The best measure of success in digital advertising sales isn’t what you might expect. Sure, revenue per visitor and revenue per page are important metrics. But the biggest factor that determines the success of an advertising program are your renewal rates.
Publishers with high advertiser renewal rates are more likely to generate sustainable revenue than those with low renewal rates. High renewal rates indicate satisfied advertisers and exceptional client service. However, low renewal rates could be the result of high-pressure sales tactics, over-valued contracts, or weak ad placements.
Why does any of this matter, and why should publishers bother keeping track of their advertiser renewal rates?
It’s a dollars and cents issue. The cost of acquiring a new client can be 5x the cost of retaining an already-existing one. Therefore, the most time and cost-effective way to maintain and grow revenue is to hold onto existing advertisers.
Building loyal relationships with clients is one of the first steps to achieving profitability in direct digital ad sales. When your customer retention rate is higher, your customer acquisition cost is lower.
Studies have shown that the probability of selling to an existing customer is 60% to 70%, while the probability of selling to a new prospect is 5% to 20%. That’s great news for publishers with established rosters of advertising clients, but it doesn’t tell us how those publishers are achieving such high renewal rates. Here are five factors that guide us to an answer:
The easiest way to increase advertiser renewal rates is to target the right clients in the first place. Businesses that are the right “fit” for your publication will produce better results. When clients see better results and a higher return on investment (ROI), retention rates rise.
Selling to clients who are not a good fit might seem harmless, but it can make it harder to achieve your revenue goals. Consider all of the time your sales team is spending on outreach and retention efforts just to retain a single client. When you target the right companies in the first place, you don’t have to spend nearly as much time keeping those clients happy.
How do you determine which companies are the right fit for your publication? The answer is different for everyone. Generally speaking, it’s a good idea to think about what your team can provide, who your audience is, and what the advertiser’s goals are. Those three elements should be in alignment when you’re recruiting potential advertising clients.
Low renewal rates are usually the result of poor performance. Clients usually dictate which metrics they are measuring to track performance, but click-through rate, engagement, and conversions are all standard.
Put simply: If ads are performing well, advertisers will be back.
The best way to improve performance and increase advertiser renewal rates is by offering high-quality advertising formats, creative offerings (like sponsored content, display advertising, and newsletter advertising), and visible positioning on your website. Each of these elements has been shown to increase impressions and clicks, which leads to more satisfied advertisers.
To learn more about which types of ads generate the greatest ROI, check out 5 Alternatives to IAB Banner Ads and Why They Work.
What can your publication offer to advertisers that larger platforms cannot? One thing is customer service. Being able to foster direct relationships with advertisers is a key advantage of being a smaller publisher. Those close relationships lead directly to increases in advertiser renewal rates.
What does it take to offer exceptional customer service in the publishing industry? Surveys have shown that companies want flexibility, attentiveness, and trustworthiness. Advertisers are more likely to renew their campaigns when publishers listen to, and are receptive to, their ideas. They expect regular contact and check-ins, and if their campaigns aren’t going well, they want to speak to someone and try to fix it.
Local businesses don’t need publishers to connect with audiences online anymore. Anyone can run pay-per-click advertising on Google or Facebook. What sets small and mid-size digital publishers apart are the the unique ways they can connect advertisers with their audiences.
Always emphasize the newest, highest-performing, and more creative ad formats when pitching to potential clients. If you offer sponsored content, native advertising, or new website positions, then you can use those formats as upsells or deal sweeteners to get advertisers to renew. Existing customers are 50% more likely to try new products, and spend 31% more, when compared to new customers, so it’s likely that your long-time clients will be eager to try out your newest and most innovative formats.
To learn more about how having better ad formats in your media kit helps you retain clients, click here.
We want advertisers to be spending more on your site each year, not less. How do we do that?
One way is by letting advertisers settle in and not trying to over-sell from the get-go. Keep close tabs on the ROI that clients are generating from the ads on your site, and report back frequently with those results.
Surveys have shown that renewal rates on native advertising campaigns are only at 33% across all media sites, with 20% of clients renewing less than 20% of the time. However, sites with more established native programs have a 49% renewal rate. The difference is proof of concept. Publishers with established programs have the ability to show clients what type of results they are achieving and what they can expect to achieve in the future.
Tracking analytics that demonstrate the value of the advertising campaign, and then reporting those measurements in a way that is easy for advertisers to understand, will go a long way toward increasing advertiser renewal rates. That’s one of the reasons why Broadstreet sends its customers regular reports, with core events broken down by day and city, as well as detailed click data. To see a sample of the reports Broadstreet sends to its customers, click here.
Are you ready to start increasing your advertiser renewal rates? Do you have more questions about what it takes? Reach out to our team at Broadstreet and let us know how we can help.
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