local media insider

The Tennessean's inhouse ad agency earns $2.6 milllion

Chris Ferhmann reinvents the ad agency for Gannett

Alisa Cromer
Posted
The devil's in the organizational structure.
How an inhouse agency is sold within a traditional new media company: Heavy use of specialists, changed comp plans, elimination of special sections.
Under lessons learned, account managers and a project management system should be deployed upfront.
The complete product wheel after two years, as of January, 2012.
Photo

Company: The Nashville Tennessean, Tennessean.com

Circulation: 174,000 daily

Traffic: 468,000 monthly visitors, 4.4 million visits monthly

Owner: Gannett Co, Inc.

Initiative: 1100 Broadway, an inhouse ad agency

Key Executive: Chris Fehrmann, Division Manager

Summary: The inhouse digital agency created by the Nashville Tennessean, 1100
 Broadway, is designed to operate as a separate brand from the 
newspaper company and website. All sales are still currently handled
by the newspaper company's multi-media reps, and digital specialists
supporting them in a ratio of one-to-four, reporting through the
agency to the digital division, to the publisher. The division itself is managed by Chris Fehrmann, who has an agency background. The physical location, branding, and personnel of the inhouse agency are unique, and “no shared resources” was a key "sina qua non" mantra for the new management team, mostly from agency backgrounds (see personnel breakdown below).  

After it's 2009 launch, response was overwhelmingly positive, the sales force was excited and the agency was overwhelmed with requests from merchants, serving 400 companies its first year. After two years, billings are at $2.6 million, including a variety of services.

“It totally made sense for them to have a one stop shop.” About 50% of the dollars sold via the 1100 Broadway agency model are in traditional media placements. The remaining dollars are in a variety of evolving services. All "one-offs and special sections have been eliminated."

Challenge: After Black Monday in 2008, executives at the Tennessean
wanted to come up with revenue models to provide internet services
beyond digital advertising to key accounts. Specifically, they wanted
to close the gap between what they currently sold – advertising – and
what local merchants wanted – measurable results from a variety of
new digital platforms.

Strategy: The first decision was to set up an inhouse agency with its own brand, collateral and agency "DNA."

Executives had to resolve:

1. What products would be offered and priced

2. Personnel issues including how the new company would relate to the multi-media sales department

3. Logistics of combining numerous digital services and reporting for large complex
buys

4. Clear identification of their target accounts

The first year was a success - both sales and clients were excited, bringing in $975,000. Key challenges still included setting up processes, generating better leads with a longer pipeline, “overcoming customer shock that we offer these services and are good at them” and changing the culture of selling. Keep in mind that in this unique model, salesof agency services are entirely dependent on multi-media sales reps also selling their own media products, though supported by digital specialists who can also call on accounts that have not run in two years. A key competitive advantage over traditional agencies is that there is
no "monthly retainer" and speed of deployment. "A traditional agency
requires a contract and a retainer, and they get their commissison. We
don’t require contracts and retainers. We are hourly or a project
quoted rate."

Two years in, here's how the agency looks in January, 2012:

Products and pricing

a. Website design. 1100 Broadway focuses on custom website development
that includes a cms system and analytics. Quotes typically run from
$4000 to $20,000.

"Everyone wants a content management system. Most
don't have it and it is their number one request."

While most of the work is still custom, Ferhmann had positive things to say about vflyer.com for templated websites, and has chosen BigCommerce for e-commerce sites.

b. Landing and Splash pages. A key capacity to track and create conversions from digital campaigns is the ability to produce unique landing pages behind the
promotional links – typically clients won’t build their own to match a
campaign. Splash pages were also designed to support print and direct
advertising.

Two kind of landing pages are used:

Landing pages: Two pages templates, with custom graphics and tracking for $350 set up and $25 a month.

Splash pages: Custom one page websites with data collection cababilities and tracking. $750 set up and $25 a month.

Currently inhouse programmers develop these, but the agency is looking at vendors including Vflier for the websites, and has chosen Unbounced to create the templated landing pages.

c. Mobile websites. Clients mobile sites are still custom designed by agency porgramers with auto detection (their site automatically reverts to the mobile site if access on a mobile device), custom-URL (important for linking from mobile ad buys), maps, analytics and SMS capabilities. Set up is $750 set up and $25 a month. Fehrmann says the company opted out of using Googles free mobile sites Google, using custom disigned, due to the more sohphisticated nature of their customers. “Google tempates are limited, and not pretty. More set up for a restaurant."

d. Pay-Per-Click. An in-house manager creates the buys, and tracks all
activity via a proxy site, using a software that allows tracking
multiple accounts at once. They recently switched  Adwords buying tools to Kenshoo, a software program that allows “our human optimizers to map campaigns on a scalable level and 24/7 reporting platform for our clients.”

