Outsourcing ad sales to a third-party sales organization has strong appeal for many Internet companies. Why? Because building and managing an ad sales operation is an expensive proposition that requires significant upfront investment — more than can be covered by initial revenues.
Since many web businesses stay lean by outsourcing as many functions as possible, management’s desire to avoid investing the necessary effort to set up an internal sales organization is very understandable. But a third-party sales partnership is never going to operate exactly as an internal team would.
This is not to say that a third-party firm cannot perform very effectively for a supplier, given a well-designed strategy and strong execution. We are simply pointing out that managing ad revenue growth through a third-party channel requires learning to think differently about a number of things. And a lack of understanding about those differences almost guarantees dissatisfaction on both sides of the relationship over time.
Though less commonly employed by media businesses, third-party channel management is a familiar business concept in many industries. The job of the channel manager is to understand how the third-party firm runs its business, how it makes money, and what level of support is needed to ensure that the sales partnership works effectively.
A PC manufacturer understands that the 19-year-old sales guy at the local computer chain store is not going to explain their solution as well as an employee of the manufacturer would, so they may provide sales tools and marketing collateral at the point of sale. Nabisco knows that Safeway or Kroger employees don’t sell their cookies the way a direct sales force could, so they may invest in sampling programs that can be run at the store level. Channel managers in these industries have mastered the art of selecting, training, supporting and managing different types of third-party channels to get higher overall sales results.
An important, underlying point in this discussion is that a third-party sales channel is a separate business with related, but distinct, business goals. Because most Internet ad sales channels represent a wide range of brands, they will not cover the market and represent your specific brand in the same way your direct reps would.
On the other hand, third-party channels have big advantages. Because they handle more brands, they generally enjoy far greater access to target customers, provide broader market coverage, and offer a pay-as-you-go model that an internal team can’t match.
In Internet advertising, where the sheer number of sites selling ads makes customer access difficult; the reach of a third-party sales partnership can be extremely advantageous. This factor alone makes third-party sales an option worthy of consideration.
Third-party Internet ad sales channels offer additional value. These firms offer full-service sales and sales operations programs. While specifics vary, all the reputable networks and rep firms offer a range of benefits that go well beyond the actual sales call and executing the transaction. Ad serving (often with the latest technological advancements), ad reporting that is reliable and on time, billing and collection, marcom and positioning support for your ad sales message are all generally included in the ad sales fee.
Over the next several weeks, we’ll take a look at some of the variables to consider when choosing the right third-party sales channel for your site’s sales efforts, and address some of the expectations sales executives might have for results with each. We’ll be looking at a number of the most familiar third-party sales options, and some that are less well-known, providing insights into how best to work with each of the many business models they represent.
If you are working with a smaller ad sales firm or network that we might not have heard of, please tell us about them, so we can investigate other business models that may be evolving. To offer your thoughts on any aspect of this third-party sales issue, send an email to firstname.lastname@example.org.