• by Amy Auerbach , Jason Krebs , January 5, 2012

Question from a seller of digital advertising: I recently sat down with a very knowledgeable, respected, veteran, media buyer for a meeting. And after the usual pleasantries, he said “So my team tells me that you’re more expensive than your competition -- which of course is getting more business from us.”  Please tell me, why is price still the most important issue over product, promotion or placement?

Jason says: Because despite my daily attempts, I can't buy a sandwich with my winning smile? Money is what makes (at least) the ad world go 'round. In our business, the buying side is having a hard time differentiating what may look to them like the same product from multiple sources.

This is not a new problem. One hundred thousand years ago, Uka was saying to Odo, "Why this pole cost more than that pole? Look like same pole." And here is where Odo got to distinguish himself from the other Neanderthals and work on that down payment for the double-wide cave.  Whether you’re buying a pole, paint, or advertising, everything comes down to cost.

The problem is that digital media still has the equation wrong. As industry sage Doug Weaver pointed out last year, this idea is easier to see in other ad platforms where the value has been made clear to the buyers. Typically, price does correlate to greater value.

To test this point, I turned to the provider of my sales DNA and asked my dad, a lifelong (and still employed) salesperson, how he deals with the pricing question. He explained, “One customer will tell me, ‘I can buy other degreasers for less money.’ So, I say, ‘If that degreaser doesn’t dilute as efficiently as mine, you need more of their chemical to do what mine does for you. In the long run, my product will give you a tremendous advantage in quality and longevity.’ I suggestively dissect the quality of the other product and say, 'Now, let’s compare apples to apples.'”

Simply put, digital sellers, do what my dad does with the restaurant owner who needs degreaser. Break down both products clearly and explain how buying ads with your company will outperform the ads placed with another company by adding value, outlining the effect on the endgame. If there is greater value in your product, then that is what the price supports.

What if the products really are the same? More pearls from the elder Krebs: “Yes, a 10 oz. Dart foam cup is the same cup no matter who sells it to you. If the buyer can get it for less money, then you match the price or walk.”

Just when you thought you were dealing with labyrinthine specialty items and that nothing in the world is like selling advertising to Fortune 500 companies, I am telling you, sales is sales. Your job is to articulate the value that your product or service provides. But look on the bright side, if you tire of the digital world, my dad just trained you to sell degreaser. Or there is always Odo's House of Poles.

Amy, why are people on your side of the business so all-consumed with price?

Amy says: Cost is always measured in dollars, but value is something that doesn't have a standard unit. Especially in media, value is difficult to articulate. How does a media buyer know the relative value of one impression to another? Even when advertisers invest in econometric models, we can't always isolate the exact levers that drive sales the most. So true value may be elusive. 

Buyers rely on their own perceived value of the media choices presented to them. What are the criteria to determine a value of media? Context, editorial quality, target audience composition/coverage, customer service, past campaign performance and efficiency compared to other options. The dollar is the only absolute comparison point, therefore it becomes the easiest and most often used point of differentiation. Media agencies are always required to do more with less, so getting more impressions is achieved by buying less expensive media. Clients are happy, so everyone is happy.

Can individual sellers and/or the industry as a whole demonstrate the value of different media choices? A simple example: a pre-roll :30 spot vs. a :30 spot in “Desperate Housewives.” Both of these placements have different costs, but we don't know yet if the different cost accurately reflect different business values. Not very many companies are willing to invest the time and resources necessary to answer these kinds of questions.

Sellers must do the heavy lifting in convincing a buyer to pay more for an impression. I don't think that will ever change. Some media will continue to be a commodity where cost will trump value. DSPs, etc. are proving this to be true. The value of media will always be subjective, and good sellers will use that to their advantage. Buyers will always use cost to make comparisons.

Know your product, know your competitors' product and know how to create perceived value. Perception is reality, as we all know. Use that to close the deal. Just please don’t bring me any poles or degreaser.