Agency Model: Digital Marketing Services are an annuity for DJLMG
Merchants don't always want to buy advertising; this program addresses the "other 2/3 of the marketing budget"
Summary
More local media companies are launching digital ad agencies. But not all agencies are the same; this case study looks at the digital services model added by Dow Jones Local Media Group (see also SoLoMo packages at Morris communications).
Rather than limiting sales to creative services and media buys; DJLMG creating additional marketing services that appeal to the two-thirds of local merchants who are shifting marketing dollars to digital, but not to banner advertising (Borrell & Associates). A PayPerClick buying service, is still included with these programs; however, display advertising is considered a different product unit. Services, contracted annually, are more of an annuity than a campaign, and potentially a steadier source of long term revenues.
Technologically, the digital services model is simple to deploy. DJLMG uses a concoction of powerful third party technology tools do most of the work. Yes, merchants could "do it themselves" but most feel they do not have time to identify, set up and monitor the tools available, much less integrate several into an overall strategy. Part of the sale is a personal, man-on-the-street contact point. The biggest challenge is the sales culture and needing to add additional digital-first reps.
However, results so far are promising, and include a 17% jump in digital revenues in the first three months.
Media company: Dow Jones Local Media Group, DJLMG, a group of eight daily and 15 weekly newspapers in seven (mostly East coast) U.S. States
Owner: News Corporation
Key Executives: Kurt Lozier, Director of Digital Media, Kathi Hammer, Director of Advertising, Hudson Valley Media Group
Challenge
Dow Jones Local Media Group, hired Borrell & Associates in 2010 to assess their product strategy. Customer surveys showed a common theme:
*Merchants are struggling with limited time and resources to market their products and services.
*They need a lower cost and less complexity than traditional and larger ad agencies provide.
*They are beginning to recognize the importance of online marketing and report their websites are their #1 lead source.
Especially influential were statistics showing that two thirds of merchants' investment in digital media would not be in advertising, but, rather, would go to promotions and infrastucture.
“Your display businesss can only get so big, and is limited by the size and traffic of your sites,” says Kathi Hammer, ad director of Hudson Valley Media Group, the largest newspaper group within DJLMG.
Strategy
With about 19 newspapers in small markets, Dow Jones Local Media Group created three product teams, centralized at headquarters, each with a director who reports to Lozier. These teams are loosely refered to, internally, as the ".com" groups: brand.com (the newspaper site including display advertising and paid content); database.com (a new division focuse on datamining); and agency.com, which supplies digital marketing services. Creative services at the concept level are handled by the newspapers' own creative teams.
On the product side, the agency unit has a director, five product managers, and a traffic coordinator. The director reports to Lozier, and services all 19 newspapers.
“It is is highly centralized, you can’t do this (create digital services from scratch) in every local market,” Lozier says.
Products
The agency division supplies a variety of products:
*Website design and development, including ecommerce and hosting. The company paired up with vSplash for website development and for web-hosting, especially high conversion splash pages for PPC buys. (Note: The ability to create excellent splash pages that match banner ads and track email and phone conversion is also a core competency LMI recommends; if your company does not have this ability vSplash is a good turnkey solution).
*Local search with listing and coupons. This is, essentially, the local online business directory with businesses, maps, reviews, updated business listings, and coupons. It also houses Real Estate, Cars, Jobs, and Miscellaneous Classifieds for sale. The unit also creates Google AdWords buys for clients.
*Reputation management. By reselling Marchex's platform, sales reps can allow small businesses to monitor, and respond to mentions of their company on Yelp and other social media.
*Limelight deals, the new (2011) daily deal program.
These four basic solutions have allowed the local sales groups to drill deeper in to advertisers needs, and to charge for creating measurable results.
Like the SoLoMo package (see the full case study on this sales package here), customer service is aided by a host of technology vendors. “We've knit together a pretty broad array of people and companies who can fullfill what we sell on the agency side of the business,” Lozier says.
