Beating the price grinder at his game - magazine advertising sales

Folio: The Magazine for Magazine Management, May 15, 1993 by Josh Gordon

Take the focus off rates, and you have a much better chance of deflecting the Price Grinder from his goal. Here's how.

You know the Price Grinder: He focuses his attention on trying to get you to lower your magazine's rates over all else. He is a master craftsman who has honed his skills over the years. If he spent more time creating better ads and working harder to place them strategically, the company he works for would be far better off. But for the Price Grinder, the sport of getting the lowest rate is more important than buying the best space. You may say he is crazy and doing his company damage, but often the Price Grinder is "crazy like a fox" and does end up getting what he wants. And often, the person driven crazy is you.

Ultimately, many Price Grinders are not worth doing business with. They can represent unprofitable clients who will drain you and your magazine of energy and time with more demands than the business they send you is worth. And the relationships you develop with them often don't last long: If Price Grinders focus on buying space for the sake of buying something cheap, and not to solve marketing problems, their marketing incompetence will soon get them fired, or put the business in jeopardy.

But in some industries, particularly ones where the clients themselves are under tremendous price scrutiny, Price Grinders thrive. If you sell in an industry like this, get used to selling Price Grinders: You will be selling them for a long time. That being the case, here are some coping strategies.

If you are asked for a rate concession, ask for something in return. This is the quickest way to separate the serious rate negotiators from the "It doesn't hurt to ask" negotiators. Tell the Price Grinder he can have his rate, but he must run more space, run bigger ads, commit to specific months of the contract up front, or commit to the contract earlier in the year. If your client is not that serious about a rate demand, you have said "no" by putting the ball back in his court. If he is serious, he will get back to you.

Find out what the Price Grinder really wants. A rate demand is many things to many clients. For some, it really is just a straight request for paying less cash. For others, the motivations could be one of the following:

* A way to look good before a superior or client by squeezing some extra blood out of you. Is there something else you can give besides a rate concession that will accomplish this?

* A win. They win, you lose, they buy. Is there some other way they can win and still buy?

* A matter of pride. After I had explained why there would be no rate concessions made to one client of mine, he responded, "I can't accept this. I never pay rate card." Again, is there some way you can "go off rate card" without lowering your rates?

Okay, you don't want to budge an inch on the rate card, but can you extend an extra merchandising service, a positioning concession, or something else? With Price Grinders, rate negotiation is often an ego issue. They just want the satisfaction of knowing they got something extra. If this is the case, give them something extra that does not involve cutting rates, but that is meaningful to them. If you can discover the deeper needs of the clients you are negotiating with--the need to look good, the need to win, the need to maintain a "record"--you will have more horses to trade when the horse trading begins.

Don't let Price Grinders view your magazine as a commodity. If the page your client buys in your magazine is viewed as identical to the page he buys in another magazine, you are selling a commodity. Commodities traditionally are sold on a price basis. The most common tactic Price Grinders will use is to make you think they can get the identical page cheaper somewhere else. You must prove the uniqueness of your magazine. Make comparative presentations showing side-by-side counts of editorial topics covered, circulation, editorial color, number of editors, showings in readership studies, and so forth.

Talk "value added." Offer the Price Grinders a unique value-added package. In my book Competitive Selling, Rance Crain says, "The way publishers will be able to get away from rate negotiations is by not selling pages anymore, but by selling packages of things. Not only pages in magazines, but videocassettes or a TV show or other things wrapped up in one package that has an overall price that is impossible to take apart. It is possible that the media could create packages that would cost more than the rate card. Advertisers want more than just price concessions; they want interesting and unique packages that help reduce ad clutter and give them a unique place to sell their wares. And they are willing to pay a premium for this."

Keep it personal. With price, less personal negotiations favor the buyer. It is much easier to gouge or make crazy price demands of someone you don't know very well. If you have had dinner with the client and his wife, chances are you will be treated, at the very least, fairly. And you will be less likely to be subjected to severe price-bashing if you have a personal relationship with your client's boss, the agency's client, the president of the company, and so on.