How to Set Advertising Rates
Since nailing down an exact dollar value for every dollar spent on advertising is practically unknowable, pricing it is equally tricky. Nebulous value will offer no help with this task. Advertising rates are as diverse as the various media through which they appear. Location can have a bearing on some forms of advertising. Other factors such as area population density, the reputation and audience size of the advertising vehicle also play key roles. Observing some generally applicable indicators can give limited guidance with setting advertising rates.
- Difficulty:
- Moderately Challenging
Instructions
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Measure the amount of exposure to the general public that those who advertise with you can expect. Look at your total available market. Determine a percentage of your market that may be interested in what the customer is wishing to advertise. Charge based on that share of market.
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Comparing premium and incentive schedules gives a quick summary of current rates.
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Take a second look at your schedules. Examine first your premium schedule, which is the schedule you use to price premium advertising rates. Compare it with other similar advertiser rates in your area and market.
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Consider resetting your premium advertising schedule up or down depending upon your rate comparison. Do not be overly concerned about pricing your advertising lower than anyone else. Price instead in line and within range of similar competitors for that market.
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Incremental rate changes will result in fewer complaints.
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Adjust your discounted/incentive advertising schedule. Use the same criteria, and bring it in line with the premium schedule adjustment you made. Set a percentage rate change in either direction to retain schedule consistency.
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Use projections to gauge the effects of any huge rate changes you may consider. Decide whether the big difference in rates will reduce buyers significantly; and if it does, will the rate price difference be enough to cover the lost volume. Refer to and use a history/summary sheet to confirm your projections.
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Set rate structures to maximize advertising revenues.
approved image by Andrey Kiselev from Fotolia.com
Review your rate structures in addition to your rates. (Rates are what is charged per page. Rate structures are how the rates themselves compare, as in one size ad being 20 percent higher/lower than the other.) Make sure you are competitive rate structure-wise as well.
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Consider other pricing guidelines, such as colors used, fonts, boldface and other ad features that can be adjusted up or down according to the need to stay competitive in your particular market. Maintain vigilance of your market. Scout the competition, and strive to be proactive and aggressive with pricing.
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Tips & Warnings
Look for ways to increase market share and adjust rates based on those increases.
Be as helpful and service-oriented as possible with your regular advertisers. Do everything you can to retain and build allegiance.
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