Tuesday, February 22, 2011

Google takes magic out of advertising sales process

Una versión en español se encuentra aquí.

In a confrontation between Old and New Media in 2003, Mel Karmazin, CEO of Viacom, told the founders of Google that their advertising sales program was "messing with the magic" of sales.

Google’s Adwords told advertisers exactly how many people were exposed to their ads and how many clicked on them, as well as other specific data.

The model for selling advertising espoused by Karmazin and the Old Media was, "Advertisers don’t know what works and what doesn’t...You don´t want to have people know what works. When you know what works or not, you tend to charge less money than when you have this aura and you’re selling this mystique."

Google makes the sales process more efficient and transparent, which has the effect of driving down the price of advertising and minimizing the importance of salespeople.  

Karmazin’s meeting at Google headquarters is described in Ken Auletta’s book Googled: The End of the World As We Know It. 

"Don’t sell the numbers"

When I made the transition from news editor to publisher of a newspaper, an experienced colleague told me not to be a salesperson. "Don’t talk about your advertising rates. You shouldn’t even know them." He advised me to ask the potential client about how business was going and talk about some of the recent stories in the newspaper, local business conditions and so on.

In essence, he said, be the expert without getting into a lot of numbers. Present yourself as a leader in the community with knowledge of public opinion and the ability to influence it. The publisher’s job was to sell a client on the mysterious power of the media to get into people’s hearts and minds.

Advertising works

Of course, this is not deception. Advertising works. It is just that we don’t always understand how. The famous quote of a department store magnate was, "Only half of my advertising works. I just don’t know which half."

Google’s algorithms and analytical data go a long way toward devaluing the role of media buying companies and salespeople. The buzzword is that Google is responsible for "disintermediating" the sales process, or removing the middleman.

Advice for entrepreneurs: sell credibility, not traffic

Digital news entrepreneurs should not despair. It is still extremely important for many advertisers and sponsors to associate themselves with trusted media outlets.

A perfect example of this is the reluctance of major advertisers to buy space on YouTube despite its enormous traffic numbers. The advertisers don’t want to associate themselves with videos that might be amateurish or in poor taste.

A digital media outlet that has a reputation for credibility, strong ethical standards and community service will appeal to many advertisers who want to align their brands with those values.

You can still sell the magic.

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