Newspapers
At newspapers, the national bite eases
By Lisa Snedeker
Feb 20, 2007, 10:23

When media buyers grouse about placing their national clients in local newspapers, they grouse most about the higher rates those clients are charged over local advertisers. Under these premiums, a national advertiser can be socked 30 percent and sometimes more over what local advertisers must pay for the exact same ad space.

And this is so even as major papers report further, often precipitous slides in circulation.

The national premium is not going away, either, at least on paper. Newspaper rate cards will continue to include it.

But in reality, the premium is already being severely trimmed, and over time it could all but disappear.

Increasingly, papers in major markets are seeing those premiums negotiated down under pressure from media buyers.

One issue, of course, is the big drops in circulation, which publishers and their reps have a hard time explaining away. But also at work is the rise of new competitors in their markets.

There was a time when national advertisers had no choice but the local daily if they wanted to reach into their markets. Now there are increasingly other choices, led by the internet.

"Newspaper advertising prices are increasingly being determined by negotiations between the newspaper and agency or advertiser," says Len Kubas, president of Kubas Consultants, a Toronto consulting firm that works with newspapers.

"The national premium has long been an issue for newspapers' advertisers, but individual negotiations can mitigate the actual premium. The resultant premium usually isn't the difference that is published in the retail and national rate cards."

As Tim Rodriguez observes, the premium is costing publishers business.

"What papers are responding to is that national business is shrinking and they are taking that into consideration," says Rodriguez, who is vice president and director of corporate media service for the Newspaper Services of America, which buys ad space in daily newspapers and alternatives around the country.

"National buyers are really circulation-sensitive. Advertisers’ perception is that newspapers are just not reaching the audience they used to and that means the only way they can appeal to national advertisers is by offering discounted prices."

There's certainly lots of room to negotiate, judging by online rate cards of several major market papers.

In The Washington Post, the open rate for local auto dealers for display advertising is $350.10 per column inch for the daily paper and $530.50 on Sunday. But a Detroit automaker would be charged $507.74 and $671.53, respectively, a 31 percent difference.

At the Dallas Morning News, for example, the retail rate for a local department store is $367.42. The advertiser is considered local if it has a presence in the market, such as a store, whether a Sears or a Macy's. A national advertiser, say an airline, would be socked $904.34 for the same ad space.

The rationale for the different rates has long been that national ads incur an agency fee, traditionally 15 percent, that newspapers have to absorb, and they might give another 2 percent for speedy payment.

Another rationale was that national advertisers got a better bargain, in a sense, than local retailers and ought to pay more. Likely the national advertisers was gaining the advantage of appealing to the full readership of a newspaper, whereas often the retailer was really only interested in reaching readers in his or her local neighborhood, so a lot of the paper's circulation was wasted.

A related rationale was to see the national premium as rather a discount, in effect, for local advertisers, as a way the paper might help level the playing field versus larger national competitors. Says Jouette Travis, executive vice president and managing director for Carat, the global media service agency: "I think it was done more to honor the local community."

But among many media buyers, the national premium has long been seen simply as a gouge, a way to hold up national advertisers with inflated rates simply because they had no other options.

In a recent survey on buying newspapers, Media Life asked what most annoyed buyers about the process. One respondent answered: "The scam of multiple rate cards and the general cocky attitude of the reps ('We're the only daily newspaper in town!'). Circ goes down and rates go up. Advertisers are losing value in newspapers every day, but newspapers act like it is still 1970."

But at many papers that's changing, with a greater sensitivity to such complaints. Papers are becoming increasingly alert to buyers' closer scrutiny of circulation figures. As Travis observes, "You have to be careful how you increase your ad rates. You don't want to be the paper that went down 8 percent in circulation and raised your rates by 7 percent."

Rising competition also means there are more people out there talking up how they can do a better job--and in the process putting a brighter spotlight on papers' weaknesses.

Travis does not see any immediate changes in the newspaper rate cards but she does see changes coming as digital editions play a bigger role.

"This is the year that suddenly the digital side and the offline side of newspapers has come together, and it's really going to pick up momentum now that the digitization of newspapers has hit that incendiary threshold," she says.

"I think the transition is going to be bumpy. But at the end of the day the information will still exist, it will just be in a different form."