How to Develop a Killer Media Sales Account Plan
Selling digital media is a tricky business.
It’s getting increasingly more difficult and complex to get to the answer of a basic account planning question: How much will that advertiser spend in the following year? Successful sellers have to navigate the complexities of multiple inventory types, sales channels, and increasingly, the trend toward programmatic buying. Winning in this dynamic market begins by having a good plan of attack, i.e., a good account plan. What should publishers consider when creating a bottom-up account plan? How does inventory type impact planning factors like the number of deals, deal value and timing of ad buys throughout the year?
To begin answering the “how much?” question, publishers must build up the advertising spend dollars by three basic inventory types: premium guaranteed, audience and remnant.
Premium guaranteed (50 – 85% of advertising spend): As implied in the name, a premium guaranteed inventory provides assurance to the advertiser that a specific ad will be placed in a specific location on a publisher’s property. From a technical standpoint, this type of ad can have the same ‘look and feel’ as any other type. The key differentiator, from the advertiser’s perspective, is control on timing and placement. As such, premium guaranteed inventory is the most costly of the three basic inventory types, yet still the preferred way to sell ads by both advertisers and publishers. For publishers, guarantees create predictability in terms of set monthly or quarterly spend throughout the year. The largest portion of a publisher’s revenue, typically more than 50% and up to 85%, will come from guaranteed inventory. This is the starting point in building-up the account plan for any specific advertiser. The negotiation and pricing of premium guaranteed inventory usually happens early in the year, often starting late in the previous year, and thus means more predictable account planning.
Audience (10 – 30%): Delivering targeted content to the targeted audience is often considered the holy grail of advertising. Advertisers looking to target a very specific audience turn to publishers to place their ads on digital properties where those audiences live. An audience can be very broad (ex: males between the ages of 18 and 34) or quite narrow (ex: males between the ages of 18 and 34, with a college degree in sports medicine, graduating top of their class). The more specific the audience, the greater the relevance of the message and therefore difficulty in finding that audience successfully time after time. Unlike guaranteed inventory, the advertiser pays only for a successful impression. From an account planning perspective, most advertisers will spend significantly less on targeted ads. With increasing ability to provide specific audiences, advertiser spend in this category is likely to increase in the future.
Remnant (10 – 15%): In simple terms, remnant inventory is the unsold space, or leftovers. In the digital advertising space, remnant inventory is equivalent to the empty billboard on the side of the highway. It’s cheap, plentiful and pooled with other unsold space and sold in real–time bidding. Impressions are not guaranteed and advertisers only pay for what they get. As such, the median price of remnant inventory typically hovers just above zero. Much of the technology innovations have focused on improving the distribution and pricing of remnant inventory. However, it’s still very difficult to plan for, and as such, is a small portion of a publisher’s revenue stream.
Piecing together total advertiser spend requires a breakdown across three key inventory types. Understanding the typical spend proportions across inventory types allows the sales executive to place appropriate sales effort against each throughout the year. The largest portion, premium guaranteed, is usually locked in early in the year. This means it’s easiest to plan for, but typically the most difficult to win because a lot of the work to win that sale is done at the tail end of the previous year. Targeted buys and spot buys of remnant inventory are harder to predict and build into the account plan but typically comprise a much smaller portion of an advertiser’s spend. As proportional spend on audience and remnant inventory increases, the account planning process will only get more complex. Keep these proportions in mind and ensure your sales executives are aware of where ad spend dollars are coming from and when they need to go after them throughout the year.
Channels and their Impact
The internet created a new way for publishers to advertise; and, as a result, the amount of space available to display advertising increased tremendously. In fact, the rate of growth outpaced the rate of demand, leaving behind a surplus of unsold advertising inventory or space. To continue the ‘billboard on the side of the highway’ analogy, the internet essentially ballooned the highway system, leaving a lot of empty billboards, particularly those on secondary roads. Here’s how all that billboard space gets bought/sold.
Direct from Publisher: Direct negotiation between a publisher’s account executive (AE) and an advertiser (or sometimes the advertiser’s agency of record) is still the preferred way for both parties to secure a deal. Although the number of such transactions bought/sold in this manner in proportion to other ways to buy is decreasing, the average dollar value of individual deals remains high. It’s no surprise premium guaranteed inventory is generally negotiated this way. Think of this inventory like the most highly visible and frequently seen highway billboards you know, maybe off of I-95 (for those of you on the East Coast) and the I-5 (for those of you on the West Coast). The largest portion of a publisher’s revenue comes from premium guaranteed inventory, typically 50-85%. The negotiation and pricing of premium guaranteed inventory often occurs a year in advance, thus representing more predictable sales from an account planning standpoint. A good account plan starts with a clear understanding of an advertiser’s potential spend on premium guaranteed inventory and the timing of negotiations. The publisher’s AE has the greatest control over this sales channel and can certainly influence an advertiser’s spend proportion earmarked for this type of buy.
Ad Networks: Third-party ad networks aggregate and allocate unsold ad space, or remnant inventory. They provide scale, significantly lower price points and categorization. Most publishers wouldn’t want an AE to spend any time negotiating the sale of advertising buys that are not only mere fractions of a percent in value of premium guaranteed inventory, but also extremely high in volume. By pooling together enough unsold ad space, an ad network can turn ‘low dollar and high volume buys’ into a profitable business. Horizontal networks, like Google or Yahoo!, provide a platform that reaches a broad audience population. Vertical networks, like Sportgenic or Gorilla Nation, provide access for advertisers looking to engage more specific audiences. For example, Sportgenic “connects sport enthusiasts with products and information to fulfill their passion for sport,” while Gorilla Nation targets users in the “premium entertainment and lifestyle communities.” Even more targeted platforms, those arguably best suited to provide the exact desired audient to an advertiser, are called “audience networks.”
Audience Networks: Third-party audience networks help advertisers identify and target very specific audiences, even more specific than users in the “premium entertainment and lifestyle communities” as highlighted in the Gorilla Nation example above. For example, “males between the ages of 18 and 34, with a college degree, and part of premium entertainment and lifestyle communities.” The more specific the audience, the greater the relevance of the message and therefore difficulty in finding that audience successfully time after time. From an account planning perspective, most advertisers will spend significantly less on targeted ads as a percent of their total spend. This may seem counterintuitive. After all, why wouldn’t advertisers be willing to pay if they can get access to the very specific audience they’re after? The challenge has been delivery. Few audience networks have been able to live up to the promise and successfully (and repeatedly) deliver the advertiser’s desired audience. As a result, this portion of an advertiser’s total ad spend is still relatively small.
Demand Side and Supply Side Platforms (DSPs and SSPs): SSPs were created to help publishers manage access to inventory and track which agencies/advertisers are buying what. They help publishers manage revenue coming in from the various ad and audience networks. More importantly, they create a bidding environment so publishers get a better price for their remnant inventory. DSPs were created to help agencies, buying space on the behalf of advertisers, to manage the real-time bidding environment, or RTBs. The creation of RTBs subsequently led to the creation of agency trading desks tasked with executing programmatic buying — which we will explain in the third and final installment of this series.
The number of ad and audience networks continues to grow. And the unique value proposition of each network seems to be less and less distinct from one another compared to a few years ago. Here’s the key: Your Ad Sales AE still plays a critical role in negotiating and securing the largest portion of an advertiser’s total spend — the premium guaranteed inventory. And they can play an increased role in helping advertisers understand their options across the other inventory and network types. As proportional spend on audience and remnant inventory increases, the account planning process will only get more complex.
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