Media sales teams' budgeting process in the Covid Era
Can't look to 2020 to budget for 2021
There are very few immutable laws when you’re a media seller, as the nature of the job is to be flexible, bending at the whims of media agencies and RFPs and clients and internal bosses.
However, when it comes to budgets, the phrase, “If you don’t use it, you lose it” is pretty much etched in stone. Especially for travel and entertainment (T&E), where sales reps take clients and buyers out for fanciful dinners, shows, and in some less savory moments, Hampton houses, jeans parties and Apple picking. This year, though, everything gets tossed out the window.
For the uninitiated: sales teams, like the broader companies they work for, are assigned a budget each year for various items. From hiring to travel and entertainment (T&E), media companies assign a budget from an alchemy based on the previous year’s expenditures and projections of the coming year. These discussions typically happen around now, as media companies start closing their fiscal year books and plan for the coming year.
(Photo by Josh Sternberg, watching, in happier times, the greatest band on earth play at the greatest arena on earth.)
But with the pandemic upending everything, the old playbook has been ripped up. According to multiple chief revenue officers across a variety of publications, the budgeting process this year, especially for T&E, which is a large expense for publishers but viewed as a way to generate revenue, is about figuring out the economic recovery and working backwards. (Which can be a bit of a fools’ errand, as if you could figure out the economic recovery, you’d win the Nobel Prize in economics. But anyway. )
“Planning anything based upon this past year, let alone historic assumptions or axioms, dismisses the fact that we are now living in a completely new world,” said Keith Grossman, president of Time.
In March, as the world was shutting down, I spoke to a few sellers about how they’re navigating reinventing the selling process, one that leans heavily on entertaining clients, and one thing I heard often was the ‘pivot to videoconferencing’ and how that won’t be able to make up for those moments of those gross words of “surprise and delight.”
“It’s definitely not business as usual,” said Guy Griggs, executive advertising director at The New York Times. “We have a box at the Garden, at Barclays, where we had concerts scheduled [to attend] for the next two weeks. That softer sell—look, a lot of business happens in those soft times, where you find an insight or brainstorm idea—those things wouldn’t come up on a video call.”
Seven months later, sales teams’s expenses have dwindled. One sales chief told me that of a team that hovers around 100 that over the last six months they approved less than $1,000 of T&E budget. Total.
Over at the Washington Post, its sales team under spent its 2020 T&E (not surprisingly), but the company isn’t at risk of bumping up against the ‘if you don’t use it you lose it’ mentality.
“We’ve looked at 1H next year as a bit of a continuation of what we are seeing in terms of T&E levels in 4Q and assuming that we return to some degree of normalcy in 2Hm” said Joy Robins, the Post’s chief revenue officer. “We certainly have kept up with ‘entertaining’ to some degree throughout all of this but in a way that adds value. I don’t feel like we need to spend to justify budget next year.”
An executive at a large news organization, speaking on background as they were not allowed to talk to media, told me that budgeting will be about prorating business. There won’t be a moment where the lights turn on and the same day in-person meetings happen, IOs start to come in. It’ll take time.
“We’re spending a lot less in in-person meetings and travel,” the exec said. “The minute we have clarity around when business returns, budget will return because it's essential to our business.”
Media companies invest in resources before money comes in. Or, another way of looking at this: in the Covid Era, sales teams, instead of taking buyers out to ball games and Broadway shows and Apple stores, now send buyers digital gifts on everything from Goldbelly coupons to Peloton subscriptions, all with the intention of getting on the buyer’s plan. Spend money to make money.
Even as programmatic buying has twisted the buyer-seller relationship, the old press-the-flesh mentality is still a driving point for media companies’ bottom lines.
We often talk about the ‘entertainment’ part of the T&E budget, because that’s the sexier one, and the one that has the highest potential of blurring the ethical lines between buyer and seller. But the “T” part is also important, especially for media companies that have large international footprints.
As nations across the globe halt their economies and close their borders, media companies, too are not allowing their sales reps to travel. And for media companies that rely on events as their dominant revenue stream, something to think about planning for 2021: what if there are no events in the U.S., or even globally? There are quite a few media companies who are hoping beyond hope that by the second half of next year, big-ticket, in-person events will return in full. I am not so sure.
An exec told me that they just finished planning for 2021 and just assumed there will be no physical events in the U.S, which means travel budget will be down, too. They added that maybe on a global scale, mainly in Southeast Asia, there might be events, but definitely not Europe.
“The budget process was interesting,” the exec said. “We are up year-over-year, and we’re still looking at this as ‘whoa, this is nuts.’”
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Billy Joel, “The Entertainer”
Some interesting links:
For media criticism:
The World Is Burning, but the Political Press Insists It’s a Horse Race (The Nation)
For targeting:
How politicians target you: 3,000 data points on every voter, including your phone number (WaPo)
For account wins:
Walgreens signs with WPP (press release)
For death-of-tv watchers:
Comcast streaming subscribers surpass its cables subscribers for the first time (NYT)
For platforms:
The Trump-scam-industrial-complex now extends to Snapchat (Daily Beast)
Inside Facebook’s push to get advertisers to plug directly into its ad servers (Ad Age)
Spotify Is Defending Alex Jones' Appearance On "The Joe Rogan Experience" (BuzzFeed)