Ad rate discounts have been used as a bargaining tool for publications since the beginning of publishing. New customer discounts, early bird discounts, and seasonal discounts, just to name a few, can entice advertisers to make the big leap into your publication, but may not be the best way to retain them. Those who are just looking for a deal may not see the value in your product and will be quick to jump ship and anchor with another publication if the price is right.
Not only is there a risk of attracting clients who are just looking to save a few bucks, but deviating from the rate card can also cause unnecessary complications with your bookkeeping. These deals can be difficult to track and could mean little to your bottom line.
A deep dive with three industry-leading partners proves there are publications out there who believe in the hard and fast rule of the rate card strategy. They thrive on the simplicity and the transparency it provides to their clients. No surprises. No complications.
Frequency Is Key.
Frequency is key, and that is why Publisher of Marsayl Media Graham Lavender believes rate cards should be a hard and fast rule. “The discounts are built into the rate cards,” said Lavender. “If you sell [different pricing from] rate card, then you are opening yourself up for advertisers having rates that are cheaper than their competitors [who are advertising with you as well], which would bring headaches and possibly loss of business.” When advertisers see they are not getting fair treatment, publications tend to lose their trust and their loyalty.
So how does he create longevity with advertisers? “Frequency-based discounts are the main discount line,” said Lavender. “We budget based on the highest discount structure (12x), so everything else is extra. We have multiple publications and some advertisers are relevant in more than one. We offer a multiple-publication discount of an additional 10% off their current frequency discount. We also offer an additional five percent when they pay their contract in full.”
The simplicity of this structure has provided many benefits for Lavender such as no need for complicated software to manage the various discount levels, no approval needed for discounts because it is across the board, no need to change commission structures, and no angry phone calls from advertisers who think they are not getting the same deal as everyone else.
Lavender advises, “Publish the discount structure in your rate card. You will have no surprises and your budget can be based on your largest discount.”
Marsayl Media specializes in professional, custom printing and publishing. From business cards, direct mailers, and websites to large-scale magazines. One well-known publication is AgAir Update Magazine.
Negative Effects on Perception.
Another publisher who has seen first hand the benefits of sticking to the rate card structure is Katie Williams, associate publisher of Milwaukee Magazine. “We only offer frequency discounts, plus we provide frequency bonuses to clients,” said Williams. “This is a hard and fast rule.”
One danger that comes along with an array of discounts is that customers can get used to the low prices. According to some consumer studies, when you use a discount on your product too often this lower promotional price may become merged into a customer’s reference price. This will lower their willingness to pay for your product when it is no longer discounted, as their idea of how much this product should cost has been altered.
Discounting can also have a negative effect on how consumers perceive your products and brand. The Association for Consumer Research conducted a study where researchers examined the efforts of promotions on brand attribution and evaluation across nine different service industries. They found the higher the perceived amount of discounting in an industry, the more likely it is that consumers believe this reflects the brand. Consumers are more likely to believe that a brand that promotes more often than others in its industry is of poorer quality than others in that industry, while a brand that promotes less often is perceived to be of better quality. Maintaining your product and brand value is sacred, especially when you are competing on quality.
As the area’s most-read monthly magazine and leading lifestyle brand in print, online, and through lively in-person events, Milwaukee Magazine has most certainly built their reputation on this standard of quality instead of relying on discounts to obtain and retain clients. They have no need to change their commission structure to accommodate discounting and require approval for any sales rep who is trying to offer a discount that is not frequency related.
Milwaukee Magazine has been serving the southeastern Wisconsin region for more than 40 years with authoritative coverage of dining, décor, travel, culture, and entertainment.
People Tend to Talk.
Publisher of Southlake Style Mike can speak well to the importance of following a rate card. If you have ever lived in a small community, you understand that word can travel fast. This works both to Tesoriero’s advantage as well as keeps him in check when providing pricing to clients. “We’ve been publishing for 17 years and have always been 100% rate card,” he said. “Our community is about 30,000 people. Everybody knows everybody and we have a long-standing customer base. When there is a hyper-local setting, it is important to provide the same pricing for everyone.”
Being 100% rate card further promotes the importance of transparency to their clients creating a culture of trust. “I tell [clients] they are getting the same price as everyone else. And it is that simple,” he said. “If we gave people various discounts, we would be shooting ourselves in the foot, and I have watched other publications do just that. So we are proud of that. If you give a deal to one person, you must give it to everyone.”
Tesoriero and his wife work closely in publishing Southlake Style. “I’m more of the creative and journalistic side of things and she handles the sales,” said Tesoriero. “She must deal with clients on a day-to-day basis and so she knows the importance of sticking to rate card. Because times are tough, we do have special sections that we can create special pricing around, but that rate is the same for everyone. No exceptions.”
There will always be competitors who will try to undercut your pricing, but is it really to their advantage? “We’ve stuck to our guns and sometimes that means, you know, we have customers or prospects that won’t advertise with us because they can get a better deal elsewhere,” said Tesoriero. “And those are typically the ones that are looking for a deal and are tough to get collections from. So that is something my wife and I have made tough decisions on.”
Southlake Style is a hyperlocal media organization focusing on uplifting stories and news that help build connections in its community.
Many publications rely on discounts to boost sales, move excess inventory, and attract new customers. However, as with any strategy, there are some major implications that could come along with this tactic.
Rate Card Advantages
- Advertisers will appreciate your transparency and fairness when it comes to pricing.
- No need to adjust commission structures.
- No approval needed for discounts, because it is all on the rate card.
- Ensure you are meeting your goals and supporting your bottom line.
- Promote frequency in ad placements.
Consequences of Discounting
- Customers may become too reliant on the discounts and as a result will be hesitant to purchase at regular price.
- You risk damaging the reputation of the brand and may be associated with “cheap.”
- You risk getting into a price war with the competition and being seen as a commodity.
- Discounting can end up hurting your profit margins.
- Unnecessary complications with your bookkeeping.
- Advertisers becoming angry they did not get the same deal as someone else.