how to pay your Ad Sellers
good morning media folks ☀️
Hiring is one of the hardest things to do when you're steering your own ship or running a department. I mean... companies have full teams dedicated to this sort of thing. So I'm never surprised when I get asked about how to approach hiring Ad Sellers for publishers. And luckily, I've worked in publishing for a long time and I've got some secrets to help you out.
If you're making a media sales hire, it's common sense to offer a salary and commission plan... but how do you structure this? Every business is different and there's no science behind it. Why do you think you see so many SaaS solutions to trying to solve this problem (like Spiff Inc and QuotaPath )?
In this email, we will talk about:
- core components of a comp plan
- setting commission rates
- managing quotas
- ramping up and bonus plans
core components of an effective salary and commission plan
There are a couple of things you have to tell yourself. What's the experience you're looking for and what are the most important parameters for you and your business?
Despite the experience, when you're establishing salary and commission structures, you have to base it on these things:
- previous media sales experience
- desirable logos under their belt
- strong references
- job tenures
- deal size experience
- sales methodology
- tech stack experience
- performing without an sdr (full sales cycle)
If you're an established publisher, looking to add to a growing team, your budget may look different than a fast-growing newsletter making their first hire. The salary range you should consider is between 60 - 90k base depending on experience level. Again, there is no science behind this. This is based on my experience working with 20+ publishers over the last year and my 12 years of experience in Advertising.
setting commission rates
So this is probably the biggest question I get. How do you set up commissions? The best practice is to offer an accelerator scale. It's a standard, but not done by everyone.
The reason you want to set it up this way is to manage morale, motivate to hit stretch goals, reward high performance, protect yourself against underperformance, and retain your employees better.
Not sure what I mean? Here's an example:
If an Ad seller were to close 105% of their number for the quarter, they would get paid 3% on revenue booked through 100% (that's the lowest percentage they could earn, and is agreed upon before they start employment), and then the revenue booked between 100.1% - 110% would be paid out at 4%. Anything above 110.1% would be a higher fixed percentage agreed upon.
These percentages can vary depending on how high you're willing to offer. So decide on the highest percentage you're comfortable with by getting with your team and finance advisor.
managing quotas
The first thing is protecting you and the new Ad Seller. The second is how to handle the money.
To protect you from any quota objections, and changes in revenue goals, including a clause in the employment contract that the quota is subject to change, is pivotal. One thing I’d recommend is that you make it clear that changes will happen per an agreement between both parties. That way the Ad Seller won’t reject this idea and it will create a two-way line of communication on how to make the comp plan better for everyone.
Next, you need to decide how you want to calculate the quota. My recommendation is to calculate quarterly because you don’t want these relationships to be transactional. The downside with a monthly quota is that Ad Sellers will hyper-focus on the short term rather than the long term.
Commissions on a quarterly quota structure should be paid out 30 days after the end of the quarter. This will give you time to calculate commissions and ensure all booked relationships are valid relationships.
ramping up and bonus plans
You need to be somewhat generous here. I know the goal is to have your Ad Seller hit the ground running, but you need to set your expectations based on the experience of the hire. The most important thing is to consider the time it will take to build new relationships, if the Ad Seller has to learn a new industry, and A/B testing their sales strategy and processes.
Using a ramp-up period lowers the initial pressure coming into the role, giving them ample opportunity to focus on building new relationships and assessing what’s working and what’s not with their strategy. Often, seasoned sales reps will use their first quarter to test with Ad partners, and scale the partnerships throughout the the rest of their first year.
A quarterly bonus plan is standard across most sales orgs. That extra motivation can push an Ad Seller to hit their number and give them extra incentive to close larger deals. Ultimately you can decide how much and where the requirements should land.
final thoughts
These are simply guidelines. From my personal experience, this type of structure is where I've seen most new hires and teams succeed. Consider these insights when you're designing your own sales comp. Just be sure you align with your business model and revenue goals.
see you next week,
shaan
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