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Issue for October 2010

Price Objection over Online Ads

Posted on Thursday, October 14, 2010 at 12:22 PM

Are you having trouble getting decent rates for online advertising? If so, you are not alone. Here's an analysis of the problem -- and some tips on how to solve it!

By William Dunkerley

A lot of publishers are saying that they just can't get a good rate for online advertising. Advertisers want to pay less. At the same time, publishers are looking to make up for recessionary fall-off of print advertising. And getting more revenue online seems like an answer to many. But, how can you deal with the persistent price objections?

Let's analyze what's going on here.

I find that there are two factors involved. The first is the sales methodology used by the publishers. In many instances, it is just not up to the challenge of selling online advertising. The other factor is the online advertising itself. Unfortunately, many publishers are not offering advertisers good value with online ads. For a variety of reasons, online magazine ads in many venues are relatively ineffectual for the advertisers.

The Sales Methodology

The sales team of one publisher was telling her that they needed to cut the online ad rates. Why? The advertisers were telling them that this publication's rates were too high. Maybe they were too high compared to an online competitor, or perhaps they were just plain too high. The sales team sought to remedy this by acceding to the advertiser demands for lower rates.

At another publication in a completely different field, advertisers were telling the sales people that they simply didn't have the money to spend on ads. Recession had hit their businesses. And, if they weren't making money, they couldn't be spending money on online ads. The sales team at this publication wanted to start offering deep discounts in light of the economic circumstances.

Price. Price. Price. That's certainly a common objection these days. Are your sales people encountering it, too? If so, here are a few tips to consider:

1. Are your sales people unwittingly prompting that objection? There's no doubt that many advertisers are spending money cautiously -- and they're letting sales reps know that. But, after hearing the price objection a number of times, a salesperson may go into a sales call anticipating the objection. As a result, he introduces the subject of price early in the conversation. It's an attempt to head off the price objection and avoid rejection. Talking price before the prospect is convinced of benefits, however, is almost always a mistake. In fact, the more the salesperson talks about price, the more likely it will become a source of objection.

2. "Your rate is too high" and "I have no money" are often code words for "goodbye." In other words, the advertiser is trying to end the conversation. She hasn't been convinced that online advertising in your publication offers any concrete benefit. Price isn't the real objection. The problem here is that the advertiser hasn't been sold yet. So, responding with a justification of the rate or suggesting a discount can be just a waste of time. The code words for "goodbye" are often invoked when the salesperson has done an inadequate job of probing the prospect. The salesperson doesn't know what the advertiser's goals are. As a result, he can't tell the prospect how advertising in your magazine can achieve those goals. So what can be done to rescue this sales call? Re-probe the prospect. Pick up on something that seemed to be of interest, and get her talking about her marketing objectives. Present a few targeted feature/benefit statements. Then, go for a close. Don't revisit the price pseudo-objection. Just go for a close.

3. In the rare situation where the advertiser honestly believes that he can't spend money on ads because he's not making any money, there is opportunity for a different approach. Educate the advertiser. Successful advertising is not an activity that is loss-making. It is profits-producing. Failing to spend money on efficacious advertising will only perpetuate a company's weak financial position. Worse, it can even create a downward spiral. Effective advertising is a way out; it leads to new business. Find ways to drive home these points, and your prospect will see why it is important that he spend money to advertise in your publication.

The Online Advertising Itself

Many advertisers are refusing to accept publishers' online rates because the online advertising isn't paying off for them. You may be able to quote how many exposures they are getting or cite click-through statistics. But an advertiser can't take those numbers to the bank. What an advertiser is usually looking for is orders. In the case of image advertising, it is benchmarked survey results that demonstrate impact. When considered in these terms, server statistics don't really mean much. What's more, they are often inaccurate. Efficacy is what's important.

I know that some advertisers actively look for server statistics when deciding where to advertise. But sooner or later, things will come down to efficacy of the advertising. If the advertiser spends a lot of money on click-throughs and exposures that produce inadequate results, he may learn the folly of his ways. And if you sold yourself based on server stats, you might come up short. It would be better to have sold your online advertising based on efficacy.

But that raises the question: is advertising with you online efficacious? Will the advertiser get results in terms that really matter?

Too many times, the answer to that question is no. The online ads are bearing no fruit (or at least insufficient fruit). Why is that so? Here are a few reasons why some online advertising produces inadequate results:

1. The ads aren't big enough. It's a well established fact that, in advertising, effectiveness is proportionate to the size of the ad. That's why a full page in a print publication out-pulls a tiny fractional. A lot of online banner ads are the digital equivalents of tiny fractionals. They're not going to produce big results. Online advertising really got itself into a rut with the preponderance of banner ads. If you want your advertisers to see results from advertising with you online, sell them big ads.

2. Some ads have no fixed location. They are served dynamically as members of a sequence. Now you see it, now you don't -- the next ad has been served. What's wrong with that? It has to do with repeat exposure. Repeat exposure contributes to advertising effectiveness. When an ad has a fixed location, readers will re-experience the ad as they navigate back and forth in your publication. If an ad is not there all the time, it misses that reader-initiated re-exposure. And what if the reader remembers an ad and wants to revisit it? If it's still where she saw it before, she'll have a chance of finding it. If something else is in its place, that ad has missed another chance at repeat exposure. Give your advertisers the best shot at repeat exposure. Give their ads a fixed location.

