Advertising: AWNA Testing “retail rate”

For the purpose of discovering the effects of a “retail” rate on the Association’s ability to attract more business for members, the Board has approved a “retail rate test” as recommended by the Advertising Rates Committee.  You will see this reflected on AWNA insertion orders beginning immediately.
Advertising Rates Committee:
The committee, chaired by Ad Committee Chair Ossie Sheddy,  represented the diversity of AWNA membership and ownership with the stated purpose to: “Address the current rate obstacle created when inflated national rates are compared (by national and regional clients) to rates obtained by calling newspapers directly, and by doing so enable the AWNA to maintain mutually beneficial relationships with current clients and open doors to new ones more efficiently. This is to be done with a view to reasonable yields to members and a workable funding program for the AWNA office.”

Conclusions:

The conclusion reached over three meetings that took place over the past two months is that adherence to our present national rate and VIP Discount program is negatively affecting the Association’s ability to attract, influence and retain revenue for members.  This negative effect is hampering revenue streams currently and threatens to disintegrate the ability of Associations to position community newspapers for future revenues.

The cost of inaction is seen to be great however there was a strong note of caution in the committee’s deliberations.  Thus the recommendation is this limited test.  The results of the test period will show with more certainty if a move to such rates removes roadblocks to additional business and what exactly is the impact on overall yields to members and association funding.

The committee recognized that the “retail rate” will apply to only a portion of each member’s AWNA business and that the impact will be different for each member.  The degree will depend on the volume and make up of the AWNA business they receive.

The committee also recognized that it will take some time to see what the results of an unfettered AdWest marketing and AWNA sales effort that is no longer hampered by difficult-to-justify rates.

Thus with so many moving parts making accurate modelling of a new rate plan impossible, the test became the clear path forward.

Background
Over the past two years AWNA/AdWest have taken the opportunity to engage agencies in meaningful discussions to ensure that, moving forward, our products and services continue to meet their needs.  In a constantly changing landscape it is vitally important that the association evolves in lockstep with the needs of our clients or we run the risk of becoming irrelevant – as middlemen who fail to do this always do.  We feel it is incumbent on this association to ensure this never happens.

Agencies spoke in person at the 2009 Spring Session Advertiser Roundtable on the importance of justifiable rates and the decline to near extinction of the National Rate, the basis for association/AdWest sales.

Agency participation at the 2010 AWNA Spring Meeting came by way of unveiling the results of the AdWest Client Needs survey conducted with 40 media executives across the country in November 2009.  The results of that survey provided unique perspective on the types of products and services that clients value in an industry that looks much different than it did even 2-3 years ago.

Highlights:

This data squares with our experience in working with AWNA clients and potential users of community newspapers. One Order-One Bill, while revolutionary in its day*, does not hold sway in the era of fast information and communication.  Agencies are motivated by their clients and held accountable more than ever to find the best possible ROI position for campaigns they recommend.

They have found contacting members directly to be an extremely good way of reducing campaign costs.  If it means booking directly, it is not the problem it once was. Highly evolved communication software now means fear of multiple relationships does not trump the desire for best rates.  ROI positions, including media costs play a large part in campaign planning.  Costs must be controlled and when it comes to community newspapers, that is done by either selecting other media or by placing community newspapers buys directly with members.

The threat posed by your association continuing to lose relevance with these accounts is not merely a kink in the association’s funding model, but means losing a place of influence with powerful advertisers.  The importance of positioning community newspapers as a credible, understandable, plannable media cannot be overstated.  The continued ability to do that positioning work with clients in the face of competition from old and new media choices is dependent on having relationships with clients and the ability (funding) to supply services and non-partisan materials that serve them in planning our medium. Only Associations can provide this.

Corporate and for-profit rep houses largely depend on rate erosion to secure accounts and have proven unsuccessful at positively positioning our industry.  Many are considered suspect by the very clients we need to impress.

The Test

The recommendation, subsequently approved by the Board, is to test a simulated retail rate for a period of three months ending December 31, 2010.

A selected list of prospects will be presented with the AWNA rate known to most closely resemble rates quoted locally (namely VIP 22%) and a color rate of $234 (a previously utilized AWNA price).

This pricing will be worked into presentations and offered to a limit of 40 agency clients and 40 direct clients.  Results will be reported to the Board for evaluation.  Specifically; Does the rate attract business from clients the Association has not been able to attract previously?  Does the rate translate into volume increases? Does the rate mean the campaigns are planned for more AWNA titles?

Key indicators of success for the program will be a demonstrable increase in dollar volumes and ad count.

The expected pay off

If success is indicated a further recommendation to establish a single rate structure rather than a rate + discount structure could be the next step.  Such a move gets us away from “discounting” all together.  The role of the Association should be the facilitation of business, not “discounting”.

AdWest has provided advertisers the ability to see the Prairies clearly and when worked in combination with the AWNA’s ability to solidify and execute campaigns, we have a potentially winning formula, maximizing the value of the other investments already in place.

*Note:  NONE of the participants in the survey reported that a One-Order-One- Bill system represented their single biggest need. (Current AWNA core product)