Friday Poll: Ad Pricing (part 2) - On What Are Your Rates Based?

    • 993 posts
    July 27, 2017 10:10 PM PDT

    Quite a few years ago, we asked the question, "How are your 60-second ads priced relative to your :30s?"  We received a variety of responses, ranging from "We charge the same for both." to "A :30 is half the price of a :60." One member even thought that shorter ads should cost more." 

    What was largely missing from that discussion was the rationale behind the rate differences. Why all the variations? 

    Even more to the point, and this week's Poll Question: what's the basis for determining your rates? 

    • Are they based on some fixed standard (cost per second, last year's rates)?
    • Are they based on supply-and-demand (whatever the market will bear) or something else?
    • Are they subject to negotiation (whatever it takes to make the sale)?

    Look forward to hearing your thoughts and comments below.

    ---------

    More than 40 years ago, Jim Williams proposed a Universal Rate Card (pictured below, in his trademark "tacky handwriting"). It was structured like a newspaper rate card, only instead of column-inches, the basic "unit" was five seconds of airtime. The advertiser would contract for a bulk number of units, and the more he agreed to buy the lower the cost-per-unit. The advertiser would be free to use 5-second ads, 10-second ads, 30-second ads, etc., whatever length the message needed to be. (Jim wasn't encumbered by automation and satellite-delivered programming with fixed length breaks.)

    It was an elegant idea, revolutionary even, that never quite took off as Jim had hoped. But it was, at least, an attempt to create a standard.

     


    This post was edited by Rod Schwartz at July 27, 2017 11:31 PM PDT
    • 118 posts
    July 28, 2017 11:33 AM PDT

    At stations where I worked pricing was either "60 seconds or less" or a 60 and 30 second rate was published with the 30 second rate generally at 80% of the 60 second rate to discourage clients from choosing a 30 second unit. From the programming aspect, a commercial break was 4 units regardless of length at the station offering both the 60s and 30s. Literally the idea was to maximize the money made per commercial break.

    When I worked an AM/FM combo we sold a combo rate. Everything was 60 seconds or less. While the stations had different audiences (the AM was Country, the FM was Hot AC), the thinking was to discourage the single station buy because in order to 'take our best shot' at getting results, we wanted to offer both stations. To do so, the single station buy was 90% of the combo rate although both stations had plenty of listeners. In other words, the audience for the FM was not much bigger than the audience size of the AM station as the country format could only be heard on AM in this market.

    Like the above rate card, I am a fan of short spots. They're just easier to write, produce and require less of what I call 'window dressing' being more of a 'nuts and bolts' spot. In other words, the short spots tend not to be the big productions because there's not the time. They pretty much just get the message across and you're done. I contend that in longer spots we tend to need to create a stage with lots of fluff to sell a certain message. Sometimes the fluff is so memorable the client name and message is difficult to recall.

    I loved the TV spot showing a fellow in the passenger seat of a pick up truck telling the driver "you're not listening to me now". The camera pans to show a dog in the drivers seat. Suddenly a duck crosses the road and the truck wheels leave the ground as the dog steers the truck in to a pond as the passenger says "Mother of pearl, No!". I made a mental note to remember the client and the message. If you saw the commercial on TV do you recall the client and message? Spolier alert: CarFax was the client. The message was people do a lot of things to their vehicles. CarFax gives you the history of the vehicle. It was great 'window dressing' but was the client and message remembered as well as the creative it was wrapped around?

    • 121 posts
    July 31, 2017 6:58 PM PDT

    When I started at WOWO at the end of 2013, we only had set prices on our prime time 60's.  After about 7 months, we had to add our live 10 second news sponsorships to the rate card because I was selling so many of them.  They were my "secret sauce" to get lot's of exposure for a little money and because we were so tight on regular inventory.

    Anything not on the rate card we can sell at what ever price we want.  Generally I'll charge at least 75% the 60 second rate for a 30.

    Inventory is what rules our rates, with weekly updates.