Commentary

Do Greater Discounts Deliver Greater Value?

Jim Cooney started selling print advertising at a time when two martini lunches were just sitting down to the cliché table.

I had the pleasure of working with him briefly at the end of his career when I sold for Newsweek. He was tall, with Irish blonde hair that had turned white, and a belly that encased a career of expensed meals. Back then, magazine reps were all assigned advertising categories and were expected to become experts within that field. Jim had the liquor category and knew his business.

Soon after I arrived, Jim begrudgingly accepted an early retirement package. One morning, he stopped in my office, removed his glasses and said to me in his raspy voice, "Kid, they are messing this thing up" only he did not use the word messing. I sat straight and listened.

"We're giving it away at 25 percent off now!" He repeated 25 for emphasis. He then asked me if I knew how all of this "garbage" got started. I gathered it was a rhetorical question, because he continued talking.

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According to Jim, off the rate card rate negotiations within the newsweekly category started years back when those "insert curse word" at Time offered an additional 1.5 percent on top of the earned discounted rate to a large advertiser that ran in both magazines. The caveat was that the advertiser had to buy Time exclusively.

The client, so surprised by Time's off-the-rate card offer, called the rep at Newsweek and asked if they would match the deal. Jim said Newsweek's management huddled for a day before deciding not to discount their product beyond the earned discount as published on their rate card. As Jim stood in my doorway many years later, he still applauded his management's decision to uphold their integrity and walk away from that business.

The media sales business Jim Cooney knew was built on relationships, editorial pride, and a rate card. The business that got away from him no longer revered editorial excellence and used rate cards not as a menu, but a starting point in which to potentially place an order. Jim Cooney left 444 Madison and his career without attending his own goodbye party.

Today, rate discounts are the barometer that reads a media sales market that has become as commoditized as Jim Cooney feared it would. What if we turned back the clock, or mimicked how Saturn sells cars and media were again purchased off a published rate card everyone was using?

Media buyers, if there was a way to ensure that every client was paying the same price for the ad inventory you were purchasing, how would your media department distinguish itself if price negotiations were removed from time spent working with publishers? Obviously, this is not possible given the reality of how media is bought and sold today. But, here is something to think about for tomorrow. Rate negotiations take time, effort, and incur emotional debits. When the majority of deals get done, publishers (either the sales person or their sales management) often feel bad about the rate in which they have agreed to do business. They are of course glad to have earned the business, but the rate paid is not the rate they felt was fairly proposed initially.

There is an ideal opportunity for media buyers who secure ad inventory at rates a media sales person has submitted on their proposal. Don't misunderstand, I am not suggesting buyers pay rate card prices, but I am suggesting that those buyers who don't reach for their hammer every time a proposal comes their way, can get rewarded with value that can distinguish themselves in the eyes of their client, well beyond a few more percentage points off a competitively proposed rate.

Buyers, you would be surprised how far a publishing organization will go to exceed your expectations if you surprise them by agreeing to the rates they proposed for their inventory, right off the bat. I have watched it happen time and again. We would upgrade those clients that paid our requested CPMs to a home page fixed position when it was otherwise unsold. When I was selling print, I watched my publisher consistently move one of my clients into open premium positions because they paid a higher page rate.

Buyers who can be more giving on rates can negotiate a secure place in line for these upgrades that invariably occur. Receiving more value by paying a higher rate may sound strange to us, but not to Jim Cooney.

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