Fact vs. fiction with rate cards

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You'd think in the strongest economy in decades, magazine publishers would be better able to protect the integrity of their rate cards. You'd be wrong. You'd think at a time when ad volume is growing, demand is strong and new categories are ballooning, publishers would negotiate from stronger positions. You'd be wrong. You'd think the rise of idea-based selling and integrated marketing programs would enable publishers to shift the focus away from price. Yet again, you'd be wrong.

Two years ago, Advertising Age conducted a first of its kind survey to determine the average discount magazines were giving advertisers off published rates. The aim was to provide a realistic look at magazine pricing, just as Ad Age's annual fall primetime survey puts a price tag to network TV commercial time. Our first print survey calculated an average discount of 27% across 33 magazine categories. Some categories, such as women's service and newsweekly, showed much steeper discount levels.

Two years later, there was an expectation -- based on the medium's healthy expansion -- that if magazines hadn't lowered the average discount, they would at least have held the line. But Ad Age's new survey, revealed in this issue, shows advertisers are slicing even deeper into rate cards. The average discount is now 29% and the women's service and newsweekly categories are selling pages for half the published price.

Despite figures such as these, publishers still try to keep the issue under the table. Forests are cleared every year to publish printed rate cards, and Publishers Information Bureau tallies magazine ad revenue as if there was no such thing as rate negotiation. It's time for change.

Rate negotiation isn't a dirty phrase, and it isn't going away. If publishers set real values for their products, they won't have to deal with the embarrassing revelation that their space is routinely sold at a 50% discount. Rate cards have to go. They're no longer a good starting point for negotiation. No one looks at them and their only possible use is by media buyers who want to boast to clients about how much they saved. As for PIB, it should apply a formula of some type to recognize the reality of the revenue situation, to reflect at the least published volume discounts if not negotiated prices.

If publishers want price to be less of a factor, they need to deal directly and honestly with the issue of rate negotiation and create truer ways to set and maintain prices and calculate revenue.

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