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How to Save the Media
May 05, 2008
Times are tough for the media industry. Could better sales incentives be the answer?
By A.E. Smith
Like many of its peers in the media industry, the Augusta Chronicle is rethinking the way it sells advertising. Several years ago, management at the daily newspaper decided the company needed to put more focus on developing its online revenue, a significant break in tradition for a paper that can trace its print lineage back more than 200 years. Today, John Jackson, retail multimedia sales director, coordinates the goals and performance of 25 sales representatives who are charged with selling their clients on the ROI of a multimedia marketing package that might include banner ads, search engines, e-mail campaigns and niche spotlights, as well as the traditional print placement.
"It's more difficult to sell online products," says Jackson. "There's a certain level of comfort with print, but when you're selling the Internet, it's more like vapor." To drive those sales, Jackson relies on a robust system of recognition and rewards that target achievement that is in line with the company's online strategy. "People can always do more," he says. "The question is just, 'Is the return more?'"
Over the past five years, online sales at the newspaper have risen from just 5 percent to 17 percent of the company's revenue. "If you look at our overall growth, it's coming from online. That's where our readership is growing too," says Jackson. "The rewards drive the kind of behavior that we want, not only from individuals, but as a team."
The Bad News
The Chronicle's sales division is rare among newspapers in celebrating the shift of its audience and ad dollars to digital. For most media companies, the news is shrinking circulations, rising costs, disruption from competing technologies, consolidation and layoffs, layoffs, layoffs.
Into this maelstrom, Scott Andrews is trying to throw a lifeline. In 2004, the Maritz veteran founded MediaAscent, a third-party incentive house based in The Woodlands, Texas, that specializes in selling reward programs to media companies. But it has been slow going. "The media industry is well behind other industries in their understanding of how a properly administrated incentive program works," he says. "It's a chaotic selling environment. There is a perceived lack of time to take a step back and see, 'what are our objectives?'"
Michelle Smith, vice president of business development for incentive company O.C. Tanner, in Salt Lake City, agrees: "The media industry as a whole has been slow to adopt strategic, long-term incentive programs. This is unfortunate, especially given incentive programs' ability to help companies and employees successfully navigate through stressful times."
Times are tough indeed for those in the business of selling traditional media products. The marketing information group TNS Media Intelligence reported that in 2007 overall ad spending on television dropped by 1.7 percent, by 3.5 percent for radio outlets, and by 5.6 percent for newspapers. Over the same period, Internet ad revenue rose 16 percent to more than $11 billion, or 7.6 percent of the total market share, and those numbers don't include search advertising, a fast-growing category that has stolen significant local advertising business from classified sections.
And the future looks no brighter for the print world: according to the Internet Advertising Bureau, consumers already spend 22 percent of each day online, and this percentage is almost guaranteed to grow. Although to date newspapers have suffered the greatest losses to online and alternative advertising outlets, the proliferation of video and audio on the Internet means the worst may be yet to come for television and radio. "It takes a good thirty years for any media to wind down," says Gordon Borrell of the media consulting firm Borrell Associates, in Williamsburg, Va. "Newspapers had a precipitous decline in the 1990s, but what set that in motion was the rise of television in the 1960s." The scary time for traditional media people, he predicts, will be when the generation weaned on today's Internet grows up to be the high-income earners.
To survive, media salespeople need to undergo what Andrews calls a "categorical shift" in strategy. Rather than selling the same page space or airtime to the same advertisers (lumping in a few extra digital products for good measure), salespeople and sales teams will need to become "consultants" who can advise clients on a complete marketing package that may include print, video, audio, online and event components. They need to evolve, he says, "from selling a commodity to selling value, from being reactive to being proactive. All of those things can be managed through incentives."
Making a Case for Rewards
 Internally, many media companies run short-term spiffs that are designed to boost revenue for a month, a week, or even a day; many also honor top earners with salesperson-of-the-year awards. What is lacking at most of these businesses is an overriding plan that effectively coordinates segmented reward initiatives with company-wide business values as well as longer-term goals like retention or increasing market share. "What tends to happen is that when a new product gets rolled out, rewards might not be used to incent the right kind of behavior," explains Ressie Pate, vice president of media sales at MediaAscent. "It becomes the incentive war."
One problem for incentive professionals is convincing upper management to take the risk on a more ambitious program. Michael Day, president of Michael Day Media Incentives in northern California, has been planning travel incentives for radio stations and other news companies for over 20 years, and recently opened a division for cable television and Internet groups. "There is certainly more receptivity than ever at the local station level, but those local stations need approval from corporate—where there is a natural reticence to approve budgets."
