The Advertising Sales Problem

Hutong West
Laying low
1824 hrs.

I have spent a lot of time at Internet industry conferences in Asia over the past year, meeting, speaking with, or hearing from companies seeking to start or grow internet or mobile businesses in China. One thing that amazes me about the current flock of China online hopefuls is how many of them plan to rely on advertising to pay the bills.

To their credit, most of them understood from their experience elsewhere that this was going to be a difficult task, and they were ready for the challenge. What most did not know is that there are a couple of reasons why running an ad-supported online business is going to be tougher in China than elsewhere.

Moneyball Advertising

First, it is common knowledge in the ad industry that many (if not most) of the advertising dollars spent in China are allocated based on habit, fear, ignorance, longstanding relationships, or corrupt practices like kickbacks and under-the-table payments. Even if you can prove that what you offer is the most efficient way to spend ad dollars since the Romans invented graffiti, do not expect a warm welcome. Most Chinese marketing managers are more concerned about creatively enhancing their personal income or avoiding potentially job-threatening risks than about demonstrating how much bang they’re getting for the buck.

Second, making an effective pitch to advertisers in China depends on doing three things really well:

— Identifying the precious few intelligent and creative marketing managers who care about efficiency and effectiveness above all else;
— Framing the sale in terms of what the advertiser needs, not what you want to sell; and
— Finding advertising sales managers who can do both of the above.

The last is the toughest one of all, and is the bottleneck restraining the faster development of online business in China.

The Ad Sales Manager Crisis

I have worked with online firms in China for over a decade, from foreign brands to local start-ups, and the one speed bump each of those companies hits is the problem of finding a good sales manager. Initially, the CEO serves as the chief salesperson, and most large advertisers and agencies won’t negotiate with anyone else. The boss winds up going on all but the coldest of sales calls.

Unfortunately, the CEO of a startup or high-growth Internet company has a lot of other things demanding his or her attention, like actually running the business. Given the importance of revenue, however, either those other things start to slip, or the CEO starts working 18 hour days for months on end. Not even the most enthusiastic CEO can last long with that kind of schedule.

The solution is to hire sales managers who are intelligent, experienced, and trustworthy enough for the company to grant them considerable latitude in framing the creative (and legal/ethical) deals, and who close business or do everything but the final handshake.

Unfortunately, good ad sales managers are rare and hard to find, and those willing to shift to the uncertainty of an internet startup are even rarer. What this means is that the internet business faces a bottleneck that is likely to last for years, and that the good ones will become the subject of virtual bidding wars, jumping to new jobs for higher pay and titles until they are out of reach to all but a fill well-funded startups.

Fishing in a Bigger Barrel

Until the current crop of young ad salespeople has had a chance to mature, and unless some higher power starts air-dropping highly qualified ad sales managers over Beijing and Shanghai, companies are going to have to start addressing the problem more proactively, and more creatively.

Pulling experienced sales people from other industries might help, although like many industries the ad sales game demands some specific skills, knowledge, and familiarity with the sector that would require some intensive mentoring and a 9-12 month apprenticeship. That may be a better approach, however, than trying to turn a 25 year-old ad salesperson with 3 years of experience into a sales manager.

There is another pool of talent that is worth considering: mid-level Chinese advertising agency executives.

Here is a group of people who are used to thinking creatively, at least compared to most of their peers. They are not only accustomed to selling to advertisers, they are used to crafting campaigns for clients based on the specific needs of that individual rather than a lump of inventory that needs to be sold. Another plus is that they understand how advertising agencies think and operate, giving the organization insight to how to frame, time, and pitch campaigns to media and creative agencies.

There are plenty of these folks as well, and their availability is not necessarily a reflection on their abilities. Large agencies have become adept at hiring young people and putting them to work, but many are having trouble keeping people happy after about 7-10 years in the game. By this point in their careers, most advertising executives have been promoted to Account Executive, pushed up by a combination of title  inflation and two decades of double-digit growth in the advertising industry. Once they reach this stage, however, they plateau, constrained by the rapidly shrinking number of positions above them, and held back by their own fairly narrow scope of experience from taking enterprise leadership positions. At about this point, the really good ones are looking for other options, and it is time to snap them up.

Time for Creative H.R.

This is not a panacea: the ad sales manager problem is not going to disappear overnight simply because the industry goes searching in different quarters. The key takeaway is this: the lack of strong advertising sales managers is a hidden choke point in the growth trajectory of an online enterprise in China; the problem must be addressed proactively, and ideally in the earliest planning stages; and the best way to address it is with a creative approach to recruiting, development, and retention.

With apologies to the IT and product people, the ad sales manager is the second most important position in the online enterprise behind that of the CEO, and it demands as much attention and focus from H.R., from boards, and from investors. Failure to give this role due attention at the very least will mean lost revenue and an overstretched and burned-out CEO at a critical point in the development process. At the worst, it could become a key factor in the failure of the business.