Sales organization
To get real traction on the sales side, in June 2011 multi-media reps were supplemented with the addition of digital sales managers in each market, and a digital specialist for every two markets (the markets are close enough to share).
"What we needed was people who could focus strictly on this, as opposed to the multi-media sales people who were charged with doing everything,” Lozier says.
A key role for the digital sales managers is to work with specialists to “make sure we organized around selling to the highest priority merchants. Then work with the media reps to get out in the field and close business. We are still working out process of what a high priority account is,” Lozier says. “The goal is to get more calls on the highest probability accounts, those who have a need and want.”
Lozier expects a high percentage of sales “will end up in the $500 to $700 a month, category. I think we've known that for quite some time. Your average order value is between $400 and $1000. What is different about this and one of the changes that we have to get people in tune to is that is not really a $500 sale, it is really a $6000 sale.”
“This is not as a campaign, but an integral service for their business. That is a change from the way sales reps are using to working, where they go out on a daily basis and pick up ‘this week's set of ads.’ The service we are building up is a long term annuity. That is the mind process change that we have to go through with our internal staff.”
Training
As each project was launched the company training became a critical component. Initial product training includes:
*Visits onsite from the product managers for sales and online training.
*DJLMG companywide weekly training by product and by sales positioning.
*A train-the-trainer program for the new position of a digital sales manager.
*Small businesses were also trained with a series of online marketing seminars, webex and on sales calls.
Success stories coming in from the field underscore the programs potential. Here are three:
Examples 1 (from Pocono Mountain Media Group)
Vacation Time Share company
Challenge: Increase leads at 50 cents per click
Strategy: Creation of new landing pages, call tracking and a long term PPC strategy plus eight new landing pages at a charge of $3200 and a $104,000 in PPC buy. Currently redesigning new sites for all the locations. Total buy was $107,000
Example 2: Bowling Alley
Challenge: A sporadic $1400 a year print advertiser needed help improving its web presence.
*Web design - $2800
*PPC - $500 a month
*Be-found listing distribution - $149 a month
The total buy wound up at $10,588. Currently the group is designing a new site for the Bowling Alley's wine and liquor store. Additional 2011 revenue is forecast at $4588 and 2012 budget is aimed at $17,000 for the new campaign.
Results for the agency initiative
Digital revenues grew by 17% in the first quarter since the agency was launched, and with the additional of digital sales managers large increases are expected in 2012.
Lessons learned:
According to Hammer, the biggest challenge is the cultural shift for the sales department. There is still tension in transitioning from product sales to agency-style selling with greater expectations. "We are asking them to do a lot," she says.
"Even though we are offering them a great opportunity, until they are fully trained and confident, it is difficult to break old patterns. We are aggressively working at the training and are providing strong Digital Specialists to assist on 4 legged calls; the biggest problem is that reps haven’t fully assimilated yet to the expectations of a new culture."
Our take
Some form of selling agency style digital services is a critical part of the emerging business model; and we are seeing more companies signing up to resell reputation management and universal listing distribution, in different kinds of packages. The advantage of this approach is the unlimited potential in the market; there are many more businesses who will be spending $6000 a year, than say, $50,000 a year in digital marketing in thousands of small markets. The annuity aspect of the sale is also compelling; the "service" business is simply steadier than advertising. We recommend separate digital sales people (or managers) responsible for their own targets are essential for these efforts to really succeed.
Resources:
Website implementation and splash pages: vSplash. LMI members also recommend Websplanet.com.
Listing distribution: A variety of companies supply this including Localeze.com, ubl.com and yext.com.
Reputation management: Marchex; LMI members also recommend Vendasta.
Many thanks to Kurt Lozier, Director of Digital Media,DGLMG and Kathi Hammer, Director of Advertising, Hudson Valley Media Group for sharing their experience, and to the Suburban Newspaper Association's Fall Publsihers and Advertisers Conference for highlighting this initiative.
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.
