Time to Trash the Rate Card

Why are we still selling advertising the old way with print-frequency discounts? As modern publishers, we’re selling print, Web, e-mail, events, data and more, and our advertisers are shifting their dollars from print-only to a mix of media. But one look at most of our media kits and it’s obvious we’re stuck in a print-only mentality that only rewards advertisers when they increase their frequency in print.

We Want More Money, Not More Print
Is our goal really to get advertisers to buy more print from us? Our goal should be to get them to spend more money with us regardless of which media they choose. So let’s stop perpetuating a sales model that no longer works, abandon the old print rate-card frequency model, and instead reward advertisers based on their total spend with us.

Do you, Ms. Advertiser, want to spend all of your money on a large-frequency print buy? Great, I’ll reward you for your loyalty. Do you want to spend the same amount of money (or more) online or with a mix of print, online and events? Fantastic. You’re still just as valuable a customer, so I’ll reward you just the same.

Incentivizing advertisers based on total spend instead of frequency accomplishes several goals:

• It rewards customers, regardless of which channel they choose to invest in.
• It’s easy for customers to adjust their media blend based upon current needs.
• It mitigates cross-channel “value add” (giving away online for print, etc.).
• It helps you get advertisers back closer to rate-card value.
• It encourages up-front, schedule-based buying rather than ad hoc buying during the year.
• It positions you as a true multimedia company instead of print-centric.
• And, most importantly, it makes it easy for customers to spend more money with you.

A New Pricing Model
There are three elements to this new, total-spend-based pricing model. First, you must establish an “a-la-carte” pricing menu. What would each media item cost if you bought it separately? List out everything that you sell—print sizes/positions, Web ads, e-mail ads, webinars, booth pricing, etc., along with the open rate (no frequency) that each item costs if someone purchased only that item.

Second, create three to five partnership levels that reward advertisers based on total dollars spent with you regardless of channel. If done right, your partnership levels will somewhat mirror the kinds of discounts you would give for print frequency at the same dollar levels. Typically, the partnership levels would be on an annual basis and would be reset every year. The levels and discounts will be different for every brand and market, but here’s a simple example (see below).

Sample Partner Packages

Finally, create eight or nine pre-set packages with different media mixes and spending levels. Use these as a starting point for discussions with your advertisers and allow them to customize as desired. As long as the customizations stay within the total spend of your partnership-level packages, the discount remains the same. For example, you may have a small, medium and large version of the “Print Lover’s Special” or “Online Lover’s Special,” but based on dollars spent rather than frequency. You may have the “Hawaiian,” which combines both print and online together. Or you may have the “Supreme,” which mixes print, online, events and other products together. All you’re doing here is creating packages as starting places for the discussion, but feel free to substitute ingredients of like value.

Advertisers can buy a la carte, select and modify a pre-set package, or you can work with them to create a custom package with discounts based on total ad spend.

Think It Through
What if an advertiser signs a contract later on that moves them up a tier? Don’t pro-rate backward—only give them the new discount level on media they buy going forward. Remember, you want to encourage up-front contracts and spending-level commitments. What if an advertiser cancels all or part of a contract later on that moves them down a tier? Make sure your contract stipulates that, if their total spend in a year winds up moving down a tier, you will go back and bill them for media earlier in the year at the higher prices of the downgraded tier.

Yes, this is a radical departure from how we’ve always done business in the past, but this is a brand-new media world, and the old ways of doing things simply won’t work anymore. Even if you don’t use this specific model, find a concrete way to reward your customers based on total spend rather than just rewarding them for print frequency.