Ad sales people can be a whiny bunch. Just ask Jon Mandel, co-managing director of MediaCom, the New York based media buyer. He spends billions of his clients' money each year advertising and promoting products.
So Mandel hears a lot of pitches. "They all whine that they don't get enough money," he said, kicking off an ad sales panel he moderated Tuesday.
Rich LeFurgy, partner in the venture capitalist firm, WaldenVC and chairman, Internet Advertising Bureau, said Internet advertising continues to grow. For 2000, he said, "we're projecting our total revenues will be about $8 billion dollars. And more and more traditional advertisers are coming on board." LeFurgy predicts growth in 2001 as well, but said it was unclear how much growth there would be at this point.
Also representing the buying side on the panel was Dave Martin, president and CEO of PentaCom, which also spends billions in the ad market each year for Chrysler and others.
In a soft ad economy like the present sellers are going to have to do a lot more than whine for dollars, said Martin. A lot more. For sellers who assume they have some sort of entitlement to a share of advertisers' media budgets, Martin issued a wake-up call.
Martin said sellers may operate under the misperception that advertisers start planning their budgets by allocating shares per media. "The way we start the budgeting process is by asking what's in the best interest of our products," he said. "We don't set aside 17 percent for cable and 23 percent for spot TV and four and a half percent for Internet. It just doesn't work that way."
Sellers, he said, have to justify to people like him how it is their medium can help sell his products. In fact, Martin believes that sooner rather than later advertising buys are going to be based on what he termed "pay for performance," that is paying for spots based on how many sales of the product advertised can be directly attributed to the advertising.
Chris Rohrs, president of the Television Bureau of Advertising, acknowledged what seems to be a "new reality" in TV sales. For many years, he said, the flow of ad dollars was planned toward local broadcast television, "and it made sense." Now, he said, "We have to chase those dollars and we have to talk to the decision makers," and not just the ad agencies.
So-called cross-platform selling is an idea whose time has come, at least from the standpoint of media conglomerates like Viacom and News Corp. But Martin said there are still many flaws in the cross-platform sales process. "The problem is [the different divisions involved in the sale] are stealing from each other in order to make the deal work and no one is happy."
Kayne Lanahan, senior vice president, News Corp. One, in charge of cross-platform sales for the numerous divisions at Fox, said her company has addressed that by instituting a compensation program that provides incentives for managers who get their divisions involved in cross-platform deals. "We also have a lot of senior management support and we also have relentless communication" between divisions, she said.
Asked about the downturn in the economy, Rohrs said, "it's going to be a tough two quarters. But we've been through this before. Advertisers ultimately get it going again because advertising moves product and gets their products and services selling again. So they're going to come back, the economy is going to stabilize. Advertising drives demand in the economy."
Joe Ostrow, president, the Cabletelevision Advertising Bureau, reported that the American Association of Advertising Agencies is re-issuing a book on "advertising in a recession. Hopefully they're premature. But the point of that book is that this is the best time to advertise. It is the time when a client is more likely to steal share from a competitor." And that, he said, is an important point for everybody on the sales side to make.
Lanahan said the ad downturn is something cross-platform sellers can take advantage of, "because you can go in and demonstrate, potentially with a smaller budget how to make that money work harder by integrating it across similar brands," in different media.
Rich LeFurgy, partner in the venture capitalist firm, WaldenVC and chairman, Internet Advertising Bureau, said Internet advertising continues to grow. For 2000, he said, "we're projecting our total revenues will be about $8 billion dollars. And more and more traditional advertisers are coming on board." LeFurgy predicts growth in 2001 as well, but said it was unclear how much growth there would be at this point. - Steve McClellan