Like my earlier series, “So Your CEO Says You Need to Be A ‘Digital First’ Publisher?”, this collection of articles will take you behind the scenes of the challenges publishers are facing today and what is and what isn’t working. I expect to explore the ROI of various initiatives from lead generation to distributed content models and provide you with insights that will help you better shape your digital strategy as you continue to transform your media company. The lessons learned will be from my own experiences as well as my conversations with leading B2C and B2B publishers. So let’s start with our first subject: Where is Lead Gen leading Publishers?
Lead gen is all the rage inside many media companies today. As advertising clients are looking for better results, they are pushing publishers away from CPM product offerings and towards performance driven models that hold the publisher accountable for the campaigns. Buying qualified leads—be it a guaranteed number of downloads of a whitepaper or a certain number of attendees to a webinar—is the holy grail of performance-based models for advertisers.
The benefit of lead gen to advertising clients is clear (they only pay for high quality results), but do lead gen programs make economic sense for publishers? Most publishers will say absolutely, because sales people can sell them and clients are asking for these programs—they are a core part of many marketing services offerings. But, not everything clients want or sales people can sell makes economic sense for the company, and sometimes it’s prudent to stand back and take another objective look.
First, let’s look at the cost side of the equation. In my experience, there are a lot of new and often hidden costs in running a successful lead gen program. Have you calculated these expenses when looking at your lead gen ROI? As you evaluate your lead gen programs, keep the following in mind:
The Sales Process: Unlike selling ads on a CPM model, selling a successful lead gen program requires a lot of back and forth between the sales rep and the client to define the program and the success metrics. Moreover, the sales rep typically is having more inside conversations with their audience development, ad operations, and marketing services team (the team that creates and manages the programs) to define the program. All of this adds up to a longer sales process for an individual campaign, more resources allocated per campaign, and less calls the sales rep can make to new clients.
Program Setup: After the program is sold, the next step is to set up the program. Unlike running an online or email campaign, which merely requires plugging the IO into your ad server, creating a successful lead gen program requires many more steps to initiate. All of the elements of the campaign need to be structured including: (a) ROS ads need to be scheduled, (b) “co-branded” email messages need to be scheduled, (c) registration forms need to be developed and setup, (d) assets need to be loaded, and (e) other site integrations need to occur. All of these activities often necessitate having a “marketing services” campaign manager to set them up, adding to the overall cost of the program.
The Guarantee: In guaranteeing a certain number of leads, publishers often run into two challenges. In the short term, trying to hit the guaranteed number creates incentives for the marketing services team to send out more email, to run more online display ads, or to buy traffic. Not only does this require more resources to manage, it also means taking away inventory from other revenue-generating programs. Longer-term, these guarantees will impact your audience. Either it will mean (1) sending out too many emails to that high-value segment that every advertiser wants to get to (e.g., CEO, CMO, CTO), thereby causing the subscribers opt-outs to increase (decreasing your list size and potentially the most valuable audience) or (2) it leads to readers turning on their ad blocking because the messages aren’t relevant and are too redundant. It will likely also cause a general erosion in the brand trust your organization has built with its readers if they start receiving too many unwanted cold calls or emails from advertisers.
Lead Quality: While most lead gen programs don’t guarantee the quality of the leads, implicit within the program is that the audience will be of a certain quality. This implicit understanding is derived from the pre-setup work during which the client defines the particular audience segment they want to go after. Too often, clients are disappointed by the quality, even when the absolute number of leads is reached. This leads to bitter clients who demand either make-goods or who, in the long-term, move business away because they don’t believe the publisher has the audience they want.
Failure to Deliver: Sometimes a publisher just can’t deliver the lead gen guarantee and disappoints the client. Unfortunately, in many of these scenarios, the publisher deployed all of their capabilities to make the program successful, but the problem was with the creative or content—for instance, the client wants to syndicate a terribly boring or low-level report and wants CEOs to read it in droves. But with lead gen programs, the publisher knowingly takes on this risk (with clients shifting the burden of success to the publisher) and any failures will be blamed on the publisher regardless of the client’s irrelevant content marketing. Ultimately, these types of failures tarnish the brand and reputation of the publisher and create long-term sales challenges.
While lead gen programs definitely have more costs than traditional digital ad offerings, does the revenue generated off-set these costs? Or is it margin dilutive? And if it is margin dilutive, what can publishers do to change this equation? In the next article, I’ll address these questions and pose alternatives to the lead gen dilemma.
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