Online Technology March 2000
Raising your rates without any complaints
By Peter Zollman
How would you like to raise your advertising rates and not get a single complaint from your customers?
It's easy. Really.
Just tie that rate increase for classified advertisers to online advertising. And make sure you do it separately from your regular annual rate increase.
Advertisers who scream and holler over even tiny increases for print advertising will pay online increases without complaint.
It's been proven time and time again. Literally hundreds of papers have raised their rates in conjunction with online services; numerous Advanced Interactive Media Group studies and conversations have shown there is little or no resistance to the increases.
Advertisers may not know yet exactly what value online classifieds offer, but they perceive a high value. That gives you the opportunity to set a reasonable price for your classifieds when they go online, or when you upgrade your services.
Many newspapers added $1 or a similar amount to their rates for classified liners when they first put their classifieds online. But in most cases, the upcharge was included in the rate shown for the print advertising. As a result, no clear value -- not even a buck's worth -- was assigned to the online ads in the advertiser's mind.
In the time since you first put your classifieds online, a lot has changed. So it's time to reconsider your pricing structure for classified ads and see if a rate hike is appropriate.
Here are some suggestions for raising your rates painlessly -- with justification.
Don't tie print and online increases together. If you want, you can include the online fee in your overall classified rate. This is typically called a "forced upcharge" -- a description that some newspapers and groups shy away from.
However, it's best to break the online service out on your billing, and it's best to raise the rates at different times.
Raise online rates in conjunction with improved services. You should be aggressively upgrading and improving your online ad services. Consistently. In this field, standing still is equivalent to falling behind.
So make sure you offer the best possible online services and applications you can -- and charge fairly for them.
Also, of course, your online traffic should be growing steadily. If you show advertisers a 50 percent or 100 percent increase in usage during the past year, that's the print equivalent of circulation growth.
If you show advertisers the value they receive has grown, they'll accept rate increases. If your traffic hasn't increased at least 50 percent in the past year, you're doing something very wrong.
Charge different rates in different categories. Some ad categories work especially well online.
With your current billing software it may be difficult (or impossible) to charge different rates for each category, but it's an important goal. If you find a category working better online, charge more for it.
One Florida paper we know of found that its print "apartments for rent" ads were being canceled quickly -- much faster than a few years ago. Why?
By digging, they found that online renters up north were finding the ads online and responding. By raising rates in that category, they could turn a negative into a positive -- while giving advertisers excellent value.
Let advertisers place their ads online. If you don't offer a real e-commerce online solution for incoming ads, at least offer easy input at your site with fast phone follow-up.
At least one company, AdStar (adstar.com), offers a very quick and easy true e-commerce ad input service under newspapers' private brands online, at nominal rates. This is an excellent way to offer additional services to your advertisers and reduce phone-room costs.
During the next few years, print classified advertising will come under increasing rate pressure due to the growth of online services and solutions.
Free and inexpensive online providers from dot-coms will make it hard for you to maintain your print pricing structure.
Make sure you offer an effective and valuable online presence to compete with those new challengers -- and, perhaps most important, assign fair dollar value to it.
Peter M. Zollman (pzollman@group-aim.com, 407.788.2780) is founding principal of the Advanced Interactive Media Group, L.L.C., a consulting group that works with newspapers and media companies to develop successful interactive media services.