Media: All about ... Online sales operations

Are those driving adland's boom sector missing a trick?

How inconvenient for Andy Duncan, Channel 4's chief executive. No sooner had City gossip columnists begun whispering his name in connection with the still-vacant chief executive's job at ITV, than he found himself creating headlines in the business pages with a controversy about a structural step-change in the advertising industry.

Duncan was pointing out that Google in the UK was likely to outstrip his channel in ad revenue terms this year. Google is likely to take £900 million, Channel 4 around £800 million. The implications were obvious, weren't they?

Well, no, actually. Senior industry figures were not slow to point out that the central thrust of Duncan's thesis - that the internet has started eating television's lunch - was fundamentally flawed. Total television revenue across the whole market has been holding up remarkably well - and even growing marginally - over the past few years.

So, the rise of the internet does not necessarily equate, in a zero-sum game, to a decline in television. Especially when you remind yourself of one small, but rather important, fact - that the money is coming out of different pots in the first place. They're in very different businesses, Channel 4 and Google. One's still in the classified advertising market, the other in display.

On the other hand, it's useful to be reminded of one rather interesting, but often neglected, consideration - that online media owners are now very much in the big league where their ad revenues are concerned. But are their sales teams similarly top drawer?

  1. Google continues in its effortless ability to excite the anger of the UK's media buying community, despite the appointment of Mark Howe as the UK managing director in February. Last year, without prior consultation, Google unilaterally scrapped the traditional 15 per cent commission system, and imposed a sliding-scale incentive scheme designed to give greater rewards to bigger-spending customers. Agencies were not exactly happy about this. When operating in his previous role as the sales boss of the Flextech sales operation, ids, Howe was widely respected for making every effort to work in partnership with agencies and advertisers - and his determination to understand their overall marketing communications goals. Well, he would, wouldn't he, the cynics say. When you're bottom of the pile, you tend to try harder. Now he's market leader in his sector, it's a completely different story. More understanding observers are prepared to cut him slightly more slack - Howe's US bosses, they reckon, leave him little room for manoeuvre.
  2. In contrast, MSN's UK sales operation is widely rated as the best in the UK online market - largely, some buyers say, because, in recent years, the company has been so soundly trounced in the search business. It was, after all, number one until Google came along - and it has found its new status rather sobering and humbling. Buyers say MSN realises that the UK market is very different to the US, and, accordingly, sales teams are prepared to understand the client perspective, doing their utmost to deliver solutions, rather than just selling them inventory.
  3. Yahoo!'s UK commercial director, Blake Chandlee, may come across as an archetypal up-front American media man, but since crossing the Atlantic a year ago, he's consistently maintained his belief that US models can't be imposed here. He does argue, however, that the UK market should be more sophisticated in selling the medium's ability to offer tight targeting. Agencies complain that the search side of the Yahoo! business is not sufficiently integrated with the display advertising side.
  4. No-one could accuse Andy Jonesco, the senior vice-president for audience at AOL, of not understanding advertiser concerns. He is, after all, the former managing director of Express Newspapers. But some agencies say that the company can be difficult to deal with - especially since it lost its head of agency sales, Miles Lewis, to Yahoo!. Agencies worry about what will happen to the profile of the main AOL portal now that (following the Carphone Warehouse sale) it is divorced from the need to front up an ISP function.
  5. Buyers also say that ad networks are growing in importance once more - not only do they have a coherent sales philosophy, but they also work hard to service the business. Those given particular mentions include 24/7 Real Media and Adviva.

ADVERTISERS - It's a somewhat bitter irony that the fastest-growing advertising sector remains relatively unsophisticated in ad sales terms. As Chris Locke, the UK group trading director of Starcom UK, says, it's ominous to find that they are already acting like ITV - "increasingly inflexible and arrogant" - during the worst days of its virtual television airtime monopoly.

Buyers who move over from trading on other media are often astonished, first, at the low average quality of the sales operations working in the digital domain and, second,at the huge discrepancies in quality from one online media owner to the next.

Lack of talent has been a problem, and there are also huge churn levels, with people not staying very long in their jobs before wanting to move on.

As one observer puts it: "The basic principles of media sales just don't seem to apply in digital."

ONLINE MEDIA OWNERS - You could argue that they have no real need to look at their sales operations while the cash keeps flying in through the window. But Mike Buckley, the trading director at i-level, argues that the media owners are, in reality, significantly underperforming because of this. He says: "Money may be flooding in, but just think how much greater the flood would be if they understood what advertisers want. We could be talking about 5 per cent. That's a significant amount of money."

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