In my last post I touched on how the advertising landscape is changing. In this post I’ll go into why many publishers are resistant to embracing this change.
Unfortunately it usually comes down to one thing: sales compensation. It starts to get very tricky to keep track of who is selling what when advertising revenue starts coming from indirect/exchange buyers. Most publishers don’t want to bother figuring it out. So they cut off their left arm thinking they are saving their right. They come up with a “block list” a mile long that lists every major brand/blue chip advertiser on the planet. “Don’t serve ads from these advertisers. We have sales reps working with them directly and this will create channel conflict. We can’t afford to jeopardize these direct relationships.”
I’m really starting to hate the term “sales channel conflict”. In order for there to be a conflict, don’t both sides have to accept that there is a conflict to begin with?
Who gets credit for all of the advertisers serving through ad networks?
For pubs, the classic sales channel conflict argument goes something like this: “We have a sales rep talking to Pepsi right now. He’s been working the account for months and we are close to getting a sale. We can not serve Pepsi ads from any of our ad network partners because if Pepsi sees their ads on our site they will know that they can get the inventory for less and we may lose the deal.”
There’s so much wrong with that. Where to start? How about we start with the fact that the sales rep is still talking to Pepsi. So there isn’t even a deal on the books yet? Is there a history of winning this business? What is it exactly that you are talking to Pepsi about- leaderboards and skyscrapers only? Does Pepsi want to run a branding campaign or performance based? Heavily targeted or ROS? What specifically do they want you to do for them as one of the few direct pubs they work with?
Let’s say Pepsi has always been a long-time buyer of your inventory. They have a direct relationship with your best salesperson and you can always count on premium sales/IOs coming in from Pepsi. And for the sake of argument, let’s also assume they are talking about the exact same campaigns. Even though this is often not the case- most advertisers run completely different campaigns via exchanges than they do via direct publishers. But let’s assume Pepsi is working with an agency and they want to promote their new dark chocolate flavor. They’ve told the agency to work with publishers and ad networks to accomplish the exact same objectives (which again- is rare). Ad network X promises the exact audience they are targeting for a $2CPM and the agency agrees to run with them and gives Ad Network X $200k. Publisher Y has a superb Comscore match and is offering tons of exclusivity, roadblocks, a micro site, and video placements. They’ve also thrown in a lot of added value inventory for a $9CPM. Agency agrees to run with them and gives them $100k.
So here comes the next big question- if Pepsi (and consequently Pepsi’s agency of record) knows they are working with both publishers and ad networks to execute their media buys- aren’t they also aware of the potential overlap? Don’t they know they can get cheap inventory from ad networks on the same pubs that are approaching them for direct buys? The answer is YES (most of the time). They know what they are doing.
But publishers who bring up the sales channel conflict argument assume agencies actually do not know what they are doing. Salespeople will paint the picture of a media buyer/decision maker randomly visiting the publisher in question, seeing one of their ads, acting completely surprised and confused, and then walking away from the deal because “we’re already running with them through an ad network- no need to work with them directly”.
Just because you're not getting a compensation check for it doesn't mean it shouldn't serve
As a sales person- if you accept this explanation and just walk away defeated- shame on you! Are you telling me you really can’t offer anything of value beyond what an ad network is offering? Your proposal consists of ROS banner placements only?
To me this is just a perfect opportunity to educate the advertiser and further differentiate your offering and win the business. “Here’s what you’re not getting from that ad network… look at all of this value you can get from working with us directly”. At the very least, if the advertisers actually are this clueless, it will be an eye opener they will be grateful to you for delivering. They’ll learn more about how they are spending their online dollars and will start to understand the differences in value between direct and indirect buying.
But now back to reality… how often does this conversation really happen? How often does an advertiser really walk away from a direct deal because they see one of their ads running on the site via an ad network? How often does an advertiser insist the publisher block their ads from serving via networks? I challenge anyone reading this right now to comment or email me with real-life examples. Help me understand how this perceived conflict actually results in lower revenue to the publisher.
Because consider this. That $100k deal Publisher Y wins to run Pepsi at $9CPM- let’s say its over 3 months. Well what about the other 9 months of the year? Did you ever wonder how much you are getting indirectly from Pepsi via ad network X? Sure it may be at $0.50CPM but there’s a good chance over the course of a full year you’ve actually earned more total revenue from Pepsi via the ad network than you did via that single lucky deal you won through the agency. And regardless- if you don’t block Pepsi- you stand to take advantage of potential advertising dollars coming in from both direct and indirect sales channels at once. Not one or the other. Both streams of revenue at the same time.
In my final post I’ll go into why I’m not alone in this way of thinking…
