At Leading in Local: ILM 2013: Digital Agencies
Today at BIA/Kelsey’s Leading in Local: Interactive Local Media conference, leaders of local digital agencies shared some critical success factors in the challenging business of offering agency services to local business — that combination of brand agnostic digital marketing solutions and the service component that helps simplify the process for SMB advertisers.
The agency model has been attractive to media companies because it allows them to reach new advertisers who show little or no demand for traditional products and retain key accounts that need a more sophisticated solution set and service layer. The model has challenges as well, including finding the right sales model, and fulfilling on programs effectively and at an attractive margin.
The panel represented a range of agency plays. Two of the speakers represented publisher models, Jeff Folckemer, President & CEO of Local Edge Media (a unit of Hearst); and Jean-Philippe Gauthier, COO, Mediative (a unit of Yellow Media). The other two were unaffiliated white label players: David Hughes, CEO, The Search Agency; and Daryl Hively, CEO, Guarantee Digital.
The following are some key comments and takeaways from the panelists.
Folckemer: The Hearst exec said the newspaper company got into the digital agency business initially to address churn. Adding the higher service elements that an agency brings, he calls these “touchpoints” is key to driving down churn.
“We saved 3.5 percent to 4 percent on churn once we added agency touchpoints,” Folkemer said. “Without those touchpoints, you will not be successful.”
He went right at one of the question dogging agencies, which is the perception that they generate low margins.
“If you don’t net down after commission to 30 percent, then your product suite is not right, maybe you are not charging enough.”
Folkcemer also said traditional media companies need to take a hard-nosed approach with traditional rep selling both core and agency products, otherwise the digital piece will be sub-optimized.
“You have to hit them in the pocketbook,” he said. Folckemer advocates cutting earned bonuses back by half if reps fail to hit their digital revenue targets.
Gauthier: Mediative started out as an agency focused on serving national brands. Now it is working with the local channel to bring digital expertise into sales calls. Gauthier said the process works well. He insists advertisers do not see a conflict between an owned and operated brand like Yellow Pages and an ostensibly independent agency. “There is no pressure to push our products over third party products,” Gauthier said. “We are trying to do the right thing.”
Hively: He built his white label agency business after building an internal agency at a previous employer. Hively said it is critical to offer a comprehensive product suite in order to be competitive in the digital agency space.