Phantom ad rate hikes damage magazine business credibility

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Kent Brownridge is one of the most opinionated and blunt-spoken people in the magazine business. That means he sometimes says things I don't want to hear or don't agree with. But I always appreciate his candor; there's never a need to ask Kent to clarify his position.

That's why Ad Age placed a call to Wenner Media when we wanted to write about an issue-rate cards and price negotiations-that most magazine publishers are too timid to comment about on the record. Kent has been there, as Jann Wenner's right hand, since the `70s, when he was one of three associate publishers at Rolling Stone (the other two were Jim Dunning and Claeys Bahrenburg).

"All of these price increases are theoretical," Kent told publishing reporter Jon Fine. "Most advertisers get less than the stated amount and somehow feel good because the publishers feel rates should go up 7% and they're only getting 4%. We are getting further and further away from reality."

Actually, we've departed reality; printed rate cards are now stocked in the fiction aisle of your nearest buyer's media library. When it comes to archaic practices, TV has the upfront market and print has its rate-hike ritual. Both should be abolished and replaced with systems that better reflect how media is bought and sold in the year 2001.

As it currently stands, publishers raise rates to artificial levels knowing full well they will give most of the increase back during negotiations. Media buyers have no use for printed rates; they rely on historical costs for a category as the basis for negotiations. If the published rates have any utility, it is that they enable buyers to show clients how much money they "saved." If there are advertisers that accept such math, we can put the bridge in Brook-lyn back on the market.

The last time Ad Age checked, about a year ago, the average negotiated discount off rate card for the leading categories of magazines was 29%. The average number of pages needed to hit that discount level was fewer than five. Printed rate cards have no relation to reality; newsweeklies and women's service magazines regularly slice their prices in half, according to our last survey-conducted in one of the best years ever for magazine advertising. Imagine how low those magazines are willing to go in a year like this.

To pad rate cards for the sole purpose of giving buyers the satisfaction of clawing away at the stuffing is a ridiculous way to do business. It also keeps the focus of negotiations on price, on quantitative rather than qualitative issues. Then magazines complain when buyers treat them as commodities.

Almost 15 years after Dale Lang, then at McCall's, stunned the ad industry by exposing the practice of rate negotiation, there are still publishers who try to keep the issue off the table. One magazine executive recently tried to prove his title was outperforming the market by pointing to the ad revenue gains shown in Publishers Information Bureau figures. PIB multiplies the number of ad pages by a magazine's published page rates to come up with an ad revenue figure that bears no semblance to reality.

We've said it before, in Ad Age editorials in 1998 and 2000: "Negotiation" isn't a dirty word, and it isn't going away. PIB's methodology should be changed to at least reflect stated volume discounts. Publishers should stop wasting paper by printing rate cards no one reads.

Headed into 2002, magazines face the double curse of rising costs and declining revenues, and it's fair to pass some of those costs on to advertisers and readers. The number that matters most to publishers is net revenue per page; good sellers know what it takes to sell a profitable page and will draw a line based on that calculation.

When we presented research a year ago on average discount levels, not surprisingly Kent Brownridge was the one who spoke up publicly. In a letter to Ad Age, he noted that while average discounts have gone up each year, so has the average amount billed. His logic was that magazines could give bigger discounts but still get more money per page by raising published rates.

The calculation makes sense. The rate-hike ritual still doesn't. Kent, call me.

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