To get around this reluctance, Andrews offers prospective clients a short-term travel promotion, where the number of participants (and thus the budget) isn't set until the number of qualified advertisers is determined. To work, the promotion needs to be creative enough that it cuts through the clutter of the many competing claims on the target's attention. His company's "Before I Die Days"—an advertiser incentive that takes participants on an exceptional one-day experience, like driving a Formula 1 race car, hiking the Grand Canyon or placing a high-stakes bet in Las Vegas—is flexible enough to work for a single advertiser. If the media company is happy with the result, he might propose a quarterly program, building up to a three-year curriculum that integrates training as well as substantial tracking and reporting.
Start With Objectives
A bigger issue for media companies is that changing the way they sell ads involves changing the people who sell them. "The advertisers are the easy sell. The harder sell is the sales rep," says Tampa, Fla.–based Mike Blinder, whose company, The Blinder Group, provides advertising sales training. "Any salesperson can sell anything if they're motivated and they understand the products."
However, understanding those products is no longer a simple feat. "A local media company has been turned upside down, with the same team now trying to sell six or seven additional products," says Bill Caudill, vice president of sales and training for Borrell Associates. To make matters worse, media companies struggle with pricing new multimedia offerings as well as with how to compensate salespeople juggling new sales goals with their existing loads. Although individual online ads usually cost less than a large print or television campaign, many companies offer the same commission rate across the board, while asking reps to increase their online sales. "If you pay the same commission rate on a lower metric display ad, the rep will say, 'Why would I waste my time selling that?' The commission has got to be higher," asserts Caudill.
Sales staffs are often left in the dark about how to prioritize their workload. Should they be up-selling Web products or offering them as standalones? Should they be pursuing new business or trying to expand existing accounts? Left to their own devices, many reps will naturally stick to the strategy with which they're most familiar—the very kinds of traditional ad formats that are in shrinking demand. "Salespeople need to clearly understand both how they can contribute to the company's overall success and if certain types of revenues or customers are more important to the company's health than others," says Smith of O.C. Tanner.
Goodbye, Adman; Hello, Marketing Consultant
 To compete in the current market, some media companies are taking a more strategic approach to selling. In 2007, Borrell Associates surveyed nearly 1,000 newspapers with online presences and identified best practices that set apart the top performers in revenue (see sidebar). One key characteristic is that nearly all the most successful companies engaged in "consultative selling." With this approach, reps do more listening than pitching during a sales call, and are able to advise an advertiser on a wide range of interconnected marketing strategies as well as give feedback on how current strategies are working.
Used in tandem with other best practices, consultative selling can have a dramatic impact. At The New York Times Company, the sales force creates a completely customized advertising product for each client that might span several brands and media categories. Their online sales jumped 22 percent in 2007 over the previous year, although total advertising revenues dropped 9 percent.
To adopt this consultative approach, salespeople often need to learn new skill sets and be educated in the merits of various products, as well as in the metrics and statistics that advertisers want. This means they need extensive, ongoing training, another hallmark of top performers. "Addressing an employee's ability to improve performance in a task along with their willingness to improve is an often overlooked element that will enhance a program's success significantly," says Smith. At the Kansas City Star, one of Borrell's market leaders, new hires receive targeted coaching on vertical markets, while all reps are expected to go through 40 hours of sales training every year, so they can stay on top of the latest information about their products.
An effective rewards program can drive this transformation of a sales force, and media companies should be rewarding behavior, not just sales figures, says MediaAscent's Andrews. The challenge is convincing employees, who may have great relationships with their clients, but who are leery of new offerings and reluctant to change the tactics that have worked for them in the past. One approach he recommends is identifying "superstars" within the company who demonstrate these new skills, and holding them up as examples for their peers. This can be done through a series of short-term rewards that build to larger initiatives with bigger prizes, each step reinforcing the new tactics reps have learned through training. Once salespeople see their peers being rewarded, they'll be more likely to get on the bandwagon.
This combination of small and large rewards is at work at the Augusta Chronicle in Georgia. "We set weekly goals that are everything from selling a full-page ad to selling an online product," says Jackson. "Each time you accomplish one of those goals, you get a square on a bingo card, and if your name is on the square we call, you get a prize." He had one salesperson who won 10 prizes during one event, at around $20 per prize, "and it looked like she went shopping. You can bet the other people were looking at her and thinking, 'I wish I had that.' It was a big win, and it really didn't cost us much." The big prize at the year's end is a trip for two to the Bahamas, which the company is promoting by placing beach chairs in various offices.
