deals and contracts in the media business
TRANSCRIPT
Deals and Contracts in the Media Business
9 September 2015
John Fox – Founder & CEO, DealSafe.co
Agenda My Background Media Deals 1. Media Company Deal Types 2. Media Company Org Structures 3. Deal Management Q&A
Disclaimer This presentation provides information. Use it at your own risk. Information is not the same as legal advice – the application of information to an individual’s specific circumstances. This presentation does not provide legal services or legal advice. Although we try to make our information accurate and useful, you should consult a lawyer to interpret and apply this information to your particular situation. We are not lawyers and we do not take any responsibility for rashes, financial ruin, or anything else that follows from applying this information. Our opinions are our own.
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© 2015 DealSafe, Inc.
My Background
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My Background
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My Background
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My Background
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My Background
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My Background
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My Background • Founder & CEO, DealSafe • SVP, BioDigital • VP & General Manager , Entertainment & Games – AOL • CEO, Games.com – AOL • Chief of Staff, AOL • McKinsey & Company
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Focus today
Today we will peel back a few layers of how this industry works and how to think about deals in this space
1. Main media deal types and deal structures 2. Media Organization Structure 3. Deal management: What happens after the deal closes?
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Intro
• Media industry seems pretty straight forward.
User
Advertiser Publisher
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Intro • In reality, it looks like this…
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Intro • And this…
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Media Company Deal Types Two Goals of a Media Company: 1. Grow Traffic • Content Licensing • Content Sharing / Traffic Exchange • Buy Traffic 2. Grow Revenue • Sell Traffic / Content Marketing • Sell Ads • Master Services Agreements (with Agencies) • Ad Repping
Many other custom deals, but those are few and far between
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Media Company Deal Types Grow Traffic – Content Licensing
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Media Company Deal Types Grow Traffic – Content Licensing • What is it?
– Allowing one party to use the content of another party for a limited period of time (not ownership)
• Key negotiating points – Price (Based on Traffic, Flat Fee, Revenue Share, Tiered Structure) – Content Library – Exclusivity
• Considerations – Does this include all geographies? – Does this include all domains you own, or only certain ones? – How do you control it? – Wind down – Ensure both sides are incented to grow – Branding (e.g., logo, text name mention, above or below content)
• Typical stakeholders – Business Development – General Managers – Editors
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Media Company Deal Types Grow Traffic – Content Sharing / Traffic Exchange
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Media Company Deal Types Grow Traffic – Content Sharing / Traffic Exchange • What is it?
– Traffic Exchanges are when one party sends x traffic to the other party each month, and the other party sends back y traffic each month – no cash is exchanged.
– This is done via “recommended links” sections, and sometimes larger feature sections – Traditionally, the amount of traffic exchanges is equal. However, there are cases in which one site
has more valuable traffic than another site, so you can do a 1.5x = y deal. These are cases when one site may be trying to grow a new audience.
• Key negotiating points – What the ratio of traffic out to traffic in should be – Penalties / make goods – Traffic will never be exactly equal each month, so what leeway do you want to give
• Considerations – Are there multiple sites you want to be part of this deal (e.g., is there one site you would give traffic
from, in order to grow traffic on another one of your sites) – Are there certain placements you want to negotiate for (could be a certain number of placements
per week) – Certain ways you want your content represented (e.g., brought to you by, logos)
• Typical stakeholders – Editors – Business Development
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Media Company Deal Types Grow Traffic – Buy Traffic
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Media Company Deal Types Grow Traffic – Buy Traffic • What is it?
– When one party promotes content from another company’s site. When the user clicks, they will usually be sent directly to the other company’s site (similar to an ad, just more contextual)
• Key negotiating points – Payment (e.g., per day, per placement, per click, per impression) – You can also pay per user type (e.g., if you are looking to acquire a specific type of
user) • Considerations
– Placement – Branding – Could merge this together with a traffic exchange deal
• Typical stakeholders – Editors – Business Development – Sales
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Media Company Deal Types Grow Revenue – Sell Traffic / Content Marketing
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Media Company Deal Types Grow Revenue – Sell Traffic / Content Marketing • What is it?
