Digital sales commissions continue to be a topic of reflection and challenge for local media organizations. Compensating sellers competitively is critical to keeping them, but you still have to allow for profit. Since digital products have a higher cost of goods than linear spots or O&O (owned and operated) inventory, finding this sweet spot can be difficult.
Additionally, radio stations are striving to increase their digital revenue to bolster their profitability. Revenue from radio may dip or stay flat but can perform well in 2024 with political.
To support sales managers, we created a commission calculator to enable you to try different models. We also have an on-demand webinar on digital sales comp and a dedicated page on the topic. Now, we’re updating data and trends from 2024 research and projections.
Updates on Numbers and Commission Preferences from the Borrell-RAB Digital Benchmarking Report
The 12th annual digital benchmarking report for radio provided insights directly from radio stations and an overall projection on digital growth in 2024. In 2023, digital sales grew to represent 21% of digital revenue, and the forecast for 2024 is $2.1 billion.
Local businesses are eager to invest more in digital advertising, and local media organizations are in a great position to capture it. The study also found that many radio spot buyers aren’t buying digital from stations. Upselling these existing customers would certainly put the industry on its way to that $2.1 billion figure.
Sales managers also responded to questions about digital sales commissions:
What Do Media Sellers Want in Terms of Compensation?
To hear directly from media sellers, The Center for Sales Strategy Media Sales Report went right to the source. In response to a question about their preferred compensation, these were the answers:
- 38% want commission-only models.
- 36% said they want 30%-50% of their total compensation to be salary and the rest commission.
- 38% responded that they’d be willing to take less commission if the company had a proven lead generation strategy.
Digital Sales Commissions: What’s the “Best” Approach?
There is no single answer other than it depends. Let’s look at the factors that influence this decision.
Media Costs
These costs vary across different digital products. Display ads tend to be the least expensive, and OTT/CTV is usually more so. The variances involve the type of creative and the execution of the digital tactics. These costs dig into your margin, and you also must cover commission.
The most impactful costs would be from a third-party digital platform with high media costs, managed service fees and monthly minimums.
If you partner with an agency for execution, you’re losing another slice of revenue. It may require you to mark up ad packages to a point where you’re no longer competitive.
The key to compensating sellers well and protecting profits is using a technology platform that offers great rates on digital products and doesn’t pile on junk fees for the ad operations part.
Your Market and Talent Pool
Where you are has a lot to do with compensation. In areas of the country where the cost of living is high, pay has to meet this demand, or you’ll never hire anyone. How competitive the job market is matters as well. Turnover in sales is prevalent, and the radio industry has had some challenges with recruitment.
The NAB launched a campaign, “You Belong Here,” to revive the radio industry by attracting diverse, dynamic, young talent. They created a toolkit with lots of resources to help stations appeal to new generations and eliminate misconceptions about working in radio.
Your market and its cost of living, along with the quality and size of the talent pool, will influence your comp models. One thing to know is that LinkedIn cited salesperson as the No. 1 in-demand job in Q1 2024. It’s not specific to media, but this puts things in perspective.
Your Digital Sales Success and Processes
You’re still figuring things out if you’re new to digital sales. Sellers are working hard to upskill, create the most relevant proposals and develop processes. It’s a lot of work on the front end, which may mean you need to pay them a higher salary at first and incentivized commissions. Doing so also means they won’t only talk about radio and O&O.
If your digital sales structure is more mature, you have the workflows, technology and training in place to make them successful from the start. In this case, a commission-only model might be a good option. Commission percentages may be average initially, but you don’t want sellers to get comfortable. Raising commissions for renewals keeps them actively cultivating relationships.
Digital Sales Commissions: Retaining Great Sellers and Profitability Are Possible
Keeping great workers is challenging for any industry. The workforce is much more flexible and distributed than ever. Unemployment has remained low in 2024, and job creation continues. The economy is expanding while wage growth is improving. Inflation is still a thing, and many forces impact what your market looks like. Macro trends don’t always reflect the micro.
Taking all this and the new research data into account can help you determine the best commission model. Revising it at least annually is a good idea to remain competitive and profitable.
Experiment with different models with our commission calculator.
