Online news publishers are offering a mix of compensation to ad sales staff, I found in an informal sampling.
Teresa Wippel, publisher of MyEdmondsnews, an online publisher serving Edmonds, Wash., pays her ad sales staff commission only. She pays a percentage of sales, with the percentage increasing as the number of sales rises.
Howard Owens, publisher of the Batavian, online-only news for Batavia, N.Y., sells advertising for his site himself on a no-commission basis. He also enlists the services of a part-time revenue assistant. Owens says she is paid an hourly rate. “Her “motiviation” is to turn her job into a full-time job,” Owens said in an email.
Debbie Galant, Baristanet, pays her ad sales staff a 20 percent commission.
A number of site owners shared information on background only, saying that pay is pure commission, without salary.
Ad sales staff in the traditional community news world in the halcyon days of newspapers usually worked full-time with some combination of base salary and commission. Even then the compensation varied widely, ranging from 55% of first ad sale to 15%.
Compensation varies widely in the “traditional” online sales marketing world.
“Our sponsor or ad sales commission rate ranges from 10 percent to 25 percent, depending on whether there is a draw, or a base salary, and whether the sales job is simply maintaining accounts or finding and closing new ones,” said Christine Mason McCaull, founder and president of Click Markets Inc. She added that the site, or the network, needs to have at least 250,000 views a month. ”Otherwise, the site is relegated to hosting paid links or Ad Network buys (AdSense, Kontera). In other words, you have to have a pretty significant site to even have an ad sales person,” she said.
McCaull added that ad dollars are increasingly moving to social networks, and away from online ads and contextual site placements.
As the dynamics of online advertising evolve, so do the concepts of how to measure success, or return on investment, ROI.
“Pageviews can be a misleading metric,” said Keidra Chaney, a web analytics and social media expert. “In many cases the bulk of traffic that is measured by pageviews alone come from low-value, low engagement visitors – casual visitors who don’t return or convert. A more accurate measure of the value of websites comes from measuring unique visitor loyalty and engagement.”
The revenue equation in the community-based news space is a hard nut to crack and it’s become the focus for hundreds of online publishers nationwide seeking to make a profit and become sustainable.
One solution has been the creation of local ad networks, a number of which have formed throughout the country to serve the local news niche.
Increasingly, providers of self-serve ads are moving into the community news space, a domain that traditional advertising networks have been shunning. NowSpots is a self-serve start-up funded by the Knight Foundation, whose product is under development. Other providers include firms like Advanse, in Chicago.
Steve Krol, founder of Advanse, said that his firm has a self-serve solution to the problem of leveraging local ad dollars with local content.
His product automates ad production, creating ads from three layers of data: creative; business specific, and audience. Publishers sign up and create a revenue sharing agreement – which is usually 20%. They can still participate in ad networks if they like, although the networks tend to take a higher percentage.
As is typical in online revenue systems, dollar volume is driven by the number of visitors attracted to the content. The greater the number of visitors, the greater the amount of revenue. He said niche news tends to work well with self-serve ads, citing his client EverydayHealth as a case in point.
But even as self-serve ads become increasingly common, last week Nextdoor opened to the public. The new private social network mixes Facebook tools with services resembling Yelp and Craig’s List. Its revenue model — to be unveiled some time soon — will be based on advertising from neighborhood businesses, likely self-serve.
In an interview, NextDoor founder Nirav Tolia, who launched ePinions successfully, said NextDoor plans to work with other innovators in the neighborhood social ecosystem, including online community news publishers.
The Goliath in the online ad world is Google AdWords, which according to Wikipedia, is Google’s main source of revenue, bringing in revenue of $28 billion in 2010. Recently Google has been asserting itself as a provider of online services to small and local businesses, a market it says provides half of all US GDP.
Watch part one of a five part series on Revenue Strategy from the BlockbyBlock 2011 conference in September in Chicago.