Feature

How to sell yourself out of a downturn

Media owners are adopting a more creative and collaborative approach to sales, Alasdair Reid says.

Downturn...media owners are adopting a more creative approach
Downturn...media owners are adopting a more creative approach

A month can turn out to be a terribly long time in the advertising business. On 29 May, Channel 4 broadcast Honda's live skydiving ad to almost universal acclaim. Here was something terribly exciting - not just a potent challenge to the creative status quo, but also a symbolic manifestation of a new spirit of enterprise. Proof, if it were needed, of what can be achieved if advertisers, agencies and media owners work together in genuinely collaborative teams.

Well, how quaint and naively optimistic that all seems now. Because a month and a day later, on 30 June, the market watched aghast as Trinity Mirror's share price crashed by 25 per cent following a profits warning based on worries about a deteriorating advertising market.

Lest we were tempted to dismiss this as a little local difficulty, the Trinity Mirror story was soon followed by similar tales of woe from just about every major media owner in every sector bar one - the internet.

And, as night follows day, cost-cutting, not least in the sales departments of media owners, follows inevitably in the wake of profits warnings. We've been here before - and if past experience is anything to go by, what happens now may not exactly be pretty. When downturns loom, media owners tend to throw subtlety out of the window, employ street-fighting tactics and introduce aggressive pricing policies to defend market share.

But, of course, that's the £6.4 billion advertising question. Just how many steps back is the media market prepared to take? Because there are those who argue that this time around things are very different indeed.

First, there's a new factor in play - a fully functioning new commercial channel called the internet that clearly works to a new agenda. Second, and more importantly, the Honda live ad has proved just how fundamentally the rules for offline media owners have been rewritten.

Ten years ago, the Radio Advertising Bureau aside, none of the major media sectors marketed itself generically. Now they all do.

But that was merely stage one of the revolution. Once upon a time, individual media owners tended to focus on shifting inventory by striking crude commodity deals with the buyers at media agencies.

The past five years have been all about individual media owners selling themselves and their wares far more creatively, setting up dedicated teams to talk directly to creative agencies, media planners and advertisers themselves. Equally importantly, we've seen media owners bring down the barriers between editorial and ad sales - in order to give advertisers greater access to their content creators.

That's why, some say, it will be difficult for the likes of ITV and The Independent, both of which have made high-profile innovative appointments in this area (see boxes), to cut and run.

Mike Parker, the Channel 4 head of strategic sales and commercial marketing, says it's almost unthinkable, but then Channel 4 has been a consistent innovator in this area for longer than most. Big one-offs like Honda aside, it has been working to "redefine the break" by a range of measures, not least the encouragement of "themed" breaks and an initiative to offer a 20 per cent discount on commercials longer than 60 seconds.

"Whether at Thinkbox or at the individual sales houses, there's a far greater determination to sell TV as a medium," Parker argues. "There's an emerging generation of agency creatives who think only in terms of digital. Many young planners, if they watch television at all, watch it on their computers. It's essential that we get them to think about TV and how they can use it."

Steve Platt, the trading director at Aegis, agrees. And he knows exactly what it's like - he survived several downturns on the other side of the fence as a sales boss at ITV. He says: "It would be a disaster if sales operations decided to retreat. It has to be about achieving a balance. There has to be a trading element to what they do but if a media owner stops innovating, it will lose its position in the market."

Unfortunately, the experience of past downturns is that crude market forces can put paid to the best of intentions. As far back as June, as the current downturn loomed, there were stories of buyers using divide-and-rule tactics in the newspaper market to play media owners off against each other and bully the weaker players.

There's also a pernicious mechanism in the TV market whereby, as fair-weather friends like financial services companies drop out, average prices are dictated to an even greater degree by the big FMCG companies - all of whom command large discounts. This shift in the market profile can trigger a rather Darwinian struggle for survival, as broadcasters seek to balance their books and meet their deals.

Jerry Hill, the worldwide strategic development director at Initiative, is another senior media agency figure who has also done time as an ITV sales boss. He points out that, in slower markets, it's actually the commodity inventory or the less-well-organised media owners that tend to get exposed by smart buying tactics.

On the other hand, he points out that more proactive sales teams still face huge challenges: "There are still significant bottlenecks created by the sheer number of reps seeking to get their ideas more upstream in the planning process."

In other words, there are too many ideas out there seeking strategies to link in to. But Hill adds: "My advice (to media owners) is to start exercising the instincts, calm the nerves and get visible."

And in any case, Marc Mendoza, a managing partner at MPG, points out that it's not just the media owners who've changed. He explains: "We've launched a multimedia collaborative team working across the agency whose job is to go in and ask media owners how we can do more interesting things with them.

