Tuesday, April 3, 2012

Digital publications still have to climb the advertising hurdle, learn to sell products other than print

No matter how much you proclaim yourself committed to digital – whether that's "digital first" or merely "customer-centric selling' – the issue of ad sales will eventually rear its ugly head. If publications are to succeed selling mobile and tablet publications they are going to have to learn to sell digital editions.

Although some companies have bragged about growing their digital revenue, most of these dollars are not coming from the traditional print ad sales teams. Many magazine companies have begun selling data and other digital products and in this way have grown their digital revenue.

Don't get me wrong, creating new data products, especially digital products, is a damn fine idea. But for the most part, new teams have been put together to sell these items. In the meantime, ad teams tasked to sell full page ads in monthly magazines continue to concentrate on that task, while adding in web advertising as value-added items, or as steeply discounted up-sells.

The problem is an old one: how to get your team to sell something new.

Many modern media gurus like to say that the problem started with the rise of the Internet, but that is silly. I can trace this back to my own professional beginnings – and I'm quite sure this issue goes back even farther.

While at Hearst Newspapers the issue I faced was that of a management team too conservative to consider creating new print products. When I moved to the Bay Area, however, the President at the chain of newspapers was more innovative. Realizing that we were losing money to ADVO, the marriage mail company, we started our own marriage mail program: buy a print ad and expand the reach of your marketing with a mailed piece delivered to non-newspaper households. This matched the reach of ADVO, but involved a combination of print and mail.

For some newspaper customers, this was a dream come true as they were committed to newspaper advertising but realized that they were missing customers. For the ad teams, however, selling marriage mail went against everything they had learned. Wasn't the sale pitch of the newspaper that it delivered superior demographics and that those non-subscribers weren't important to reach?

Ad teams had to learn to be flexible in their approach and to understand the goals of the client. If reaching a large percentage of households was important then a combination of print and mail seemed the right thing to sell.

"But what if the customer only wants mail?" sales reps started to ask their managers. That was a problem, you see, because the whole mail program was created to save print ads, not to switch the business. Now managers were the ones having to get their heads around the idea of selling a new medium.

Today, many publishers are wondering how they are going to sell tablet advertising, and how they are going to get a fair price for that advertising. The MPA's metric recommendations is a step in the right direction in getting the terminology straight, and influencing what the metrics will be in evaluating that advertising (more on the MPA tomorrow).

But the issue is still one of sales.

It's been exactly two years since the first iPads were delivered by UPS to their owners. On that day the number of tablet edition subscribers was zero, making selling ads into tablet editions, well, rather difficult.
Mac|Life's approach with their first tablet edition was a smart one: get a single sponsor, either charge them a nominal fee or give it away to them as a reward for their print schedule. Publishers knew it would be a while until they reached a critical mass of readers through the iPad or other tablets. We're still somewhere between zero and that magic moment when tablet editions can be sold on their own.

Looking at how publishers adapted to the web will not provide much guidance. I look at most B2B websites, for instance, and I see very little advertising – and what there is looks to me to be simply small add-ons to the schedules of the major print customers or ads coming in from networks.

One sure sign that a team has turned the corner in selling digital is when new accounts are broken that buy digital only – just like that mail customer who told their rep they wanted mail only, no newspaper space.

Often the solution is what I used to call the Nordstrom buy.

If you are positioning your print product as a premium buy then you will lose customers who are too price conscious to pay your prices, right? Sometimes they will buy a modular ad, but for the most part they are left on the sidelines – kind of like making a choice to buy clothes from Nordstrom or Walmart. The customer knows the quality is better at the luxury retailer, but in the end it is just a pair of pants and so the sale goes to Walmart.

"But what if I could tell you that you could buy that full page ad into my premium magazine, but only pay a fraction of the price? Would you be interested?" You get the idea, right?

But this isn't a sure fire solution because print ad reps are paid to sell XX number of dollars of advertising – selling a full page ad for a fraction of the print rate card price doesn't get them to their sales goals.

This is one of the reasons that for the first ten years of Internet publishing the biggest debate in many offices and at many industry meetings was "should you create a new team that sells digital, or can the old one adapt?"

The answer was... there was no answer, lots of solutions were tried but the results were decidedly mixed. In the B2B media world, there was a moment when it looked like an Internet pure play could show the way. But that company imploded and digital display advertising remains still a difficult sell (and most industry customers have decided to bypass their B2B magazine friends and now consider the web to be something they deal with themselves).

Many publishers have turned to ad networks to sell much of their web inventory, and again some publishers see ad networks as helping them sell tablet editions. It is probably not going to happen simply because ad networks rarely are able to target your audience with any sort of precision.

But publishers who resign themselves to the fact that there are no easy answers are setting themselves up for another fall. Just as far too much advertising is allowed to go to Google and Facebook rather than their own websites, unless clients are sold on tablet editions publishers won't see much new revenue for all their investment in digital editions – and ad agencies will continue to do what is easy and buy networks and digital brands that are familiar to them.

One thing that has stayed constant is that the client, more so than the agency, knows their target audience. Rolex wants fashion, and so they buy Condé Nast and other publisher's print magazines. With the demographics of tablet editions showing that these customers are now using tablets, one could see that a customer like this would want to make sure they migrate to tablets, as well.

This is one reason why I've been so disappointed in the newspaper and B2B media segments. While most consumer advertising goes through agencies, much of the local and trade buys are still determined at the client level. This is a publishers big chance to speak directly to the client and to demonstrate the value of the new platform.

Unfortunately, judging by the iPad and Android apps released by these publishers, far too many media executives in these segments are not sold themselves on tablets and are letting their digital publishing vendors sell them less than readable apps. Further, a number of vendors are creating their own ad networks and selling publishers on the idea that they can have cheap (or even free) mobile and tablet app editions in exchange for surrendering their ad inventories to the vendor. The result is that a client that wants to appear in a publisher's app edition would need to call someone other than the publisher in order to book space.

At the industry events I've attended over the past half dozen years the focus of the agendas have changed dramatically. Those sessions on ad sale have changed to sessions on custom content or creating new data products – good ideas, no doubt about it. But many publishing executives today have absolutely no sense of ad sales. The fundamental skills of their business have eroded. No wonder then that so many execs have no interest in learning about digital publishing solutions, location aware app development, and other technical topics.

But unless publishers finally crack the digital ad sales game they will remain in this downward spiral. New smartphones and new tablets can't drive ad revenue if you have an ad sales problem, in general. Paid content proponents may currently be in ascendancy, but many execs are already seeing how limited the reader based revenue model is. If you magazine can not prosper when it is at less than 50 percent advertising, how will it prosper on a tablet when it is zero percent advertising?