Grey Persons | Director, Borrell Associates | @GreyPersons | April 1, 2015
Like many of those reading this blog, I consider myself a veteran of selling advertising and marketing services to local businesses. Twenty-two plus years of on the street selling, sales management and product development have taught me some valuable lessons. Among those is the basic and undeniable fact that successful products and sales start with customer needs. Never in my many years of selling did I have a customer who needed to buy advertising. What they needed was a way to get more customers in the door and to compete more effectively. Advertising and all marketing programs are simply a means to an end.
It’s also been my experience that if you really want to break into new markets, you need to go after new customers. And when you call on those new customers, you need to be tuned in to their unique needs, challenges and opportunities. Sounds simple, right? But the mistake I see far too often is that if your sales representatives are talking to the same old customers with the same old needs, you are very likely never going to learn what non-customers want/need. In fact, the complexities of today’s media markets require an understanding that goes beyond intuition and past experience.
Consider your own business enterprise in the context of the shifting market share across various media types in the past seven years.
Ask yourself — are you getting into this new market of digital to serve only your existing customer base? Or are you looking at digital as a way to serve new customers and move into a whole new space?
In the chart above it is clear that for most media, the pie is shrinking. Although selling more products may help you grow revenue in the short term, you’ll eventually end up with a larger piece of that shrinking pie. So selling more to your current customer base simply won’t get you the types of gains that are possible in a new business segment and necessary to grow your business. In fact it’s extremely likely your current customer base does not represent the best digital customers and may actually cost you money to serve.
Take a moment to consider how your customers go to market themselves. In the case of an automotive dealership, to be successful, they need to know how many buyers are in the market, who buys cars, how much they spend, how they shop and how they buy. Without that information, it’s impossible to develop a solid communications strategy and marketing program. Now substitute “digital advertising/marketing services buyers” for auto buyers. How do you, at a media company, go to market without knowing who the potential customers are, how many are there, what they buy and how much they spend? In other words, what is the true addressable market for your advertising and marketing products?
Take, for example, the $191 million local ad spending market of Myrtle Beach, S.C. In 2015, local online ad spending is forecast to grow 42 percent or $24 million. Thus, digital revenue growth by a media company of less than 42 percent in Myrtle Beach will actually represent a loss in share-critical information in developing sales goals.
While this info is vitally important, it’s not terribly actionable. To develop a plan for growing sales revenues, we need to dig deeper. We’ll start by identifying those business categories representing the greatest net projected growth in digital spending from 2014 to 2015. The table below outlines the top 10 (of 100).
Of course while some of these dollars are new, many will shift from traditional media. The table below outlines the five Myrtle Beach media representing the greatest projected decrease in spending from 2014 to 2015.
Newspaper and local TV represent the greatest projected decrease in ad spending. Below are business categories representing the greatest projected decrease in each. Use this information to identify business categories for retention and cross-reference with those growing the most in digital for acquisition through online sales efforts.
The objective is to narrow focus to the eight or 10 business categories that represent the greatest opportunity, then align sales, products and pricing appropriately against those categories. Auto is important but most media companies are likely already focused on this category. This quick analysis shows furniture sales, credit and mortgage, home improvement and telecommunications should most likely be included in the plan. First, though, we need to take a look at digital purchase behavior and confirm our products align with what businesses in the category tend to buy. For example, Furniture Sales’ online ad spending broken down by ad format is outlined below.
From this information, it’s clear the ability to sell targeted display ads will be required to serve the category. Of course advertising is only a part of the mix. Many are also engaged in selling digital services. The information below outlines average expenditure per business among furniture retailers in Myrtle Beach.
From my experience, local sales teams spend a lot of time calling on small mom and pop retailers. It’s easy to get in the door and they have been good prospects for traditional media. In this case, a furniture retailer with five employees is likely to invest less than $70 a month in digital services — not a good prospect and a business that will most likely cost money to serve with an outside rep. A furniture retailer with six to 10 employees is likely to invest just over $300 — a marginal prospect at best. In fact, digital service spending varies greatly by business category and business size and is one of the issues we see media companies struggle with the most. What businesses to call on, with what and for how much, and maybe more importantly, what businesses to stay away from.
I think most will agree that success in digital is necessary for growth of existing media companies. Your customers are buying it and they have most likely pulled dollars from your core business to do so. What’s critical to understand, though, is that digital is a new media serving new markets with a set of dynamics all its own. Sales teams can’t tell you what you need to know about markets they don’t serve. It is up to leadership to invest the time and effort to understand the markets they wish to serve and to have the skill and discipline necessary to develop and implement a go-to-market strategy.