In any negotiation, knowing all you can about who is on the other side of the table can give you the upper hand. If you're negotiating an online media buy with a publisher, there's a lot you should know before coming to the table. What strategies can you employ to find out this information and bring home the best buys for your clients?
There are a lot, in fact. Here are several things to look at before you begin discussions with a publisher.
Unsold inventory. To media buyers, unsold inventory means there may be a lot of room for negotiation. But don't assume all publishers see their unsold inventory in the same way. Some won't budge on rates even if they have unsold inventory because they're afraid to seem like they're devaluing their own inventory. Those might have larger deals pending, have a distorted view of what their competition is doing, or just think highly of their site.
Fortunately, there are others who look at unsold inventory and think, "Time to discount." These sites - and they're in the majority - don't have the luxury of turning away advertisers that don't pay their open rates.
AdRelevance tracks online advertising and can give you a glimpse into how much unsold inventory a site has. I can see the value of publishers tooting their own horn on their site, especially if they have a lot of new initiatives and service offerings. However, if a site is doing more in-house advertising than outside advertising, that should raise a flag. But look a little further. If all of its ads are in-house ads, it may not accept outside advertising, or it may be new to the ad business.
The publisher's revenue model. Is the publisher's business built on advertising sales? Is it built on subscriptions? Business exchanges? A combination of these? If the majority of its revenue comes from ad sales, you better believe that there is plenty of room for negotiation. Any unsold inventory is wasted revenue down the drain.
The publisher's competitors. There is nothing like old-fashioned competition to help you get what you want out of your media buy. Don't be afraid to let the publisher rep know where his site stands against the competition. This can often work to your advantage. Losing a buy is bad enough, but losing a buy to one of your biggest competitors hurts even worse.
Use of advertising auctions. Sites that use ad auctions are predisposed to get rid of unsold inventory at low rates and are more willing to negotiate with you from the start.
Network versus publisher. There are times when a publisher can sell cheaper than the network and other times a network can sell cheaper than the publisher. A network representative recently called me and mentioned that she represented several high-profile sites at lower-than-normal rates. When I inquired which sites these were, the rep would not mention the publishers. That was a rather interesting call that I won't be following up. The rep was trying to save the integrity of the "high-profile" publishers, but she must not have really wanted to sell me advertising because there was no way I'd buy a network without knowing which sites I was running on.
How long has the publisher been accepting advertising? In the early days of the Internet, we often pioneered advertising on sites that hadn't previously accepted advertising. There are still sites out there that do not accept advertising (we ran into one two months ago). If they reach your target audience, it doesn't hurt to ask if they will sell you advertising. This is an ideal position to be in as an advertiser. Publishers are often open to your suggestions on what might work for your client and what will work for the site. Additionally, the price is usually right, but it may take a little longer to set up, sometimes as much as a month or two. If the site fits, it is often worth the wait and the headache.
How much money does the publisher spend marketing the site? Often the sites with big marketing budgets are more expensive. We have found that the best ROIs come from the lower-tiered sites (lesser-known sites with smaller marketing budgets). Break sites down into A-, B-, and C-tier sites, and strive to have a good mix of each when your media objectives are dual marketing (branding and direct response). A-tier sites play a role in media plans when clients need visibility in the market and can look like they walk the walk. A-tier sites help build the brand and increase visibility. Focus on the B- and the C-tier sites if your media objective is strictly direct marketing the ROI is usually better because you can negotiate a lower cost and reach your target just as well. Beware of large ad agencies that don't go beyond recommending A-tier sites. Most large agencies don't have the time, the manpower, or the desire to recommend beyond the obvious.
Be aware of how much or how little a publisher values its audience. Look at where the publisher is advertising and how much money it is spending to get people to the site. We once did the media planning and buying for an online publisher whose sole focus was to drive traffic to its site because its revenue model was ad based. We could have easily driven gobs of traffic to the site by negotiating cheap cost-per-click deals, thereby sacrificing the integrity of its audience.
The question of the quality of the audience versus the quantity of the audience is a difficult issue to balance. The results of our advertising efforts for this particular publisher weren't surprising. Although recruiting quality traffic was more expensive up-front, it turned out to be just as cost-effective as getting "quantities" of people. You can negotiate cheaper rates from publishers that don't necessarily value the integrity of their audience, but be aware of the audience composition. By getting the cheaper rate you may be sacrificing the integrity of your buy. Make sure the site's demographic research is up to date.
Is the publisher a privately owned company or a public company? There are several ways to view this. If a company is privately owned, there won't be a board of directors or investors to please; such a company may not work as hard for your business. On the other hand, if the privately owned company is in the midst of seeking funding, it may be more willing to work with you so it can please its VCs or private investors. We have gotten some excellent deals from large networks before they went public, just so their numbers would look appealing. A public company has to show earnings on a quarterly basis. Depending on how deals are going for the quarter, you may have a lot of leverage, especially if it is close to the end of the quarter.
Back-end metrics and renegotiation. We can tell within two weeks whether a site should continue to be on the buy or not. If a site is on the border, its ROI is a little high. Go back to the site and renegotiate the buy. When given the option of continuing at a lower rate or being taken off the buy, publishers are usually willing to lower rates to stay on the buy. When you have the back-end metrics, this is often convincing evidence to publishers. However, I have bumped into A-tier sites that would not budge from the original negotiated rate. The beauty of online advertising is that there is always someone else that is willing to work within your parameters.
Meet Your Favorite ClickZ Contributors
Many of ClickZ's leading expert contributors will be at ClickZ Live, the new online and digital marketing event kicking off in New York (March 31-April 3). Hear from the likes of: Jeremy Hull, Lisa Raehsler, Andrew Goodman, Bryan Eisenberg, Mathew Sweezey, Aaron Kahlow, Stephanie Miller, Simms Jenkins, Jeanne S. Jennings, Dave Hendricks and more!
Michelle Ellis is Director of Account Planning at M2K, a top-100 interactive agency. She started her career over a decade ago focusing on the retail and business-to-business industries. M2K specializes in interactive marketing solutions for clients, including strategic positioning, media planning and buying, offline and online creative, web site design, intranets, and extranets.
March 19, 2014