Press ads offer more room to negotiate price

A wide spread of media prices in the press indicates that some agencies could provide their customers with better competitive advantage, says John Ferguson

Today’s press advertisers are faced with a medium apparently in decline. The hype may be about falling circulations and readerships, but the greater demand for colour and the consequential increases in revenue are evidence of a dynamic medium. We read about the threat of the Internet, yet the fastest growing advertising category for press is computers.

The dynamics of trading press space also divides opinion. How often have you heard in recent years that the growth of the media buying industry with bigger, and therefore fewer, buying points is leading to price commoditisation? At the same time, agency press buyers are keen to demonstrate competitive advantage to their customers. Among Billett’s latest studies is an examination of the price variation within our customers’ national press deals.

On the one hand, against the recent backdrop of fairly consistent television price inflation, we find little evidence of consistent increases in national newspapers’ overall unit space prices. Most titles are struggling to move prices at all year on year. The only two titles that have extracted significantly higher prices are The Daily Mail and The Mail on Sunday. Consistent circulation growth, contrary to the rest of the market, has moved their colour prices on by around six per cent in the last 12 months. Titles whose long-term circulation has dropped have been unable to maintain price momentum.

On the other hand, data drawn from the 12-month period to June 1999 reveals extensive variation in the available range of prices. For example, the spread about the average for all newspapers in the colour market was found to be 26 per cent, with a similar figure for mono. In one major quality daily we found campaign mono prices varied by about 70 per cent.

Our investigation has also revealed which of the newspapers/groups achieve the tightest control of their inventories. Generally, clients are finding little scope for negotiation in the stronger tabloids, and in the quality sector The Sunday Times showed resilient price management.

Billett has identified a number of advertiser categories where virtually identical strategies are traded at very different price points. A good example is the retail category, where colour page prices vary by as much as 20 per cent. Again, buying proficiency must explain the overall nine per cent spread that we found here.

Billett has concluded that the spread in overall pricing on a like-for-like basis that our clients pay for comparable space is around 18 per cent. In a market worth &£1.2bn annually, there are clearly opportunities for some advertisers to improve their value positions.

Press offers the most cost-effective and direct mass-market reach of any medium, with 65 per cent daily reach – what bigger opportunity can there be than that?

John Ferguson is head of press at The Billett Consultancy


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