Newspaper Ad Pricing Remains Aggressive
This is a guest post from Ryo Yamaguchi, Media Researcher at Cision.
The question of advertising pricing strategies in the midst of a media industry and larger economic recession has been occupying us and, certainly, our clients, for some time, so we’ve been poring over our print directories back to 2007 to see what sorts of trends might emerge. It’s been obvious and extremely well covered that the major losses newspapers have felt over the past decade is in advertising dollars, and most agree the primary culprit is the migration of readers to online, which is a bit of a shift of apples to oranges in terms of advertising products and pricing, not to mention circulation, reader habit, and a host of other absolutely fascinating topics that we will not cover today. Instead, let us walk through a few percentage changes in newspaper advertising pricing from 2007 to 2010 to see what sorts of incentives may or may not have been offered to retain print advertisers through this major industry shift.
Let me make a few caveats: this is a casual statistical look and not in any way exhaustive; we have looked only at the top 50 dailies in the U.S. and Canada, comparing national black and white open rates; I have removed around five publications who exhibited the largest percentage changes in both directions from the pool, primarily to maintain a cleaner deviation and exhibit more median trends; U.S. inflation from 2007 to 2010 has had a median of around 2 percent, obviously with great fluctuations primarily in 2008. Given these caveats, it is safe to say that newspaper advertising pricing remains aggressive.
Here are the numbers:
- From 2007 to 2008, rates increased 6.7percent.
- From 2008 to 2009, rates decreased 9. percent.
- From 2009 to 2010, rates increased 15.8 percent
While newspaper researchers at Cision began seeing the most devastating cuts to newsrooms (exemplifying lost revenue and decreases in operating budgets) in 2008, the trend was certainly apparent years before, and the general sense in looking at these numbers is that newspapers were not willing to offer discounts in the face of the coming decline. This is a general view, and it must be stated that many individual publications in this pool were already reducing their advertising prices by 2007 and 2008, so papers were really exhibiting different behaviors, with some reducing prices and others maintaining an even rate of increase.
One apparent trend did emerge, however, which was the locking-in of prices. In 2008, 10 papers in our pool maintained 2007 pricing, and in 2009, 14 maintained 2008 prices. Clearly 2008 was the aberrant year, with the pool actually reducing prices by a relatively aggressive 9.1 percent. No doubt the closing quarters of 2008 and the opening quarters of 2009 were some of the worst economic quarters in recent history, so this move seems very much a response to the larger economic crisis of that period and NOT to the media recession these companies had already been enduring for several years prior.
Even more aggressive, however, is the 2010 increase, a full 15.8 percent, according to our numbers. This again seems an apparent reaction to better general economic weather. Without speaking to strategists, the guess with this huge pricing jump is that publishing companies are attempting to recoup some of the 2008 and 2009 losses and get back into the pricing line right where they, say, left off. It is important to mention that there are many reasons a publication would decide to keep higher advertising prices. For one, a business needs to maintain revenue, especially as customers are dropping out: a higher price means more money coming in from those that are paying. And second, a business needs to appear strong: discounts can show trepidation and lack of confidence in product and market.
Of course, these are basic business strategies and in no way do I mean to explain the actual thinking happening in advertising departments at newspapers throughout this period. The most complete point here, the long and short of this story, is that discounts were short-lived and quickly and zealously righted when things began to look better for everyone.
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