Question

Topic: Advertising/PR

Advertising Pricing

Posted by Anonymous on 6/16/2011 at 2:18 PM ET 500 Points
I am putting out a tabloid magazine (for election season). I am at the point where I need to set my advertising pricing, and I am having trouble with this. We are circulating 5000 magazines and the magazine will have a shelf life of a month and a half (last week of June to August - the date of the elections).

So how much should I charge for a full page ad? (I can calculate the other size ad costs after knowing the cost of a full page)
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  • Posted by AdsValueBob on 6/16/2011 at 4:55 PM Accepted
    I agree with Phil, and I wish to give you more to think about.

    I assume you have a line on many related advertisers wishing to target a political election market, and there aren't "any" like competitor publications. If not, listen to Phil.

    I see your project as a risk politically-centered advertisers choose (or need) to bear 100% on such highly speculative "one time" space. The money to pay for political or other advertising is as green and any money. You make no representation of ROI - only exposure. You're providing a service - nothing more. (similarly - Obama wants to raise $1,000,000,000 that needs to be spent on promotion. Your opportunity just has fewer zeros to the right)

    Consider a go-no go proposition - if you can't cover your costs (sell minimum ad space) by a certain date, refund their payments. Goofy but possible if you're funding with revenue strictly from this publication.

    (Easy numbers provided for example only - adjust accordingly)

    First figure your costs:
    Ad design, overhead, sales costs, article costs, publishing and distribution, etc. = $5.00 / copy x 5000 = $25,000
    Opportunity cost 30% x 20,000 = $6,000
    Total cost $31,000
    Go / No Go ad sales might be 70% = about $22,000

    How many pages (minimum needed) = 20 with 50% ad space = 10 pages of ads

    Assuming 100% of the ad space is sold, a raw calculation might be:

    Total cost divided by # of pages of ads = $31,000 / 10 = $3100/page.

    Now adjust individual ad pricing for cover or center ads, 1/4 page ads etc.. A rear cover might be $5000, and a 1/2 page might be $1600.

    This is a cocktail napkin example but gets your calculations going in the right direction. If it doesn't look good on paper - it will look a lot worse in reality.

    Call if you wish to discuss further.

    Bob
  • Posted by mgoodman on 6/16/2011 at 5:36 PM Accepted
    You can only charge what an advertiser is willing to pay. So who are the target advertisers? What are they paying today to reach a comparable audience? That should give you a starting point. (You can make adjustments on a CPM basis.)
  • Posted by marketbase on 6/16/2011 at 8:20 PM Accepted
    AdsValueBob has the right idea. Simply stated, you first need to determine total cost to be covered, then add a reasonable profit.

    Good luck!
  • Posted by Peter (henna gaijin) on 6/16/2011 at 8:30 PM Accepted
    I started a magazine, so went through a two step process.

    First step is determine what you need to make. Add up your costs (printing, distribution, editorial costs, etc.), and divide this by the number of ad pages you plan to have (magazines are often 30-60%, newspapers up closer to 80%). This tells you how much you need to make per page. I would increase this by some percentage to cover discounting an such that you likely will have to do.

    Second step is look at what competitor magazine are charging for ads (sometimes they will have their ad rates online, other times you will need to find a way to get it). The goal here is to see if you are in line.

    While you are at it, get a hold of the competitive publications and count up how much ad space they have, so you can see if your percentage is in line.
  • Posted by BizConsult on 6/16/2011 at 11:58 PM Accepted
    Figuring ad pricing based upon your costs is an exercise that tells you whether you have a viable business proposition...but solely looking at it from your perspective would be myopic and dangerous.

    You need to put yourself in your potential advertisers' shoes: What is your target demographic / mindset and guaranteed delivery? How does this fit with what the advertisers might be looking for and what are their alternatives?

    Do you offer something (or someone) unique - i.e., the audience, timeliness, engagement or content that the possible advertiser can't replicate elsewhere? Do you have multi-platform/channel messaging that reinforces the messaging? Do you have built-in tracking or response mechanisms? How does your medium complement others in terms of reach and frequency, pass-along readership, etc.

    Once you've scoped out the advertisers' needs, the relative benefits of using your publication and substitute costs (start with a basic SWOT analysis), you can decide where to price your offering.

    Bottom line - put yourself in your customer's situation and look at what their choices are to help direct how you can offer them a unique solution to their needs and then price appropriately!

    Steve
  • Posted by AdsValueBob on 6/19/2011 at 12:08 PM Member
    (By the past questions you've asked in this forum, I assume you publish or have attempted to publish other items before.)

    The answers so far are right on for the mainstream magazine world, and I wish we had more details on the description of this political magazine and the target audience. Since we don't, I assume this "magazine" will be unlike most other magazines and deviating somewhat from accepted publication guidelines.

    An assumed description. . . .
    - a one-off that has no history and no future (at least until another election)

    - at 5000 copies - it's only being presented to a small vested "political arena" - not the general public so demographics may be a minimal factor. I suspect they are more a handout at political gatherings

    - typical advertisers would not be looking for X sales or Y leads generated or introducing the new XYZ9000 gizmo. They are more apt to be looking for posturing their position of an issue, throwing their support behind someone, or specialty services for politics.

    - political money "has to be spent quickly" and probably relatively few options are available for such a specialty magazine advertising

    If these assumptions have any correlation with this magazine's potential reality, then some traditional publication guidelines tumble by the wayside. I liken this to a "magazine" for the National Faucet Washer Convention.

    If an advertiser wants or needs to be seen (and crazy if they don't advertise here), they need to advertise in this "everybody gets one in their welcome kit" magazine.
    The political magazine might be somewhat on these guidelines.

    Someone "needs to" publish such a magazine - then why not PartyOrPaper? Just proceed with good business decisions and don't get caught holding the short end of the stick. Create a Go / No go plan to avoid any (minimize) loss.

    Bob
  • Posted on 6/24/2011 at 7:16 AM Accepted
    Your "one-off" publication sounds unusual, so here is an unusual suggestion. Create an auction for the most desirable advertising space. The highest bidder gets that space. With that space there is some kind of on-line tie-in. There is a build-up at the auction by selling different kinds of advertsing spaces and packages (on-line tie in, etc.).

    You also promote the auction over the Internet and on-line. People actually come to a physical event to bid (can be a modest setting), but can submit bids on-line too.

    Auctions often fall flat on their faces, but the right environment with the right professional auctioneer can create a remarkable "feeding frenzy."

    Regards,
    JH
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