Points of competitive differentiation from
other comanies that offer Pay-Per-Click - especially ReachLocal -
include human optimization and transparent billing (ReachLocal does
not reveal how much of the buy it takes). Pricing is a minimum of a
$500 per month and a transparent 30% management fee.

e. Local Optimization. This service also has a new set of vendors, a combination of a basic listing distribution service using Localeze.com, and Vendasta which provides a dashboard for before and after tracking of results and also reports web mentions. Localeze distributes listings to more than 1000 “places” including
directories, maps and search engines (Note: Though somewhat difficult
to explain to SMB's listing correction and distribution is considered
by many who have observed returns from the marketing services space
to have the highest long term impact). The initial optimization is $499 per year.

Localeze typically charges the media company around $1500 to enroll in the service and then a very low per client fee. Vendasta is a small fee (10 per month per client) which the media company marks up in its bundles.

f. SEO packages. On-site and off-site SEO techniques include keyword
blue-printing, and human optimization – again a key differentiator.
Packages start at $350 per month use a variety of tools mainly a tool set called Raven, which “actually combines a bunch of tools into one tool set, including google key word tools and social tools, reporting on SEO and showing ranking via key words, accessible to the client.

g. Text messaging. Set up of key word campaigns that create
conversions from print ads and build the opt-in database. $450 per
1000 messages.

h. E-blasts. The lists are geo- and demographically targeted, Rather than use it’s own proprietary list, it rents “opt-in lists created by Take5soltuions. with a
26.2% average open rate and 3.56% CTR . Packages start at 20,000
minimum cpm, starting at $35 per 1,000 emails.

i. Social media. These offerings include Facebook business page
creation, custom tab design and programming, PPC. $250 set up, and a
30% management fee, $150 to $250 for tabs creation. Fehrmann says the agency creates its own pages and tabs, however, see below for additional providers considered “too bsic” for the types of clients and campaign currently hosted.

 j. Media planning and placement. Charged at 15%, this service launched
after a "sales rep literally tripped over
a stack of newspapers" from allover the country that an client was
buying on their own, using an office administrator. By supplying ROI
reports and organizing the buys, 1100 Broadway was able to acquire
that account and earn 15% on a $100,000 spend.

"There are times when
(buying) other media makes sense. If we control that media budget we
can make sure to get what we want."
Media buying is not considered a key revenue stream for the agency, and they do not place adnetwork buys.

k. Creative services charged hourly. The newspaper division has 42
artists creating 1500 ads for free. The ad design remains free but
brochures, logos, and so on are charged at $75 an hour, and is handled
by the top designers on the newspaper staff.

l. "Thrive" seminars for small businesses. A total of 18 of these
seminars drew 100 plus attendees and generated $200,000 in revenues in
2010. For these seminars, the group partnered with the Chamber of
Commerce in Nashville. There was "zero selling no pitch or rates"
given out. The seminars were very dense informationally and resulted
in an implicit desire for additional help.

Notes on products: Fehrman’s team discovered quickly the number of
new competitiors talking to key advertisers for the same services they were offering, and that the market was price competitve not quality competitive. They chose
to stay in the “middle” range of pricing."

Selecting target accounts 

Another realization in the
first year was that the best accounts were ones who require integrated
campaigns; that is they were aware of digital marketing but did not
have the internal resources and were unwilling to hire a traditional agency due
to high pricing and slow turn-around.

1100 Broadway identifies accounts with a potential
of a $25,000 to $250,000 annual spend, but who are not sophisticated
marketers – that is, who do not have marketing resources in house.
Many of
these accounts such as auctions or real estate brokerages need a
quicker turn-around than agencies can provide.

“Our goal is to have a
bunch of $75,000 clients.”

Accounts also include a Pizza Place who opted for both mobile and SMS,
a granite countertop store who benefited from a strong PPC compaign
and a community college that bought into a large scaled social media
effort.

Personnel Organization

The core of the agency team in the development stages including the general manager, website
developer, sales person and support person. After the launch it became
clear that both a project manager and project management software were needed. Finally in 2011, the company hired account managers that took
over managing the accounts post-sale, freeing up sales people to sell rather than act as liaisons to push a variety of products through the system while communicating back to the client.

The new back end fulfillment
team fully deployed has this structure:

1 Project manager

3 Agency account managers – liaison with client between digital
specialists and programmers

3 Website developers
 1 server admin/programmer

1 SEM specialist
 1 Media Buyer

Mulltiple Vendors: Vendors are an important part of services and are included along with other suggestions from LMI members under “resources” below. Since 1100 Broadway has switched vendors several times, its selections even when new relationships are considered well-vetted. 

