The ad-sales business has gotten much more complex in the last decade. Media companies are scrambling to adapt as marketing budgets get smaller and ad campaigns get shorter—even as media product lineups have vastly expanded, forcing salespeople to master new technologies—and sell more stuff.
But in ad sales, as elsewhere in life, you are what your numbers say you are. For companies seeking continued revenue growth, and looking to impose tighter cost management, one alternative is to partner with a proven outside sales firm.
Outsourcing your ad-sales operation is a big step. But it’s also one that’s fairly common. If you decide to outsource, there’s a playbook available to ensure your decision succeeds. Dennis Connaughton, general manager of the James G. Elliott Co., and I recently discussed approaches, insights, and principles on the ad-sales outsourcing process during a Q&A with our newsletter editor, Tony Silber.
We started with why companies might make a decision to outsource, and then went into the elements of the process and the timeline.
Outsourced Ad Sales is Common Across the Media Spectrum
Jim Elliott: Independent selling is the norm in most other sectors of the media, like television. Planners and buyers don’t care one bit whether the seller calling on them is a direct employee or an independent, so long as that seller is quick and competent. Today the truly valuable commodity is information, and not as much relationships and lunches. When there is a relationship, it tends to be with the media brand being sold, not with the individual seller.
Dennis Connaughton: The entire environment around selling print has changed over the years. You can’t have a real relationship with someone at an agency who’s been there two months and will be looking to leave after six. There was a time when sellers in the magazine industry were information purveyors. They were experts. We still have a hangover in the business, with some publishers believing that reps fill that vacuum, but that really doesn’t exist any longer.
Common Concerns About Converting
Elliott: The most common concern about outsourcing is the perception of lack of control by senior management. That is often followed by, ‘Interesting idea, but how do I actually do it?’ Organizations don’t always understand the process. A second concern is about the salespeople an organization perceives as superstars. ‘I love Mary Jane and can’t see firing her.’ That’s common. The right provider for you will have a highly evolved plan covering all aspects of transition, and a plan for evaluating Mary Jane as a potential transition hire.
Connaughton: Then there’s the concern about lost sales and lost momentum. ‘This sales team has a lot of contacts. How am I going to sell without those contacts?’
Elliott: But often that’s a belief that isn’t accurate. We recently had a client where we were told one of their sellers was the best salesperson who ever lived, only to be told later by a buyer that they wanted her off the account.
How to Know it’s Time to Convert to an Outsource Solution
Connaughton: It invariably comes down to money. Senior management has probably been down a path of promises. Expenses never go down—but revenue does. It reaches the point where management has lost confidence that revenue increases will come that justify the expense. And when you look at an outsource solution as an alternative, there’s no office expense, you lighten the load on the management side, and you see savings in research and marketing as well.
Elliott: Companies look at expenses. They’ve listened to their ad directors’ promises for a long time. But the ad director’s view of the world is ‘I want to keep my job.’ It’s not looking at costs and getting costs down to a percentage the organization can live with.
Connaughton: From the publisher’s point of view, the decision to outsource is a function of the level of confidence in what the company has been doing recently. Maybe there was too much confidence in a digital solution and it didn’t live up to expectations. Maybe they tried two or three different things, and none of them worked. Now something has to be done. Very often that’s the situation we face.
How Long Should an Implementation Take, and When Should it be Started?
Elliott: The most important thing is to get a crystal-clear game plan for how you would do it—item by item. It is critical for the sales firm to explain how it works: The legal parts, NDAs, CRM systems, information flow, management, sales-activity levels. You’re setting a plan. You set a date-certain for a turnover. Everything should be done by dates and timing. For bigger publishers, the average time to make a transition is three months. For smaller publishers, probably a month and a half.
Connaughton: It’s best to make a move in the spring or early summer months but often it doesn’t matter. Budgeting has been pretty much formulated by the end of the first quarter. That gives sellers pretty good run room to get up and sell for the upcoming year.
What’s the Priority List, and What’s the Correct Sequence?
Elliott: The number-one priority is a completed sales-data transition that includes information about each and every account. A data-rich CRM is the ideal way to access that information. Some publishers don’t use a CRM system, but customer data remains vital. The outsource sales firm should work with its clients to obtain the customer information from reports, insertion orders, or even copies of emails. Of course, CRM is best.
Connaughton: The outsource sales firm should give the publisher a list when they get started that outlines all of the information and all of the materials that they need. No two companies are identical. Even magazines within the same company can be different.
Elliott: You also need buy in from the senior management. At a single title that’s the president and CFO. At multi-title companies it’s those same people, plus the business manager of the unit. It’s the C-suite. You want to have a blunt assessment of what the internal situation is—and the competitive situation. Doing that by numbers alone is very difficult. Getting that level of background from a senior person really helps. Another essential part is to have someone at the new outsourced sales organization who takes total responsibility for the incoming brand(s).
How Do You Ensure Continuity in Sales, Prospecting, Pacing, and Forecasting?
Connaughton: By planning and having proper information ahead of time. Some clients don’t pay attention to their CRM. We’ve seen companies that have a good system but don’t enforce the use of it. There’s no penalty to salespeople for not filling in information. Publishers should be able to get status reports at least weekly, if not in real time.
What’s Critical from the Sales-Support Standpoint?
Elliott: Competitive information such as what MediaRadar provides, and support in channels like SRDS, are key ingredients in sales growth. If you just have a sales team and no promotion, you’re doing your marketing one sales call at a time. You need air cover. You need to have the right tools.
What Are the Common Pitfalls in a Transition?
Elliott: The most common is senior management’s belief that information about accounts will be available to the new sales team when there had been no good system to capture it. The transition may include some unexpected challenges that will require flexibility and understanding from both sides. In the ad-sales business there is an awful lot of [former Secretary of Defense] Donald Rumsfeld’s number-three scenario: Unknown unknowns—the things we don’t know we don’t know. Also, leadership is needed to encourage employees to support the sales effort to avoid the potential pitfall of an adversarial relationship. It is essential for remaining employees to understand that their success depends on the ability of the new sales team to bring in revenue.
Talk About the Human Resource Aspects of an Ad-Sales Transition
Elliott: There’s a need to untangle that expense with discretion and great care. When you’re working with individual employees it’s complicated.
How Does the Elliott Company Decide Whether to Hire Former Direct Employees?
Elliott: The first thing we do is determine salespeople’s sales skills. We put them through profile testing. The second thing we try to figure out is whether they can adapt to our culture. We determine the personalities of the people we’re dealing with, and their successes, and their ability to continue to be top performers. In a lot of cases, people might stay on with us.