Should rate cards be flexible?

Thisis most common in specialist business- to-business titles that go to
very niche audiences who cannot be directly targeted through any other
medium. In this instance, advertisers pay rate card as it reflects the
real cost of targeting the audience with no wastage (comparable in many
cases to a direct mail cost).

Further to this, newspapers often
charge rate card for rate changes, public company announcements,
product recall, political parties, competitive advertisers and private
advertisers. In these situations, the advertisers are either legally
bound to advertise, prepared to pay ratecard to "broadcast" their
message or unaware of the discounts available.

Finally,
classified advertising, and in particular classified recruitment, often
starts from a basic rate card price and work downwards based on volume
discounts.

However, the vast majority of advertising booked in national press and mainstream magazines has no real relation to rate cards.

Buyers
and media owners trade on how the title performs versus the target
audience and circulation and will also factor in things like volume and
share.

Inevitably, media owners need to trade off rate card to
pick up business at a rate that reflects their actual value. As a
result, agencies are often buying at a huge discount against rate card.

That
being the case, it would be easy to write off rate cards as an industry
anachronism with no real role to play, but that would be over-looking
the benefits of rate cards within the bargaining arena.

When new
titles are being launched, there has to be a way of establishing a
start point from which negotiations can proceed even if the eventual
discount is huge. Whether you are a media owner or a media buyer, your
start point is likely to be CPTs, so the rate card acts as a guide
bearing in mind what circulation the title is aiming for.

Rate
cards are also useful for seeing what kind of premiums publishers
attach to specific positions such as a front-page solus or guaranteed
editorial. Again, this may often be negotiable, but it provides buyers
with a way of evaluating additional impact.

While many accounts
are audited these days, for clients who are not, the rate card provides
a benchmark with which to measure performance. Furthermore, some
clients use several different agencies and, therefore, they may need
some kind of universal benchmark with which to compare or aggregate
performance scores.

In radio, there are very few rate cards. As a
result, there is little transparency and it is difficult to assess true
value, so greater prevalence of rate cards would be welcome.

Finally, rate cards provide a rate at which all advertisers and agencies can be measured by comparing competitive spend.

This
is often used for establishing agency credentials in pitch work or
planning advertising weights. Anyone who has worked on a retail account
will have spent hours compiling and analysing share of voice reports,
looking at competitive spends and weights to try and predict future
strategies in order to steal a march on their competitors.

So
despite the volumes of trading that is conducted without reference to
rate card, I think the current system allows for a huge amount of
flexibility and a variety of rates.

It has been suggested that
rate cards need to be modernised, but if we were to write off our rate
cards and the current trading system, we risk future trading similar to
the US system with set rates and fixed discounts.

Recent rumours
suggest Newsquest wants to move towards this system of trading and
implement an "American" rate policy to try and equalise the huge
variations in rates paid by local and national advertisers.

This
may in fact benefit some smaller advertisers as the rate would actually
be more in line with market rate rather than the erstwhile rate card.

However,
in this situation, the media buyer then becomes a mere "bookings
monkey" and cannot add real value through skilled negotiation and the
larger client may lose the advantage they have against the rest of the
market.

Jeremy Blake is a director of sales and management training firm Reality Media – www.realitytrain.co.uk

"Hi Jeremy, this is Darren from All Sorts Media, I've got an offer, a full page, £200."

I've never advertised in All Sorts Media before. The salesperson
assumes I want the offer, discovers nothing about my business and now I
don't want to know anything about his. What a waste of a call. I become
another piece of "burnt data".

This is typical of nearly every
sales call I've received in the past three years. Does this salesperson
really think that I will ever pay a penny more in the future? Why
didn't he try to sell it at the full price first? If only he'd spent
time learning about my business and what I am trying to achieve this
year. I've now got a perception of that company and the quality of the
media, and "perception is reality" until I can see differently.

Fortunately this industry is changing.

Some
media owners have realised that to adopt a proper rate policy will reap
huge rewards. It means changing the way you sell and manage your
business.

Ad rates must firstly be in line with most of our
advertisers' options and we must change our attitude to deadlines.
"Late Space", a horrendous term anyway (we are selling response not
space!) must not be sold off at ridiculous rates. There are literally
thousands of managers who get their consultants to bash the phones and
speak to existing advertisers and, worse, new customers and offer
"deals" so the media can be produced on time.

Why do we ruin what
may have been a professional week or month of consultative selling by
becoming a moron, calling up hundreds of businesses and selling on
price?

Special rates should only ever be offered to the best
existing advertisers. A contingency budget could be managed by the
consultants on the clients' behalf.

Many media owners worry about
the issues a fixed rate card can bring. The spectre of large
cancellations from long-term customers, or deadline days with masses of
pages to sell, looms large. They also worry about how they can get
their sales staff to accept the new system; after all, you are being
asked to change the way you think.

If you took away the
opportunity of selling on price, thousands of "journeymen" would lose
their jobs or hand in their notice tomorrow.

The good news is these are the salespeople you don't want anyway.

As
a rate card company, you need to encourage your advertisers to be rate
card companies too. The products and services a business offers can
vary in quality and value and their rates should reflect that.

The
"rate debate" with a client is always a negative one. Put your valuable
time and knowledge into discussing marketing and understanding your
advertiser's buyer. Then the copy and design will follow, and the ad
will work, and they'll make money. Also, where is it written that media
companies shouldn't make a profit?

Last week, we trained a group of sales managers on implementing their rate card.

After discussing our case studies on Yell and Ziff Davis and other rate card companies, we learnt something.

It was clear that these managers and their salespeople were in many cases giving advertisers a lot for what they were charging.

A
rate card would bring about the balance they were looking for. In the
minds of all your advertisers, your rate card should reflect the
quality of the media and the service offered.

When we employ
sales staff, we expect them to be listeners and learners, questioning
and challenging with superior conversational skills and able to make
compelling advertising proposals, not make calls like the one above! So
many become disillusioned and end up as skiing instructors in Val
d'Isère, going into the wine trade in Weybridge or flog air
conditioning in north London.

Adopting a fixed rate card means
that our salespeople have to actually sell. It takes away all of our
insecurities and reminds us all of so many things that are right about
selling.

As for agencies, the bullish buyer will respect far more the savvy and empowered salesperson sticking to their rates.

How
do you implement this? You get help and train for the change. Then when
your research is done and the plan in place, you just do it.