Telstra’s ad sales division, the Telstra Advertising Network, is teetering on the edge of oblivion, with the telco giant outsourcing the bulk of its sales functions, putting the fate of the remainder of its operations, including Trading Post, in doubt.
As many as 60 jobs could be cut from TAN after the Multi Channel Network, a joint venture between pay-TV operator Foxtel and Fox Sports, was awarded a multi-year contract last week to take over the responsibility for selling Telstra's digital advertising.
Under that deal, the majority of Telstra's digital ad sales, including ads for Telstra T-Box, BigPond.com, AFL.com.au and NRL.com.au, will shift to MCN, which sell ads across more than 50 subscription channels and websites.
The move, which has been spearheaded by Telstra's new media boss, Rick Ellis, has been welcomed by insiders who told The Australian that the consolidation of its ad sales operations was a much-needed move. But it also marks an end to an ill-conceived and short-lived foray into the challenging ad market.
"The whole point in bringing together the Telstra Advertising Network was to create a stronger brand in market and bring it closer to the content and producers. But it looks like Telstra seriously overestimated its potential," one source said.
"There's no way Telstra would ever had created the network if it knew it was going to outsource most of it a year later, but clearly Rick has come in and he's made the right call to be honest. The ad revenues are not growing in the digital network where they should have."
A Telstra spokesman yesterday confirmed that redundancies were likely although the "final extent and numbers were not clear at this stage".
The spokesman declined to say if other parts of Telstra's ad sales business, in particular its online and classifieds brand Trading Post, would also have its operations outsourced.
But Telstra insiders have told The Australian that an outsourcing arrangement similar to the MCN deal would be extended to other underperforming Telstra ad sales operations, with the perennially underperforming Trading Post tipped to be next.
"The Trading Post struggles, it's a dog's breakfast, but it's very hard to sell," the source said.
Telstra bought the Trading Post in 2004 for $636 million but has since written down more than half of its book value. It's understood that Telstra is considering outsourcing the Trading Post's classified ad sales to Google but Fairfax Media could be another contender.
The outsourcing of the Trading Post's classified ad sales would mark an end to the short-lived TAN, which was created amid much publicity only last year when the telco merged its Bigpond, Sensis and Classifieds operations. At the time, Telstra said it held ambitions for the network to be the digital advertising market leader across sport, mobile and IPTV, but it's understood the division made only $25m in revenue in the past year.
Those plans to dominate digital ad sales are in tatters as a softening ad market has forced Telstra to leave the fate of its advertising business to operators with more experience in the market.
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