– Same as “Buy Traffic”, when you, as a publisher, decide to sell your own traffic, mainly when you think others can monetize your users better than you can
• Key negotiating points – Pricing (your goal should be to lock in as much guaranteed revenue as you can, unless
you can easily predict your users) • Considerations
– You want to figure out how to keep your users and not permanently send those users to another partner
– Do you want content approval authority?
• Typical stakeholders – General Managers – Business Development – Editors (typically don’t like this, so need to make this feel as much a part of the site as
possible)
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Media Company Deal Types Grow Revenue – Sell Ads • What is it?
– Adding advertising to your site. These are typically display, video or mobile ads on your site
– These can be standard banner ads, rich media ads that pop-up, interstitial ads, video preroll, and many more
• Key negotiating points – Pricing: CPM, CPA, CPI, Day rate – Number of Impressions (Guaranteed or not) – Audience type guarantee? – Offer targeting layers (pros and cons to this)
• Considerations – If you offer too much targeting or slice up your inventory too much, you risk having the
“unwanted” portion of your inventory unsalable – Sell through an ad network as well? For backfill only? – Hire your own sales team?
• Typical stakeholders – General Manager – Sales
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Grow Revenue – Master Services Agreements • What is it?
– Most major consumer brands who buy ads, typically work through an advertising agency to purchase. The four major agency holding companies own the vast majority of ad agencies in the space.
– If you are a publisher, you may want to develop standard terms for working with these groups. It helps deals close faster, and better terms for all.
• Key negotiating points – There are many items here, some key ones to think about are: first access to inventory,
discount rates, floor pricing, bundle pricing, exclusivity, launch partners. • Considerations
– Each agency wants to offer something unique to their clients, as their book of business can turn over quite frequently. So if they can command better pricing based on large quantities from multiple clients, it incentivizes new clients to sign on.
• Typical stakeholders – Account Managers / President of Agency
Media Company Deal Types
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Media Company Deal Types Grow Revenue – Ad Repping • What is it?
– When a publisher allows another company to sell their ads – Usually there are vertical specific industry networks that will look to roll up your site and
sell it as a bundle • Key negotiating points
– 100% of inventory, or part of the “waterfall” – Floor CPM – Floor STR – Guaranteed revenue
• Considerations – Interesting option if you don’t have a lot of traffic, because your cost of sales could be
quite high at the start – If you currently have a sales team, once your sales team leaves the market, it will take
a while to get them back out there, so you can’t just make a switch back • Typical stakeholders
– Account Managers
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Media Company Org Structures
If you are trying to close a deal with a big media company, learning how companies are structured, helps you figure out who to target to get in the door. Key, is that most of these companies are Matrixed
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CEO
Head of BD
BD, Sports
BD, News
BD, Lifesty
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Head of Sales
Sales, CPG
Sales, Retail
Sales, Tech
Sales, Health
care
Head of Content Sites
GM, Sports
GM, News
GM, Lifesty
le
CTO
Engineering, Sports
Engineering, News
Engineering,
Lifestyle
Deal Management: Post implementation
A few keys to success:
1. Try to template out your deals – the more custom each deal, the more partner management time it requires
2. Spend time doing a proper kickoff meeting - Contracts are negotiated and managed by two different groups: the handoff is often rocky – many different groups to communicate with post signing: engineering, product, invoicing, bookkeeping, design, legal, etc.
3. Contracts kickoff numerous workflows – identify them all
4. Be flexible – the deal you sign, may not end up being the deal you implement. If either side has an out in the contract, the partnership may still be very fragile (document changes appropriately)
5. Use Partner & Deal Management software (preferably Dealsafe – my plug) – Plan for when people leave the company (from both sides) – Plan for partnerships not working out – Be flexible
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Introducing DealSafe, Business Intelligence for scaling your Partnerships
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Easy to Use Platform • Easily add contracts
– Drag & Drop – Send via Email
• Alerts and Reminders to help you fulfill partnership obligations and deliverables
• Customizable Dashboard to see what’s most important to you at a glance
• Team of DealSafe Experts will automatically digitize key terms from your contracts and add to the DealSafe database
• Automatically kickoff subsequent
workflows from other systems (e.g., CRM, Project Management, Bookkeeping, Invoicing) – coming soon
• Bank Level Security - strong SHA-2 & 2048-bit encryption and 2-Step Verification Login
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