Commentary on the Changing Landscape of TV Ad Sales
For the last 4 years, I have been the CEO of a software startup aimed at TV advertising sales. Our plan was to provide pricing and inventory management intelligence, much like the airline and hotel industry had adopted decades ago. (See Sabre Systems).
We were encouraged by many top executives in television, who admitted that TV ad sales was, with some exceptions, "pretty fluid" and not easily controlled by management. We built technologies just like those used in the airline industry, the hotel industry, or for that matter, the on-line advertising industry. But we have had great difficulty getting adoption in traditional television. We're regarded as very knowledgeable about the sales process, and have provided millions of dollars of software and services to ad sales groups. We have managed the details of literally $100's of millions of ad deals. We've been told "You're ahead of your time!"
Despite the revenue pressure on television ad sales teams (whether they sell local broadcast, local cable or national broadcast or cable), none have embraced revenue management technologies in any big way. Competition (and the amount of places you can place a video ad on television) has soared! It seems odd that many sellers in a $67.9 Billion market still employ a chalkboard to set and track pricing. The fact of the matter is that most front line sales reps and the advertiser's buyer set individual prices. Let me repeat: the sales rep from the local TV station can change the price of the ad space. So if you are told $300, you could offer $200.
There is simply more inventory than they can sell, and the sales manager will take anything they can get. Why? As one manager said to me, "I don't need revenue management, I need revenue."
We were encouraged by many top executives in television, who admitted that TV ad sales was, with some exceptions, "pretty fluid" and not easily controlled by management. We built technologies just like those used in the airline industry, the hotel industry, or for that matter, the on-line advertising industry. But we have had great difficulty getting adoption in traditional television. We're regarded as very knowledgeable about the sales process, and have provided millions of dollars of software and services to ad sales groups. We have managed the details of literally $100's of millions of ad deals. We've been told "You're ahead of your time!"
Despite the revenue pressure on television ad sales teams (whether they sell local broadcast, local cable or national broadcast or cable), none have embraced revenue management technologies in any big way. Competition (and the amount of places you can place a video ad on television) has soared! It seems odd that many sellers in a $67.9 Billion market still employ a chalkboard to set and track pricing. The fact of the matter is that most front line sales reps and the advertiser's buyer set individual prices. Let me repeat: the sales rep from the local TV station can change the price of the ad space. So if you are told $300, you could offer $200.
There is simply more inventory than they can sell, and the sales manager will take anything they can get. Why? As one manager said to me, "I don't need revenue management, I need revenue."
The purposes of this blog are:
- to monitor and track trends in television advertising sales
- to observe and predict how traditional players will cope with the trends
- to monitor the tactics of the challengers
From time to time, I will relate some lesser-known facts from our experience (protecting the confidentiality of past customers), and forecast the likelihood of success of various tactics.
As one VC said to me, "You can usually forecast the future. The question is When?"
posted by Michael B. Cooper | 5:32 PM
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Copied over from http://thedemiseoftvadvertising.blogspot.com/
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