• by Ari Rosenberg , Op-Ed Contributor, March 3, 2005

When I purchased media in the early 1990s, the items we negotiated as "added value" appear relatively insignificant now.

Items such as a thousand bulk copies of the magazine for client distribution purposes and the critically important inclusion on a reader service card do not sound like much value was negotiated on our part. Only when we were spending a lot of money were we able to negotiate a bonus page or two from the newsweeklies as I recall.

Today, regardless of the size of the media expenditure, added value usually includes a form of valuable bonus exposure. Bonus pages and bonus impressions online are just some examples of how well media buyers have negotiated to add value to proposals and subsequent media buys.

If you compare the perceived monetary value between a listing on a reader service card and 1 million ad impressions online, for example, you can visualize how much ground buyers have secured in this pricing tug-of-war with publishers.

However, added value is one battle area on a request for proposal where publishers can gain some ground back. But to do so, they need to rethink their pricing strategy.

The current thinking behind proposing bonus exposure beyond the fact that the media buyer tends to direct them to do so, is that publishers can lower the effective cost of the entire proposal without lowering their rates for paid pages or paid impressions.

For example, a magazine may charge a paid rate for three pages, but then propose two pages as "added value." Therefore, the effective discount and cost-per-page decreases on the insertion order, yet the paid rate is higher. The same holds true for online impressions. Publishers charge a higher CPM for home page placement for example, but then lower the effective CPM by proposing run of site impressions as "added value."

Publishers will defend this approach because free pages or bonus impressions online does not really cost them anything beyond printing or serving costs. This is a mistake.

Value in our business is mostly perceived. Including pages, for example, as added value, which are the very item print publishers sell the most of, decreases the perceived value of their pages sold over time. So what steps can publishers take to reverse a pricing trend that ultimately eats into their margins while at the same time increase the price they get buyers to pay for what they sell the most of?

This is a complex problem, and the answer is counterintuitive. Which means once it sinks in, it is simple to execute. The first step is to identify the most valuable component on your proposal in the eyes of the media buyer. If you cannot identify this, then create it, because your proposal needs it.

It could be a premium position like a fourth cover, a dedicated e-mail drop, or maybe an editorially integrated package that involves a print and online sponsorship of a well-promoted health section. Items like these have established a higher perceived value mostly because there are less of them to sell and they often sell at a premium price.

These items then become the carrot of your proposal.

Step two includes enticing buyers to negotiate these proposed carrots into added value. In return, sellers can use the leverage gained to maintain or increase the asking price on what they are selling in the rates section of the proposal.

The key is to first establish a monetary value for this unique component and then give it away for free. "No free lunch" however, is a tired saying that can rest here for a moment because this approach, when successful, will cost the buyer a few well-earned bucks from their budget.

A friend of mine, who has been successfully selling print media for years and now runs his own publishing company that produces custom periodicals targeting small business, has adopted this pricing strategy.

In a recent proposal for a large national retail outlet, the most valuable item he identified was the proposal of 65,000 customized copies of the magazine with the client's logo on the cover for distribution at several small business conferences. The value he was able to attach to this custom printing was $82,000.

He then proposed this item as added value. In return, he required the media buyer recommend four spreads priced at his rate card, which is exactly what occurred.

Giving away your most expensive item on the menu is counterintuitive to most who sell for a living. However, if you sell media, adding unique and premium value to the menu and then not charging for it creates an opportunity to increase the price of what you do sell.

Go figure.