Ad sales: Leave it to the experts?

This came at a time when the number of sites bringing their ad sales in-house was increasing every day, while companies such as Channel 5, Carlton and Freeserve were setting themselves up as third party representatives.

DoubleClick's prediction started to look increasingly likely with the ad serving companies suffering significantly over the past months - with news out today that Avenue A is the latest US entrant to withdraw from the UK, following in the footsteps of Phase2Media and L90, which is understood to have closed down its media sales operation. Meanwhile the UK's main players, DoubleClick, 24/7 Media, Real Media and Engage, have all been hit by redundancies and cutbacks over the past six months.

However, six months on from the claims that these media owners would shake up the market, those worries are starting disappear. Channel 5 announced on Thursday that it was axing its third party ad sales operation and Carlton and Granada are also understood to be closing theirs, although the company cannot be contacted for comment.



The reason behind C5i's closure is simple: shareholder RTL needed to cut costs. The current slump in TV advertising has hit the company hard and, coupled with internet sales that have not lived up to projections, C5i is being sacrificed after just eight months.



Sales director Nick Bampton, who is amongst the ten staff to lose their jobs, blames analyst predictions made last year, making business plans hard to stick to. He says the market just hasn't risen to meet those expectations, leaving the company with no other option.

Bampton emphasises that the closure was very much a “market thing, not a Channel 5 thing”, and the operation was actually performing well.

Is it as clear cut as this? Carl White, COO of 24/7 Media Europe doesn't think so. He was among those who welcomed the entrance of major media players into the ad serving space, but also warned that they had to take it seriously to survive.

The closure now is simply an illustration of an inexperienced player getting involved in a market they didn't really understand.

Of the latest news, he says: “It's crazy that businesses think they can ad on a third party sales arm. It's a lot more complicated than that, it's a whole operation - it's not just about adding a few sales people.”

While C5i insist the business was taken very seriously indeed, it is clear that RTL saw it as its weakest link and. With TV advertising suffering so badly, the company has decided that it needed to concentrate its efforts on raising revenues there rather than investing more cash in online - despite its claims that the business was doing well.

This, argues White, is exactly where the specialists have the advantage - they are more focused. He adds: “Ad serving is not their core strength. It's clear it was a conflict with their broadcasting business and when times are difficult, they'll concentrate on their core business.”

However, C5i may yet return, says Bampton, adding that its withdrawal from the market was also because it was just too competitive with too many players vying for such a small piece of pie.

When C5i was launched, the market was still growing in terms of players, but troubles - and hints of consolidation - were already apparent. So to say it only realised how competitive the market was after entering it appears a little nave on Channel 5's part. Also, at the time of its launch in October, analysts were already correcting their previous over-ambitious projections for ad revenues for the upcoming 12 months.

However, both Carlton and Channel 5 were confident of their success in the market, claiming advantage over the ad networks in several areas. Firstly, they had sales experience gained from other media and contacts already in place with many clients. They also had the established brand name and, most importantly, the expert knowledge of particular sectors, which is why Carlton intended to concentrate purely on women's lifestyle and entertainment sites, keeping its focus narrow, rather than on gaining reach, which the ad networks such as DoubleClick offer.

However, Daphne Marinopoulos, MD of Advertising.com Europe agrees with Carl White that the likes of Channel 5 just didn't realize how much work is involved in running a third party ad serving operation, not least on the technology side.

She added: “There is an incredible amount of investment in building technology. They may have relationships with companies but they have to understand technology.”

Perhaps tellingly, when warning of the threat from media owners, Eric Stein, then-MD of DoubleClick UK, emphasised the principle advantage it - and its competitors - had over media owners was first-mover advantage and knowledge of the market. He said it would take them “some time to get up to speed.” It would, however, appear that they have decided to call it a day before even giving themselves the chance.