April 13, 2010

Jerry Shereshewsky, Part Two. On Yahoo! & Ambassadorship to Madison Avenue


The Ambassadors of Internet's Quan

By Tim McHale

Yesterday we began part 1 of our 4-part conversation with Jerry by chatting with him about his years on Madison Avenue before he joined Yahoo!. For those who missed it, click here for Part One.

Today we talk with Jerry about what it was like being at Yahoo!, which - at the time - was "the" hottest company in the digital marketing business.

Borrowed from Jerry McGuire, the mantra of the era was, "Show me the money." Being at the center of the storm, Jerry witnessed the explosive conflict between digital media companies and advertising agencies first-hand, which by 1997 had errupted into a full full-fledged war; as each fought for what they believed was their territory.

If there was ever a time that Madison Avenue needed a person who was mutually respected by both warring factions, it was then. It needed an Ambassador who could "show me the respect" each side needed to lay down their arms and heal wounds that arose from the violent change in the advertising business. Luckily for everyone there was one person with the ability to negotiate the napkin-based treaties needed to end the great www.1.0 {World-Wide-War-One-Point-0} hostility.


Tim: Let's talk about Yahoo! Who was your competition back then?

Jerry: Well, there were two kinds of competitors. There was the obvious competition, AOL, Excite, MSN, folks like that... Lycos...

Tim: Sure.

Jerry: But the real competition in my mind was ABC & CBS & NBC.

Tim: Traditional.

Jerry: It was like, "Okay we can steal business from the other portals. They can steal business from us, but we're talking about fighting over a tenth of a percentage of the marketing funds of a brand. Some people at Yahoo! at the time felt that it would be a big deal to get 28% of the tiny Internet budget. I said we don't have a business if that's all we shoot for. We have to operate as if we are hoping to get 28% of their total media budget.

Tim: Oh yeah.

Jerry: I wrote a plan in one of those early years, in which I defined our competition as "Inertia!"

Tim: Well, being first and of course scaling quickly, Yahoo!, AOL and were the first ones to sell medium in, which ticked off the agency business, big time. But as compared to the early days of Yoyodyne, portal deals as they were called represented the beginning of the legitimization if you will.


Jerry: Yes.

Tim: There was so much resistance on the agency side, and a lot of intrigue on the client side. What was it like getting in between them?

Jerry: It was a long and very strange trip. There was a lack of understanding. It was pretty profound between what it took for an agency to be in this business and what we (Yahoo!, AOL, MSN) as publishers were ready, willing and able to concede.

Tim: I remember the reps on those properties, the online properties were absolutely, hated on the traditional side even with the reality that the agencies, even the fledgling interactive groups were clearly unqualified. You guys were going in and providing a full service element that was extremely attractive.

Jerry: Yes, it was. From the publisher side we were awful about our rules and regulations. Agencies are all about Wow! Right?

Tim: Right.

Jerry: But when an advertiser would run an ad on a machine like Yahoo!, they would have to understand the complexity and the standardization. As one example, we had rules about how many times a banner could move. Many others like that which do not need to be mentioned. The larger issue though is that to me, it seemed that we had people internally who didn't like advertising. They sure liked the money, but they wanted to make the ads as small as possible!

Tim: of course I was on the agency side and was frustrated by the portals going directly to the advertiser. One of the things that I could not ignore though was the type of person who was not only had to sell in an entirely new medium, often to a glassy-eyed audience but then also sell the client into give the entire program to the portal; strategy, creative, media, the whole enchilada.


Jerry: That's right.

Tim: Besides being unable to provide the kind of services that the portals could, the type of sales people who represented them were like foreign creatures. We were used to telling reps what to do, versus the other way around. It was like total culture shock.

Jerry: Yup. There were a lot of very strange and wondrous things that were going on in those days, all of which we are still working our way through.

Tim: I'm sure you have 50 stories to every one I have. Once I was in a meeting where we brought in the portal sales person to help us sell in the concept and we then sat there like the proverbial deer caught in the headlights as the rep sold in the deal and got the client to agree right in front of us that they could do everything with the client directly, without the agency's involvement.

Jerry: Back then it happened all the time. There was both fear and immense jealously.


Tim: Is this about when you took on the role as AMBASSADOR PLENITENTIARY to MADISON AVE?

