Monday, November 12, 2007

National Channel...Stuck with the Hot Potato

A couple of weeks ago, Idearc blamed the CMR channel for their poor Q3 online sales performance.

The statement came as a shock as the national channel only represents about 15% of their total revenue. Idearc took this line further when it revealed its plans to get around the CMRs all together. Idearc's attraction to the open market has been going on for about 4 years.

When migrated from a fixed price directory product to a pay-per-click model, the national channel was last on its mind. To be fair, all the self-procurement tools they were working on over the years were more geared towards the 85% revenue weight of their local channel.

The CMRs' role has been changing dramatically over the past 5 years. Its strengths were historically rooted in driving efficiencies to a super-complex paper wrought business. Its priority was to provide a sales channel to the yellow pages publishers who would provide them with exclusive re-selling rights.

Today, with the evolution of the yellow pages businesses and the increasing migration to the digital channel, CMRs are pushing themselves to become thought leaders in the “directional” space. It’s simple really. To keep the clients, you need to provide value. The value these days is in providing objective media planning services and flawless execution.

Apparently, objectivity doesn’t sit well with publishers. With the acute awareness of the competitors streaming in, they don’t take kindly to the CMRs’ new attitude (questioning “the Matrix”).

Idearc isn’t the only publisher or media property to experience this frustration. I’ve had a number of conversations in Canada and the US about how agencies in general are a cog in the wheel to the publishers. The publishers feel they are doing three times the work to sell their products to an agency (never mind the end client).

Like it or not, clients hire agencies to protect them from the onslaught of media opportunities. The local landscape has many and whether they are self-procured or not, national advertisers will need some objectivity from someone.

I remember this problem in the mid-90’s when thousands of .com’s where being launched. All of them were convinced that they could do a better job selling through to the client. In some cases it was true. In many cases however, I spent long nights getting my clients out of bad contracts that they had done independently.

Results speak for themselves. The national channel will invest and re-invest in products that drive returns. They’re getting better at quantifying these returns and eventually, they’ll get more demanding.

It would be prudent to focus on the product’s ability to bring buyers to the sellers.
Integrity wins business.

1 comment:

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