K Group has developed advertising pricing strategies
in 20 major markets across the county. We conducted extensive
interviews with over 6,000 advertisers to uncover the basic
sources of value from different advertising pricing strategies.
K Group research uncovered
the tremendous potential associated with paying
more attention to rate structure (in addition
to volume incentives)
This primary research provided the foundation for conducting
individual market analysis. Our proprietary pricing methodology
utilizes transaction data from our clients billing system in
concert with our basic value research.
We encourage our clients to adopt strategies that ensure volume
building. Our research demonstrates that pure rate increases
are terribly inefficient tools to increase revenue. Yield from
traditional rate increases is less than 40%. In fact approximately
one-third of all advertisers respond to traditional rate increases
by reducing their volume by an amount equal to the rate increase.
This creates a no-win situation for newspapers and advertisers.
Most advertising rate cards make it almost impossible for small
to medium advertisers to avoid rate increases.
The typical advertiser
rate card demands a large increase in volume to
avoid annual rate increases. This provides little
incentive for an advertiser to grow.
By contrast we make it “very possible” for larger
advertisers to avoid rate increases in exchange for modest
K Group recommends a customized Structural AD-Rate
Program to each client. This program is tailored
to optimize ad frequency, the number of weeks advertised,
ad size, day of week mix, address sections premiums or discounts
and include appropriate volume incentives. K Group’s
customized program maximizes the advertiser’s results
and achieves revenue and volume growth for the newspaper.
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Making changes of this magnitude to a rate card demands a
full understanding of advertiser behavior and how trade-offs
are made in light of a new rate card. K Group’s analytical
approach to pricing makes this possible with high levels of
Recently K Group responded to Advertising Department requests
to “figure out an economical way to reward advertiser
loyalty”. The K Group Advertiser Loyalty Program
was designed as incentive for advertisers to grow and move
their ad dollars to the newspaper (in paper, online, direct
mail, TMC). The program is similar in structure to the Marriott
Reward program (structured by K Group in the 1980s). Have
Advertisers respond very positively to rate structure changes
that “make sense to them’ and tend to reward our
clients with increased volume. In most cases the advertisers
“figure out” the new rate card faster than the
ad sales force. This makes the importance of sales force training
investments hard to over-estimate. This is why our advertising
support (after the new pricing strategy is completed) includes
Sales Force Training and the implementation
of new Sales Activity/Reporting Systems (a.k.a.
Sales Dashboard Reports).