The ad package payoff; Need more muscle in your market? Create a magazine ad package that will enhance your credibility and boost your sales

Folio: The Magazine for Magazine Management, August, 1989 by Daniel Ambrose

2. The advertisers' perception of your package is more important than the reality: If they think it is complicated, it is--no matter how elegantly simple it seems to you.

The imporatance of simplicity in your rate package--to allow for easy up-front rate calculation--is illustrated by General Motors' old approach, since changed. Under the old approach, General Motors took all its corporate discounts at the end of the year and funneled them to the corporate account, rather than back to the individual divisions. The corporate discount money was then used to fund a corporate advertising campaign that, in many cases, did not run in the magazines giving them the discount. The lesson is obvious. You cannot think too much about how your discount structure will be perceived and used by the customer.

3. The goal is to gain profits, not just gain business. Be careful not to create a package that robs Peter to pay Paul. Review your package to see whether there are scenarios where an advertiser might earn an additional discount on lots of pages in one big circulation magazine by adding an inexpensive page in another smaller give-away.

4. Keep your sales force in mind. It should be easy for your sales force to figure out their advertisers' costs and savings for the "next additional page." Keep in mind that the effectiveness of the package will always derive from selling the incremental page or from holding that last page in the book when cancellations are the order of the day.

Plan ahead

Some further points to remember:

* Think about making discounts contingent upon increased business if you compete in a mature market, with strong titles. Time Inc.'s Max Plan, for instance, rewards share-of-market increases. But remember that it could work against you if advertisers must increase their real dollar commitment every year to continue receiving big discounts. Should there be a very bad down year for your advertisers, once they have lost the chance for big discounts, they may walk away from the magazine altogether.

* Decide in advance how to treat supplied inserts and other special units. Will the package discounts apply to mail order? To retail? To gift sections? To remnant pages?

* Consider whether to reserve some units (such as fourth coverse) from any extra discounts.

* Consider how to set the volume levels that are required to earn discounts or credits. There are two general approaches: dollar volume based, and total page based approaches.

With a dollar volume based approach, it makes more sense to include special units such as mail order, retail, gift sections and remnant pages because they carry only the weight they deserve based on revenue. This has the advantage of simplicity. Dollar volume approaches also even out the task of balancing large and small magazines in the same package. For instance, at one time, all Hearst magazines were in one package. Under this structure, an advertiser could earn a higher discount on pages in Good Housekeeping by buying an ad in Colonial Homes. Now, however, the magazines are divided in four marketing-related groups.