The Automated Advertising Industry

Want to Dump Your Ad Network? Dear Ad Network: It’s Not You, It’s Me.

May 10th, 2012   |   by fbadmin

Would you ever go to your sales team and say?
Sell whatever you want to who ever you want.
Sell it for whatever price you can.
By the way, when you make calls, you can’t use our brand or tell them anything about our users.

So, here’s my question… Why in the hell would you ever let someone else do that?

My roots are in the Internet advertising industry. I started one of the first ad servers and ad networks 12 years ago. Before founding the Rubicon Project, I started an enterprise software company called StrongMail Systems. Enterprise software is a completely different world when it comes to sales. Unlike online 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.

In enterprise software people are trained on selling through channels. They do everything possible to enable the channel. First, they set rules on who can sell what to whom – this is sometimes done by vertical, company size of buyer, geographic region, by product, etc. Then, they put together pricing rules to make sure their pricing integrity is protected and all channels have a level playing field. After that, they do everything possible to grow and support that channel.

Effective sales channel management starts with frequent communication, just like managing a customer. The seller provides them with marketing support, training, materials and helps them create more effective packages for their end customers. If the seller is having trouble selling a particular product through their own sales force, they may create special promotions for the channels and/or their end customers.

In launching a new channel, sales reps from the seller company go on the first 10-20 sales calls with the reps at the sales channel to ensure that it’s being sold properly. It’s just like hiring a new sales rep. You’d never send them off on their own day 1 of the job would you?

In online advertising, we have it backwards. A lot of publishers are so fearful of selling through channels, they’re overprotecting 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), they strip away the ability to use their name and brand and any data about their users. Most do very little to nothing at all to support their channels.

It’s no wonder the overall system is broken – few are working together, most are working against each other. This is the foundation as to why I started the Rubicon Project. I saw an opportunity to bring enterprise software-like selling methodologies to online 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. I believe the ad sales team of the future will look very much like enterprise software. 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 – ad networks, DSPs and ad exchanges. Another great opportunity is that online advertising also has characteristics of other “expiring” inventory markets such as travel; can’t sell an empty airline seat post takeoff and you can’t sell an ad after it’s been display. Much of the inventory in travel (airlines, hotels, car rentals, etc.) is sold through channels (online sites, travel agents, partners, etc.) – there is an independent trading platform supporting it (Sabre Systems) that enforces pricing rules that an entire ecosystem has grown up around. I think the online 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 is what I believe will solve the biggest problem in online advertising – making it easier for the 2 million advertisers around the globe to buy. If we can solve that, this market will undoubtedly skyrocket to $200 billion quickly.