Notes on hiring: The fullfilment team came from “inside talent” that is, you can redeploy newspaper staff to run fullfilments of these technology services, which are typically administrative in nature. The technical team
and digital specialists team come mostly from outside the company. Eventually, the entire agency was folded into the digital division, though a division run by the head of the agency.

Sales organization: Sales is one of the most difficult aspects of running an inhouse agency. While the teams were initially excited, cultural issues
based on the way advertising sales has traditional been done prevented
maximizing revenues on an account-by-account basis. Eventually
multi-media reps paired with digital specialist to sell the new
services. The multi-media team that brought in $975,000 in agency-based
revenue (about half of which was billed as agency services, half in
media buys) n 2010 without the supporting specialist, increased to a total of $2.6 millioni in 2011 after specialists were onboard.
Specialists can also sell accounts on their own if they have not run in two yers. 

1100 is currently exploring
hiring one person just to sell agency services in the lower dollar range
for merchants who may just want digital marketing.

Notes on sales culture change: In 2011, the group also came up with a new “sales vision" to address
the new ways of approaching customers:

“We are a customer focused sales organization that helps business
succeed and reach their goals by providing them with strong
advertising and marketing solutions.”

Another change was that the specialists shifted reporting from direct reporting to the multi-media team leader to reporting to the agency’s digital
manager.

There are now three
specialists for key accounts, two for territory sales and two for
classifieds, an overall ration of one specialist to four reps.
 As noted, the specialists were hired mostly outside the company, Fehrmann looks for
people with agency sales experience selling web sites, SEM, email and
other digital services. The specialists carry 1100 Broadway business
cards and report through the agency.

Another basic part of the cultural shift was enabled by account managers hired in 2011, represent the
client, but act as liaisons between the digital specialists and the
programmers.

Finally, in 2011, all special sections, one-offs and fire-sales were eliminated, perhaps the greatest indication of seriousness of both revenue potential and in changing the style of selling.

And resources were added to assist with
proposal development and B2B marketing.

Training

All new sales people go through boot camp, and specialists
continue to train and build relationships with their teams, but report
throught the agency side.

Results

*1100 Broadway served more than 400 clients in 2010

*The newspaper group eliminated 95% of special sections, fire sales
and one-offs in 2011

*1100 Broadway represented 2.3% of total media company revenues in
2010, or $2 million. That number jumped to 3.5% in 2011.

*50 cents of every $1 sold by 11000 Broadway goes into the core
product – print, direct and digital advertising.

*Exceeded digital budget of 50% growth in 2011 by 35%, a gowth rate of 75%.

*In a breakdown of 2010 revenues for 1100 Broadway:

45% of sales are
non-traditional media services

Direct mail was 40%

Media buying was 15%

Non-traditional product were as follows:

Web dev – 15%

SEM -15%

Email- 10%

Social, creative - 5%

Lessons learned:

• The launch was very well-accepted by the market and sales reps. If anything the new company was overwhelmed by the number of new
 products and lack of processes in place. In retrospect, they would 
have launched products more slowly, worked out the processes, put project
 management software in place before the launch, and had account managers from the start. 

• Social packages on the other hand are so "red hot" they would have
 moved faster into this area of sales.

• Keep the focus on quality versus quantity of accounts. Key accounts
 for this model are keys to keeping margins higher. The optimial
accounts are ones that need fully integrated solutions rather than individual one-off services.

• The agency business is also dynamic. "We have to constantly revamp 
and improve our product line. 

Resources mentionned here: 

Website creation: vflyer.com, Dan Lenehan, Marketing Manager, Phone: 800-594- 5930, Email: dlenehan@vflyer.com

Landing page creation: Unbounced1-888-515-9161info@unbounce.com 

E-commerce:  BigCommerce1-888-699-8911 

Adwords multiple client platform: Kenshoo877-536-7462

Listing distribution across the web: Localeze.com,   Mike Pycha, Senior Development manager,  703-272-6267 | m. 703-244-2170,mikepycha@localeze.com

Reputation management and reporting of listing verification: Vendasta, Ches Hagen,Co-founder,VendAsta Technologies Inc., chagen@vendasta.com, Direct: 778.588.1048 or 306.955.5512 ext 115, Mobile: 778.552.4151

SEO tools:  Raven, Brannan Atkinson, Chief Marketing Officer, brannan@raventools.com

Also referred by LMI members:

For splash pages: vSplash, Greg Bastug, greg@vsplash.com, US Operations Director, 201-355-0066 Ext. 301

Alisa Cromer

The author, Alisa Cromer is publisher of a variety of online media, including LocalMediaInsider and  MediaExecsTech,  developed while on a fellowship with the Reynolds Journalism Institute and which has evolved into a leading marketing company for media technology start-ups. In 2017 she founded Worldstir.com, an online magazine,  to showcases perspectives from around the  world on new topic each month, translated from and to the top five languages in the world.

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