"It's about the art of the possible. Media owners know what they are able to do. We can go in with a notion that we want to do X - but what you often find is that they say, 'yes, but have you also considered Y and Z?' Collaboration enhances that process." What's more, he concludes, for media owners the new philosophy doesn't have to increase the cost of sales.

"It's about getting existing staff to think differently. And sometimes it's about letting older salespeople go and bringing in younger people who will have more modern ideas but may also be cheaper."

ITV

In terms of sales culture, no media owner has come further than ITV. After all, it had the furthest to travel - despite the inexorable erosion of its share of audiences and commercial impacts, ITV persisted in acting as if it still had an effective monopoly in commercial TV.

Its first real break with the past came with the appointment of Graham Duff as the managing director of ITV Sales in 2003, and one of his innovations was the appointment of a team to talk directly to advertisers. The revolution continued as the sales function was restructured under Duff's successor Gary Digby, who created an Integrated Planning Team, headed by Simon Orpin, in October 2006. The team is 14-strong - and as well as developing individual initiatives for individual clients it runs a "Planner Inside" programme whereby senior planners from media agencies are invited to spend a week at ITV.

But an even greater step forward was taken following the arrival of Michael Grade as the executive chairman in January 2007. Having decided not to replace the commercial director Ian McCulloch, who left in 2007, Grade appointed Rupert Howell, a former UK chairman of McCann Erickson, to a new, more outwardly facing role - managing director, brand and commercial.

An important part of his brief is to make ITV's presence felt in the boardrooms of all of Britain's biggest companies. Howell explains: "The focus before Michael arrived was almost entirely financial but everyone knows that Michael is absolutely passionate about the content and the talent. He cares about the right things. We have a complex set of relationships to manage. If viewers are our consumers, then advertisers are our customers and our relationship with them is intermediated by advertising agencies. Our relationship with agencies continues, but what Michael and I are doing is getting to know customers at a chairman, chief executive and senior marketing level."

Howell reveals that he and Grade typically see a senior client each week. "It's brilliant fun," Howell enthuses. "Major advertisers don't spend every minute of every day thinking about media or advertising so we are able to correct any misunderstandings they may have about television as a medium. Improved relationships also mean that we can get around barriers to doing innovative things. In the past, ITV tended to say 'no' and then ask what the question was. Now we want to say 'yes' if we can do it and the question is reasonable. The more difficult the market becomes, the more we will engage in this way. We're determined to see television increasing its share - after all, it's the most effective medium there is."

And Digby agrees that the revolution is irreversible. He concludes: "Trading is important. It's important we get that aspect of things right. But if we want to create more revenue streams we have to keep television moving beyond a commodity trade. We can't go back."

THE INDEPENDENT

Back in April, Simon Kelner's first act on being promoted from the editor-in-chief to his new role as the managing director of The Independent and The Independent on Sunday was to hand the job of the commercial director to Daryl Fielding, a managing partner at Ogilvy.

How appropriate, cynics responded - a man with no experience of being a managing director appointing, as his ad sales supremo, someone who knows next to nothing about ad sales.

Others were more generous, applauding his bravery in bringing fresh thinking and a whole new perspective.

It's true that the papers have always been in a weak position commercially. The fact that they attract only a small audience (the daily's full price UK sale in June was 132,058, the Sunday's was 96,725) of left-leaning readers means that they are rarely the first titles to be pencilled on to a schedule. The two titles between them rack up losses of £10 million each year.

Fielding, who first joined the advertising industry in 1981, describes herself as a "noisy" personality and is best known for developing the Dove "Real Beauty" campaign while at Ogilvy, and for masterminding New Labour's advertising in the 1997 General Election.

She has vowed to focus on the quality of The Independent audience and says that her familiarity with client-side economics will help her to monetise that quality. She says she values "strong relationships" with the people who matter in the industry - but three months into her new job, senior media agency figures say they still haven't met her.

So the market is a bit perplexed. "Maybe it's no bad thing to bring in someone who can look at it afresh," one media agency boss states.

"Newspapers tend to recruit from the same small gene pool. There's a merry-go-round, with the same senior people moving on from job to job - recirculating the same old ideas."

But many fundamentally disagree. As one of the paper's biggest customers puts it: "It will amount to suicide if The Independent neglects the trading side of things. Crudely, the trading situation is that The Times and The Telegraph are obsessed with comparative market share but have always taken the view that there's 10 per cent of the market that The Independent can go after. Now they are playing for that money too. If The Independent doesn't fight its corner, all the creative initiatives in the world will count for nothing."

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