.   Brand advertising has taken a huge hit, while direct and promotional advertising have spiked.  This does not mean brand advertising is dead. 

Display advertising demand was always sold on a site by site basis.  Now, selling audience is even more important.  This is a trend that Tolman expects will explode.   Audience targeting will grow a lot faster than typical web site display ads.   Both agency and demand side platforms are changing the way media is being purchased.   As we move forward, you have ad delivery servers vs publishers vs audience targeting sellers.   The winner will change how the online advertising space transforms. 

Premium publishers are losing a key advantage: premium content and premium audience.  What’s happening today is that premium audiences can be built much easier through a network.   The question is, can publishers provide more value to the advertiser and the audience to win back a majority of the margin?

Online video is getting funded at higher multiples than only 18 months ago.   Online video should be growing at a faster rate than most of the online advertising market.   TV budgets are shifting, and being used for both TV and streaming advertising units. 

 Mobile advertising has a good chance, but currently, mobile advertising is geared more towards promotions and direct marketing efforts, as opposed to brand advertising.  

Local online advertising is also experiencing a lot of activity in both mergers and funding.    

So what are the implications of M&A?  

Interactive activity will be robust in the next 18 months.  Innovation is happening faster, ad revenue continues to grow at a nice rate (8%) and there’s a lack of an IPO window.  Strategic buyers will be the busiest people with record cash- they need high growth business.  But, it is not just about big companies.  Private equity will play a major role in the coming years.  With an economic turnaround, we are looking for more activity with strategic buyers in the marketplace.

That seems to be the latest measurement buzz word.  Now…let me ask in a different way. 

Can your Ad Sales and Ad Ops teams scale to achieve the NEW technical demands of media buyers?

In 2010, digital publishers in the US and Europe that are not a top 20 site in their market, will leave more than $500,000,000 of ad revenue on the table.  In fact, if you divide that number into the top 300 publishers on the internet, that’s $1,600,000 per publisher.  Most of that money will go to the big publishers who can get the job done…the ones that can easily execute complicated marketing programs because they have the staff, systems and processes to support them.

In the last 6 months, custom integrations and specialized marketing programs have been in high demand. This has not only become a trendy ad buy in the US, but even more so in the UK because of the market’s ability to be more progressive than most on the creative side.  The end goal is the same- create ‘engagement’ with the consumer. 

For those who don’t know what a custom integration is, don’t worry, you’re not alone.  In fact, these were less than 1% of all digital ad spend only 1 year ago.  Custom integration are media buys that typically come from an agency who is looking for the “big idea” or from a brand/marketer who wants to really create engagement with the consumer.  Things like micro sites, custom video and social media widgets are all non-traditional ways to create engagement with the consumer…a way to be PART of the conversation, not an interrupter.  The first successful custom integration I can remember was a few years ago when you were able to “Friend the King” as a MySpace user to earn points. 

So, OK…big deal right?  How does that lose me $1,600,000 this year?  Well, if you want to offer custom programs, you need to have a certain type of infrastructure to be able to support them.  Most publishers do not have scalable teams or borrowed resources to help execute these types of buys.  In the first 6 months of 2009, almost $1.4B was spent on rich media, digital video, and sponsorship display-related advertising, and according to eMarketer, well over $1B is expected to be spent on social marketing this year. $500MM across digital sounds very reasonable. 

So, what does this mean for the digital publisher?

Challenges for Ad Sales Teams

Sales people are not experienced enough to sell these types of deals.  These buys usually come with a big ticket price and involve multiple decision-makers to sign off.  It also takes an enterprise level seller and a bit of solutioning to pull it off.

Most digital sellers (not all) who started in digital media typically start out as Sales Planners or Sales Assistant roles. This basically means completing RFPs and taking orders from agencies as a full time job.  You can develop poor habits this way.  This is much different than starting your sales career selling traditional media or other “feet on the street” Sales jobs that require you to hunt for your dinner to make a dime. 

Challenges for Ad Ops and Technology Teams

This part of your Operations isn’t the easiest thing to scale.  It’s hard to predict customer programs and big effort integrations because of the nature of the sale.  These deals can be asked for in a week’s notice (sometimes days) and this puts a lot of pressure on the Ad Ops team.  Custom integration deals can also take months to close due to complexity, so it’s hard to staff for something that “may” be coming soon.

If you don’t have a dedicated team for creative development, you are likely borrowing from other resources.  If that’s the case, there’s no way you can keep up with the demands in the market for these types of buys.  Furthermore, these borrowed resources don’t feel part of the sale.  They are oftentimes being dictated to by Sales people- a sure recipe for disaster.

Keep in mind, this isn’t your typical trafficking request either. Creating these types of ads requires multiple custom developers, project and vendor managers to get the ads live.  These buys take valuable resource time away from other high priority work that needs to get done, putting other campaigns and revenue at risk.

What can you do about all this???  Glad you asked. 

Over the last 3 week, I pooled together some ideas that came from other Sales/Ad Ops Executives in the US and UK. 

If you’re a CRO/EVP/VP of Sales, start looking for enterprise level talent.  You can’t win a complex deal with the same resources as you did a year ago.  This is the type and caliber of sales person that can get to the advertiser or brand, convincing the agency to make a direct introduction.

Move the custom development and key technical resources to the sales department.  It’s just like having Sales Engineers for Sales people at an enterprise software company.  They are involved in the sale from the beginning.  This will result in fewer issues when it comes time to getting the ad up since it was properly scoped from the get go.

Ad Ops needs to create a check and balance system to approve the ads before they are sold and QA them before they go live.  The role of campaign management would then be owned by Ad Ops. 

Free up those key trafficking resources that are very technical, either by automating parts of the process or partnering with another company to provide you ad ops services in your local time zone.

Get your sales forecasting process tight.  If you use Salesforce.com, get your ‘opportunities’ for these types of deals in sync with your booking system.  This will give Ad Ops longer lead times since the opportunity will start in Salesforce.com, and not when the order is about to come in.  It will also give sales a more accurate forecast report since your booking system automatically updates your pipeline in Salesforce.

Want to ask me a question?  Post a comment or email me at lbrown@operative.com

Jeremy Fain, VP of Industry services at IAB takes the stage to discuss… DISCREPANCIES.

Last year’s presentation was called “The War on Discrepancies.”  Why were they happening?  If the ad servers were correct, than what was wrong?  Could it be process?  Click here to read about Best Practices in discrepancy management and actionable processes that can make a positive impact on revenue.  Today’s big conversation is around “system’s integration.”  With SI, we will never reach the future. 

Up next-  a look into the  future.  What is true operational utopia going to look like, considering that our focus is operational excellence.  David Cohen (executive VP) from Universal of McCann, will give us a peak into the agency side of digital operations.