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Pricing analysts: How smarter ad pricing could have saved Newsweek's print edition

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Jasper Jackson, Magazine, Newsweek, Pricing, Revenue, TheMediaBriefing Experts' Blog, Tina Brown, Google, Advertising, Consumer Media


Could Newsweek editor-in-chief Tina Brown have saved the 80-year old magazine's print edition from closure by being a bit smarter with advertising prices? According to pricing consultants Simon-Kucher & Partners - quite possibly.

The authors of a white paper, Andre Weber and Kyle Poyar, tell TheMediaBriefing that Newsweek was making 36 percent less ad revenue per copy than its main rival Time magazine - equivalent to around $50 million (£31 million) in annual revenue in 2011.

That would have been enough to generate a modest profit, rather than the $13.2 million loss (£8 million) Newsweek contributed to parent company IAB's most recent quarterly results.

How could Newsweek have closed the gap with Time? Weber and Poyar say there are two levers magazines like Newsweek can use to influence ad revenues, and getting the balance right is key:

-- Volume: Make sure the number of ads is in tune with your pricing. Newsweek was selling ads at a slightly higher rate than Time - but was selling fewer ads per copy. Dropping prices - perhaps giving some advertisers favourable rates - and increasing the number of ads in each issue could have helped close the gap - assuming they had enough sales staff to do the work.

-- Price: Unlike Newsweek most of the magazines Weber and Poyar looked at that were making less revenue per copy than their rivals were charging too little per ad. Weber says publishers are often too scared to ask for higher sums, and too quick to back down if advertisers don't bite - but if they don't ask for a higher price they won't find the upper limits of what they can charge.

Though Newsweek's circulation more than halved between 2006 and 2011, it appeared to be steadying in 2012. With a better approach it might have been able to break even for some time. 

The key point Weber and Poyar make is that magazines need to look at the bigger ad pricing picture, evaluating what advertisers are willing to pay based on market conditions - rather than just inward-looking categories such as colour or full page. 

Poyar says: "Magazines need to focus more on using the information as a guide. Look at what similar magazines are doing and then you can investigate what pricing matches your publication.

"Getting the price right relies on looking across the many data points. The key first step is to look at what is most comparable to you."

Digital

It's an approach which has more in common with the automated systems being introduced online - but for tablet apps where programmatic buying hasn’t made much headway a less machine-oriented approach is still needed. 

Weber says: “"Online is different in terms of price setting.  With Google, etc. there is more of that infrastructure. But on tablet apps for magazines, ads are still formatted the way they are in print and so apps will require a more hands-on pricing approach.“b

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