Jerry: Shortly thereafter. Once Yoyodyne was rolled up into Yahoo!, it took about a year when it became clear that we needed to understand how to work with agencies. That's when they asked me to take over sales to agencies. They had not focused on agencies and they were beginning to understand that agencies were going to become important, if Yahoo! was going to figure out how to crack the code. Before that we had enjoyed a year of unbelievable growth. Then things changed, one of which was that the market crashed.

Tim: Okay, so you are totally into 2000 now.

Jerry: Right. When the market crashed, two very interesting things came to light. One was that a significant percentage of our direct customers -- all of them had the same last name- com -- went out of business.

Tim: LOL! Right. The VC money ran out.

Jerry: And the so-called portal deals disappeared. So suddenly the AOLs, Microsoft and Yahoo!s of the world had to go back and earn the money the old fashioned way. We had to sell ads. We had to sell some kind of value and we had to sell it through the agencies. Advertisers felt that the time had come for their agencies to be more involved.

Tim: Payback time.

Jerry: In a period of 9 months we went from generating 7% of our revenue from agencies to like 55%. Not only were numbers were dropping like stone from the client side, that money was being allocated back into traditional media. But we set a precedent. People on the sales-side began to understand that we really needed to focus on the agency world. We needed to focus on what they were about. That's when Wenda Harris Millard came on board.

Tim: I remember.


Jerry: Wenda and I had a talk one day about the fact that there were probably a 100 people in New York who were better than I was running a sales team. But there was nobody in New York better qualified than I to take over marketing on behalf of sales. There was no person in the corporate marketing department of Yahoo! or MSN or AOL or any other place, who was doing marketing on behalf of sales. And so we invented that job. At first it was just me. I had been doing things, like I did when I was running a sales group. I believed that agencies had a lot of questions. If you position yourself as having answers, they would come to you. So intellectual leadership and thought leadership was a really important thing. In fact I think you were at the first conference I ran in Princeton, New Jersey.

Tim: You and Wenda made a great team!

Jerry: I loved working with her. She's a grown up. She understood that in sales, people buy things from people they know, trust and respect. She knew everybody and had terrific relationships. She joined Yahoo! at a most important time.

Tim: That's great!

Jerry: That sort of hubristic way that the early Internet sales people had about themselves went away and fast. Many people had no idea what it was going to take to make the Internet into a real medium.

Tim: Everything was just a financial model to become rich and a lot of people, as you know, were on that side, on the dotcom side, just clearly looking at multiples. It was secondary that they actually had to serve their clients.

Jerry: Right. Pardon me, but where in life did you have an "exit strategy" on Madison Avenue? This was a world where people kept talking about the exit strategy.

Tim: I love it! Now let's talk about when you became ambassador.

Jerry: It was John Adams title when he went to France.

Tim: John Adams, the president?

Jerry: Yes. Before he became president he was Ambassador Plenipotentiary. In diplomacy, an ambassador is basically a spy. You send an ambassador to a country, he'd write back letters and say what was happening, but sometimes, because of the remoteness of time and distance in those days, you would send an ambassador plenipotentiary with full of power to negotiate a deal and to say, "Yes".


Tim: That's very interesting.

Jerry: My job was really to penetrate the agencies at the highest level, at the CEO level, and gain access for our sales guys when and where they needed it. Yahoo! was very stingy with titles. They didn't believe that titles were important in the advertising industry. They didn't understand that titles were externally facing things and so I just invented my title and put it on the business card. That was it! I needed to get past the gatekeepers with a title that presumed I should have access to the boss.

Tim: When did you see the second generation media companies coming into the space?

Jerry: I'd sort of look at it differently. The real beginning of the next era was not what publishers were doing. It was from what the advertisers were doing. When they began to understand that a website was more than a brochure online, that CRM was an important component, that the ability to target, really target or better yet, to target on the basis of absolute knowledge... when the real advertisers, the major auto companies, the major companies started putting serious behind that, that's really when the change began to happen.

Tim: The deal that for me completely opened my eyes was the Britney Spears Pepsi-Yahoo! Deal. I was at Tribal at the time so I had a unique view into it, from the sidelines.

Jerry: That was one of the hallmark moments of the Internet. It enabled us to showcase the Yahoo Buzz Index which lent great comfort to marketers who wanted to measure the immediacy of change that their online investments would make.

Tim: That was a key selling point for you.

Jerry: It was the driver.


Stay tuned tomorrow for Part Three!

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