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March 15, 2001 Newsletter
Editorial and Sales Compensation: First, Be a Sales Organization
Psst. You want to know a secret? It isn’t a soft marketplace that is dragging your online sales revenue into the gutter. It’s that soft compensation package your salespeople are working with. How do you fix it? Simple: skip the base and go straight to commission.
Will that solve all of your problems? Probably not. For one thing, it won’t fix one of the dirty little secrets of online publishing, which is editorial compensation—or the lack thereof—for all of the people who now have to do double-duty creating and editing what Internet people affectionately call "content." They need compensation, too, and we’ll talk more about that in a little bit.
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Compensating your sales team with straight
commission will harness the power of motivation and place emphasis where it belongs—on producing maximum sales performance.
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But on the sales side, it’s pretty clear that the "old economy" mind-set of squeezing all possible costs out of the sales expense line item on your P&L statement while capping the income of your salespeople is just not the way to win the war of publishing revenues in a soft economy. Compensating your sales team with straight commission will harness the power of motivation and place emphasis where it belongs—on producing maximum sales performance.
This isn’t babble. We know of one successful publishing company that publishes magazines which are second and third in their markets, and yet they operate with sales teams that are independent and straight-commission reps. This has produced maximum results and the company consistently achieves 27- to 30-percent returns of net publishing profit on revenues.
Here are five advantages to revising your sales compensation structure and begin placing your team’s emphasis on growing revenues, satisfying customers and gaining market share. They are:
1. Motivation. The sky really is the limit. Your salespeople will earn commission on every dollar of revenue they sell. That’s an incentive!
2. The Internet becomes more important. If your print products are getting more attention than your online products, it’s because your sales people think they can pick and choose what they’ll sell. Well stop it. Your team will realize that the portfolio of products they represent is the sole source of their straight commission income. All of your products will gain more sales attention.
3. Reduced accounting work. Hey, accountants cost money too, and that’s just overhead. Not having to deal with sales-related expense reimbursements and other sales related accounting work can reduce accounting costs. Just write one check a month—a commission check. The sales person.
4. Reduced office expenses. If your sales team works from regional offices, let them work from home and tele-commute. Consider making them independent contractors, handing not only their own T&E, but also telephone and other office related expenses.
5. Boost online incentives. You can watch your online sales grow by doubling the commission for the first year on online sales to create momentum. Remember that regardless of what happens to Yahoo or VerticalNet, your Web sale will always be more profitable than your print sale, so do the math and act accordingly.
Now let’s talk a little bit on that issue of editorial compensation. This is difficult, because the idea of giving an editor a percent of that great big money pile you’re bringing in off of the Internet raises a lot of editorial integrity issues, and it makes many people uneasy.
And that’s understandable.
Still, those on the editorial side are just as responsible for your online success as the sales side, and they need to be compensated for their efforts appropriately. The problem is how to do it without being sleazy.
Many companies have tried perks like "steak of the month club," free family vacations, and bonuses for key editorial employees.
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It is absolutely critical that you compensate your editorial folks as vigorously for their online efforts as you do your sales team.
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Certainly if your top editors already have an incentive package that is tied to the print publication’s success, you will want to look at pegging that package to the success of both the print and online products. Or you may want to work out different incentives for print and online versions, with the numbers adjusted based on the difficulty (and profitability) of each component.
But whatever you do, it is absolutely critical that you compensate your editorial folks as vigorously for their online efforts as you do your sales team. Because in order for your online efforts to succeed, both sides of the house will need to feel motivated, valued, and ready to take on the world. 
| Jupiter Reports Skyscraper Ads Bring Twice the CPM of Banners
You can call it the "Superman" of interactive ads , because Jupiter Media Metrix is reporting that the IAB’s new Skyscraper ad formats bring in nearly double the CPM of the industry-darling full-size horizontal banner. Skyscraper ads accounted for nearly 20 percent of all banner impressions during Q4 2000, compared with full-size horizontal ads which accounted for 36 percent of all banner impressions.
Advertisers are still cautious about whether the new formats will provide a real ROI, but publishers report that there is a willingness to buy the new format even in today's soft ad market.
For maximum impact, GCN recommends designing a commanding position on your most heavily-traveled pages and working with advertisers to design navigation into their ads. This allows an advertiser to offer multiple sources of information to a reader from a single ad, and it allows you to direct click-throughs to pop-up windows, keeping the reader’s main browser window firmly planted on your page.
More details are included on the Jupiter study. But be warned that the actual CPM rates quoted are averages across all industries, including dot-coms like C|net. Your mileage will vary significantly. For information on the IAB’s new ad specs, and for excellent examples of the new formats in action, check out http://www.news.com.
Related Story: Bigger Ads Means Bigger Bucks For Publishers
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In This Issue
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Jupiter Reports Skyscraper Ads Bring in Twice the CPM of Banners
Final Analysis:
GCN’s creative, technical and business team analyze an industry-leading Web site and recommends ways to improve the site. See how InformationWeek.com, which received the prestigious Jesse H. Neal Award from American Business Media this week, did under our microscope.
Circulation Tip:
Driving subscriptions online? Create multiple in-house incentive banners plugging your magazine. Put them in your banner rotation. Also make sure your subscription button is prominent in your navigation.
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