Rewards should reinforce collaboration within sales teams as well as spark some healthy competition. Depending on the way the company is structured, this might mean splitting commissions between traditional and online staff or offering greater rewards to reps who collaborate with their online counterparts. "It doesn't matter who handed the pen over," says Caudill. When the account buys into a digital ad or for a combination of formats, "there is a lot of work to be done after the sale."
Which rewards work best? Unusual travel programs have been key for Michael Day's clients. One of his long-standing partners is KGO-AM Newstalk Radio in San Francisco, which ranks consistently at the top of its markets in ratings. The company uses a tiered program that qualifies advertisers to go on soft adventure trips and has taken its clients to destinations as wide-ranging as Peru, India, Africa and Myanmar. This year the company is planning a trip for some 40 people to Egypt and Jordan. The guests will stay at five-star properties throughout their tour, which includes a stop at Petra. "[The program] has been hugely successful," says Day.
Travel works, but any reward that gets some attention will do. "With salespeople, you just try to make their job fun," says Jackson. Awards at his company have included giving employees the chance to come in a half-hour later or having their car washed by a supervisor, as well as the usual vacations and big-screen televisions. "Motivated people are worth their weight in gold," he says. "When you lose a salesperson, you lose revenue instantly. That relationship is very valuable. It's a great investment."
Although, on the whole, media companies have been slow to capitalize on rewards programs, that could change if some of these early adopters show great results. "This industry is unique in that it is highly collaborative," says Andrews. "There's a pack mentality. Once we start getting some success, we're going to have fast growth."
Sidebar: Best Practices for Media Companies
What makes a successful online strategy? As part of an annual survey, Williamsburg, Va.–based consulting firm Borrell Associates looked at the online spending and revenues of nearly 1,000 newspapers and derived a list of best practices that characterize the companies that rank among the top of their class. Top performers:
• Offer data on demand. The Web offers almost unlimited possibilities for reporting on audience behavior, and advertisers are increasingly hungry for that information. The salespeople at top-performing companies are equipped to offer compelling statistics on market demographics, click-through rates, page views, unique visitors and more.
• Educate continuously. Media salespeople need to keep up with the fast pace of technology, and this means they require ongoing training in the latest technologies, terminologies and data. Top companies require as much as 40 hours of training per rep every year.
• Skip the hard sell. The most successful sales teams use a consultative selling approach, in which the rep listens to the client's particular needs and offers feedback and solutions, rather than pushing a hard sell.
• Stick to market rates. The leading companies have left off the practice of offering online ads as a value-added service. Instead, they charge market rates based on inventory.
Sidebar: Start-up Rewards
Start-up companies have a reputation for employee-centric work cultures—think of Google's long perks list—and that may mean they are more open to reward programs than are their traditional counterparts. "Newer media organizations have the advantage of not needing to shed or restructure legacy processes and infrastructure with which more established media firms may be wrestling," says Michelle Smith, vice president of business development for O.C. Tanner, in Salt Lake City. Gordon Borrell, whose media consulting company, Borrell Associates, in Williamsburg, Va., has worked with both old and new media sales companies and their staffs, agrees: "[Online companies] have completely open minds…. It's so much more fun to teach these people than to teach people who have an old product line to protect."
Though they are often competing with traditional media companies for the same ad dollars, online media groups face different challenges when it comes to motivation. "They have not recognized the value of relationships with advertisers. That potentially is a pitfall and a weakness," says incentive planner Michael Day.
Building strong sales teams will prove essential as Internet-based content grows more established and more dependent on advertising revenue. San Francisco–based Sportgenic is among a new breed of start-ups, called vertical advertising networks, that connect marketers with a collection of niche Web sites. The company sells advertising for over 250 sports-related sites, from the NASCAR social networking hub InfieldParking.com to the official Web site of the Ironman Triathlon, and has grown to a staff of 35 since it was founded in 2005.
CEO Robert Tas says that motivation comes naturally for a company that traffics in the obsessions of sports nuts: "I think we're fortunate in that sports are something people are passionate about." That doesn't mean the job is its own reward. Managers look at individual performance and set revenue, service and market goals, but they try to align awards with employees' interests, like paying for gym memberships and sponsoring employees who compete in races; rewards often include tickets to sporting events. Even team rewards tend to be active.
Send comments to incentivemagazine@nielsen.com.
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