Should rate cards be flexible?

For and Against - The relevancy of the rate card is being questioned by media agencies more than ever, but some media owners are sticking to their guns.

Clare Seager is associate director at MediaCom

The concept of the rate card means different things in different sectors and their usage varies.

In press, very few titles charge rate card these days, with perhaps the exception of titles with no real competitors.

This is 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.

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