Does Your Media Company Have Sales and Finance Synergies? Why This Relationship Matters
Finance and sales teams have many differences in operations, perspectives and motivations. The two also have many synergies, primarily focused on revenue generation and profitability. Every sales and finance leader prioritizes these objectives, even when looking at them from different angles. When you can work together for a shared vision, the drive for dollars becomes collaborative versus combative.
So, where do sales and finance most need to align and share input in local media?
My personal experience of being in the radio business for more than 30 years – and working with sales executives and CFOs – gives me a unique outlook on where these groups need to connect to achieve and sustain revenue success.
Understanding Digital Advertising Revenue Streams
For most local media companies, digital advertising sales is a newer revenue stream. Linear spot ads are a mature segment, but digital offers new opportunities. However, these ad units are much different from traditional ones in terms of cost of goods sold (COGS), commissions, operations and seller efforts. All these things mean there are more costs associated with selling digital advertising.
Often, these issues are barriers to profitability, so sales and finance need clarity and transparency regarding expenses and how they impact profits. Sales should explain why these models won’t look the same as linear and work together to set goals on what a “good” margin is and how it can grow. Finance experts are always looking for ways to cut costs and could offer some strategies around operational efficiency.
Pricing out advertising could also be a group endeavor as you analyze the COGS and define the necessary profit for digital to be a success.
Seller Commission Structures
As noted, seller commissions for digital are typically different than selling linear spots or O&O (owned and operated) inventory. There are many models to apply, including paying on net or on gross. There may be further nuances to motivate sellers, such as paying varied percentages per tactic or doing so in terms of new business and renewals. Commission structures will evolve as well, due to internal and external factors.
This is an important topic that sales and finance should discuss. Sales executives would bring their incentive perspective and desire to retain skilled sellers. Finance professionals would look at it more objectively, advising how models can impact overall profits.
What both groups have in common around goals for this is to retain high performers, since turnover creates expenses that the entire company must bear.
Sales and Finance Budget Conversations
Your annual sales budget includes many categories – personnel, technology and promotions. During budgeting, every group creates its wish list, knowing that the pool of money isn’t large enough for everyone. What’s unique about sales is that your costs actually generate revenue. That’s a good thing to always keep in mind and remind finance of during these negotiations. Finance also loves anything that reduces waste and saves money.
For example, sellers may use several platforms to propose, order and execute digital advertising. They may also be users of traffic software. These solutions have costs associated with them, but there’s often an opportunity to consolidate and integrate, which could save you actual dollars as well as time and resources. Finance would appreciate the savings and the potential to reallocate those dollars to other revenue-generating activities.
Strategic Planning for Sales and Finance
Another area where sales and finance should meet and collaborate is around long-term strategic planning. What will your sales team look like in the next five years? What will they need to be successful? How will sales modernize workflows to stay competitive and effective?
These are big questions that should be part of sales-finance discussions about the future. Sales needs investment to improve and optimize. Finance wants to understand how these will yield revenue. A strategic sales plan should align with your organization’s overall growth objectives. If not, there’s a huge disconnect that means alignment is happening.
These conversations will constantly evolve as the industry does. Annual check-ins are necessary, and I’d encourage them to be even more regular than that.
Sales and Finance Should Be Partners, Not Adversaries
There are a lot of cliches in the business world that say sales and finance are always in opposition. It may be great fodder for memes and movies, but it’s not the reality. These groups are two pieces of a bigger puzzle, and you can’t achieve sustainable, reliable revenue without both.
Other times, there’s just no regular interaction between the groups, which creates strategy silos and gaps. Your organization will experience the best outcomes when there’s a consistent connection between the two. If that’s not where you are today, then start laying the groundwork for collaboration by defining specific times to meet, sharing relevant information and working on mutual goals.
There’s much more to say about the power of sales and finance working as a team. We’ll share more insights and tips in our upcoming MFM webinar, How Finance and Sales Can Work Together to Grow and Protect Revenue, scheduled for September 24. We hope to see you there!
This article was written by Todd Kalman, Senior Vice President of Sales at Marketron. He oversees revenue development and sales, partnering with radio stations to help them grow with Marketron’s technology.
Posted at MediaVillage through the Thought Leadership self-publishing platform.
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The opinions expressed here are the author's views and do not necessarily represent the views of MediaVillage.org/MyersBizNet.
