Commentary

Two Models For Digital Ad Sales: Enterprise Software, The Travel Industry

Selling enterprise software is completely different than selling digital ads. Unlike digital advertising, the primary goal in enterprise software is to get someone else to sell your product. Sounds crazy, doesn’t it?  Not at all -- a direct sales force is the most expensive channel to take a product to market.

To sell enterprise software, sales employees are trained to sell through channels. They do everything possible to enable the channel. First, they set rules for who can sell what to whom -- such as by vertical, company size of buyer, geographic region, or by product. Then, enterprise sales managers assemble pricing rules to ensure their pricing integrity is protected and that all channels have a level playing field. After that, they do everything possible to grow and support that channel.

In digital advertising, we have it backwards. A lot of publishers are so fearful of selling through channels, they overprotect their direct sales channel. Most publishers do everything possible to “disable” their channels. They react and create long lists of blocked advertisers (because their sales team is calling on them directly), and they strip away the ability to use their name and brand and any data about their users. Most do very little, or nothing at all, to support their channels.

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It’s no wonder the overall system is broken -- few people are working together, and most are working at cross-purposes with one another.

This is precisely why I started the Rubicon Project. I saw an opportunity to bring enterprise software-like selling methodologies to digital advertising and support that with a platform to make the selling and buying process more efficient.

There’s a lot we can learn from the enterprise software industry. And I believe the ad sales team of the future will look very much like an enterprise software sales team.

The goal will be to sell more through channels, and to leverage a direct sales team to sell the very high-end, customized deals. To do this, sales organizations will need to employ proper sales-channel management programs, establish trust-based relationships with those channels that are transparent or semi-transparent both ways and based around a core set of selling rules, and then do everything possible to enable and support those channels.

This opportunity exists today. There are more than 600 potential channels in the market -- DSPs, ad networks and agency trading desks.

Another great opportunity within digital advertising involves those segments of the industry that contain characteristics of “expiring” inventory markets such as travel. For example, much of today’s inventory in travel is sold through channels (digital sites, travel agents, partners, etc.). There is an independent trading platform supporting it (SABRE Systems) that enforces pricing rules, and that an entire ecosystem has grown up around.

I believe the digital ad market has the opportunity to leverage the best of both worlds -- sales channel management discipline from enterprise software and electronic trading from travel.

The combination of these two capabilities will solve the biggest problem in digital advertising today -- making it easier for millions of advertisers around the globe to buy. If we can solve that, this market will undoubtedly skyrocket quickly.

If you’re looking for some provocative reading that helps reinforce what I’m talking about, read this Q&A with Martin van der Meij, head of commercial development at Telegraaf Media Group.

De Telegraaf, a Dutch daily morning newspaper, has been using RTB to buy and sell its ad inventory since 2009. As an early adopter in the real-time space, De Telegraaf has set the example for European publishers to follow. De Telegraaf has its own bidder and uses Rubicon Project as a supply-side platform to integrate with all the demand-side platforms and agency trading desks. 

I agree with Martin, who basically believes that you must treat direct and indirect sales as one channel -- and balance the incentives and measurements for both -- and you have to carefully calibrate the cost of sales and revenue when you’re analyzing your direct and indirect selling efforts.

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