The "Rate Card of the Future"

To begin with, newspapers’ advertising pricing guides will no longer be referred to as "rate cards." They will be called "pricing schedules" and will most likely be some kind of electronic spreadsheet. These pricing schedules will be published on newspapers’ Web sites, and will be fully interactive and secure. This way, each contract advertiser will have his own, custom-designed, digitized pricing schedule.

Newspaper contracts will be negotiated based upon total expenditures for all space and services purchased during the year. The common denominator for contracts will be dollars, euros, or other currency – not inches, lines, or single column centimeters (scc). Dollars, not space, are the common language of business.

A full page will become the newspaper’s basic pricing unit. Column inches, lines or scc will disappear or diminish in importance, instead, ads will be purchased in portions of a page, preferably using modular units, which are the most cost-effective way of laying out a newspaper with a minimum of wasted space.

Flat rate (or linear or straight line) pricing, where an advertiser pays the same amount per inch/line/scc irrespective of ad size, will end. When combined with modular ads, Visual Impact Pricing (VIP) will replace flat rate pricing and deliver improved margins. Newspapers will benefit from VIP’s disproportionate pricing model, which encourages advertisers to purchase large sized ads.

Newspaper ads will be sold on a campaign basis, rather than single insertions. Frequency packages will predominate – whether the ad runs for seven, six, five, or another combination of days. Advertisers will receive much lower prices for selecting more days. Pick-up or repeat discounts will disappear.

Most newspaper advertising will be sold in conjunction with Internet ads. These virtual ads will provide more exposure and allow the reader to conduct meaningful searches for specific advertising. Pricing schedules will integrate print and Internet ads in a seamless manner.

Preprints or inserts will continue to grow in importance, as advertisers choose the performance and economy of a preprinted message distributed to targeted households. The growth of single sheet (or small preprints) will encourage newspapers to develop new pricing schedules for Run of Press (ROP) advertising in order to prevent further erosion of ROP linage to preprints.

Newspapers will introduce sectional or positional advertising. Some sections will carry substantial premiums, notably the main news section. Other sections will be priced much lower, similar to business class and economy class fares for airline flights. Prices will also vary by day of week, by season, and other time-sensitive factors.

A few brave newspapers will even price advertising on a Cost per Thousand (CPM), or on a per inquiry (results-oriented) basis. This is a bold move that worries many in the industry due to the rise of remnant/negotiated space advertisers and their negative impact on newspapers’ yields and margins.

In closing, we believe that traditional rate cards and rate structures often did more harm than good because they constrained newspapers’ ability to generate profitable revenues. Long-established practices produced a pricing model that made it more difficult for advertisers to buy, limited newspapers’ revenue potential, and increased newspapers’ costs.

The "pricing schedule of the future" will enable newspapers to deliver more value to advertisers while generating more profitable revenue. The days of pricing newspaper advertising by adding a fixed percentage to last year’s rate card are long gone.

Area Catholic Newspaper Form Ad Alliance

The Chesapeake Group, as the new advertising group is called, includes the Catholic Standard, the Arlington Catholic Herald in Northern Virginia, the Dialog in Wilmington, DE, and the Catholic Review in Baltimore.

Together the newspapers can offer potential advertisers home delivery to more than 265,000 Catholic homes each week, according to Marty Valentine, advertising sales director for the Catholic Standard. The group will be offering discount incentives not available independently, as well.

"We felt the alliance was necessary to help us keep a competitive edge on the secular market," said Valentine.

Advertising Could Get Caught in Bill's Crossfire

Sen. Debbie Stebnow (D-Mich.) considered offering an amendment during the Senate debate denying pharmaceutical companies the business deduction for advertising costs on the amount of advertising that exceeded company expenditures on research and development. Stabenow has argued that prescription drug advertising is driving up the price of prescription drugs.

NAA believes the deductibility of advertising is no more a "subsidy" than allowing business deductions for such items as salaries, rent, lights, office furniture and pencils.