Facebook and Groupon appear to be charting radically different courses for their ad salesforces even though, to an extent, they compete for the same clients.
- Facebook’s recent move to allow advertisers to buy premium display ad spots on a self-serve basis through its Ads API mechanism, without going through its sales force, suggests it believes automation is the key, just as it is at Google.
- Groupon, by contrast, continues to ramp up its salesforce and wants to become more reliant on the personal relationships between reps and their clients, two Groupon executives recently told us.
Consider the disastrous recent meeting between Facebook and General Motors, following which GM pulled all its spending from the social network: A $10 million client enters the building and asks to spend more money with the brand. Instead of saying, “Let us help you with that!” Facebook apparently suggested to GM that it use more of Facebook’s free functions, and declined to sell the carmaker page-takeover ads—big, highly expensive ads that publishers usually salivate for.
That would never happen at any other company that employed salespeople. It’s like Facebook is the mirror universe of Glengarry Glen Ross—the Alec Baldwin movie about a sales office that’s so aggressive reps who can’t close deals aren’t allowed to drink the coffee.
Now look at Groupon. It currently has 5,735 sales reps. It more than doubled its sales and admin costs in Q1 2012 (Facebook’s sales headcount rose 34 per cent in the same period). Staff there actually don’t want clients who won’t engage in person-to-person conversations. It’s a very “high-touch business,” Groupon Live general manager Greg Rudin and communications director Julie Mossler told me recently. The company puts merchants through as a many as 13 levels of “quality control” before allowing them to run a deal, to ensure that the deal is as profitable as possible (and that it won’t backfire on over-ambitious small business owners who think that they really can bake 102,000 cupcakes).
Groupon has more sales reps than Facebook has total employees, in fact.
Finally, look at the effect this is having on the two companies’ bottom lines. It’s way too early to tell, of course, but this will bear watching: Despite its massive sales headcount, Groupon appears to be on the verge of producing operating profits on a regular basis as revenues continue to rise and costs stabilise.
At Facebook, revenues fell as marketing and sales costs increased.
- Here’s The Real Reason GM Pulled $10 Million In Ads From Facebook
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