3. The wrong people are looking at the ads. Advertisers want exposure to qualified, prospective customers. Sometimes in the rush to boost server statistics, a publisher will take steps to boost traffic, any traffic. And that can result in pairing advertisers with readers who have little interest in buying. Hitting a targeted audience is just as important online as it is in print. Reader acquisition generally costs more in print than online. That tends to make publishers rather judicious about acquiring a well-targeted audience. Lower-cost online audience promotion can lead to a less stringent approach. That in turn garners a less qualified audience. If you want to acquire and sustain the interest of advertisers, be sure that you are aggregating for them an audience of qualified buyers.

Earlier, STRAT carried a two-part series entitled "Why We're Not Seeing More Online Ad Revenue." It expands upon the ad-related issues I've been talking about in this article. Here you can see Part I and Part II.

Sales methodology, and the advertising itself. Those are the factors that are stimulating many of today's price objections with online advertising. Use the tips presented herein successfully, and you can see those price objections drop by the wayside.

William Dunkerley is principal of William Dunkerley Publishing Consultants, www.publishinghelp.com.

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Posted in Advertising (RSS), Print (RSS)

The Future of Mobile and Tablet Publishing

Posted on Thursday, October 14, 2010 at 12:22 PM

The future is bright for mobile and tablet publishing, but don't be blinded by hype.

By Meredith L. Dias

With smartphones poised to become the primary Internet browsing device within the next ten years, it seems logical to consider what a tablet edition or smartphone app might do for your publication. In all probability, at least some of your readers have already hopped aboard the portable reading bandwagon in some capacity (whether via laptops or netbooks, iPad, Android, iTouch, Kindle, iPhone, Nook, Sony Reader, etc.). Some are likely smartphone or tablet users.

Personal computing, suffice it to say, is changing. It is becoming increasingly portable -- in many cases, even pocket-sized. Consequently, magazine publishers must consider a host of devices when making content delivery and platform decisions. Should you offer an iPhone edition? An iPad edition? A mobile digest of your print content?

Our Survey

We recently surveyed publishers regarding mobile and tablet publishing. Some had already developed iPhone editions. Some had no plans to pursue mobile or tablet publishing at all. What was most noteworthy about the response, however, was the lack of response. For whatever reason, the topic didn't appear to resonate with our list of publishing executives.

With smartphone and tablet use on the rise, why is this? Perhaps the publishers were simply too swamped to respond -- with the industry changing so rapidly, this is a real possibility. Perhaps some publishers haven't given the idea much thought yet -- after all, the iPad has only been on the market six months. Either way, our response rate was quite low compared with past surveys.

What Publishers Said

There were, however, some interesting responses from our list worthy of mention. Terry O'Neill, editor of Powder and Bulk Engineering, tells us, "We do publish an email newsletter which we expect to be available soon in mobile format (for smartphones). Our regular print and digital magazines aren't considering smartphone or tablet apps at this time and probably won't for quite some time, if ever." A few other publishers told us that they have no smartphone- or tablet-friendly content at all.

There were, on the other hand, publishers charging ahead with smartphone and/or tablet editions. Lucy Collin, publisher of Marketing magazine, says, "We have developed a mobile app for our daily news and we are working on iPad now. Our daily newsletter app has two banner ad positions." About revenue, she says, "We see it as a growth area. Most indications are that mobile Internet use is going to increase over the next five years, so however important the Web has been to a given publication over the last decade, it will become doubly so when mobile sites, apps, and online video/audio content becomes a regular part of the editorial and production process."

Paul Westervelt, vice president and group publisher of Oil and Gas Journal, shares Collin's vision of mobile publishing's future: "We believe mobile devices are an essential part of our publishing future." He said that his journal will offer both smartphone and tablet apps starting on October 12.

Other publishers were just beginning to discuss smartphone and tablet publishing.

The Current Mobile/Tablet Publishing Landscape

The varied responses reflect the industry as a whole. It is only recently that mobile and tablet publishing have gained significant momentum, particularly with the release of the iPad and mounting popularity of the iPhone and Android. Some cutting-edge publications are ahead of the curve, with apps and tablet editions that already border on established. Others -- particularly association publications where print is still the hot commodity, or publications with limited online presence -- have no real use for smartphones or tablets right now. Still others, bruised and battered by the recent hard times, are approaching this new wave with caution.

A recent Harrison Group/Zinio survey forecasts that "tablet-based devices and e-readers together will exceed 20 million units in the next year and they may well be the Christmas gift of 2010."

The Harrison Group/Zinio Survey

While the survey reveals some interesting statistics about the reading habits of tablet and e-reader users, the press release about it is not without hype and causal assumptions. For instance, "Tablet and e-reader owners spend 50 percent more time reading magazines and magazines articles." This is, upon first glance, a stunning statistic. However, we must pay attention to what it actually tells us: simply that tablet/e-reader users spend more time reading magazines. It doesn't specify that they are reading the magazines on their portable devices, and it doesn't necessarily mean that they are reading more magazine content than before. It simply tells us that these device users read more than non-users.

Similarly, although the press release states that 33 percent "are spending more money on buying things to read," we don't know from the information given whether these device users are actually buying digital content or even reading what they buy.

Perhaps most important to note: According to the press release, "28 percent are now reading digital magazines or books." While this constitutes nearly one-third of the survey respondents, it means that over two-thirds are not consuming digital content. What's more, those 28 percent of digital content consumers may be reading on a desktop computer. (Note: The survey involved "1,816 Americans, ages 18-64").

Beyond the Buzz

With so many misleading statistics out there, it can be difficult to make smart decisions for your publication. Most important, as mentioned above, is to filter out the hype from the hard numbers and rational analysis. There is no question that digital reading and portable digital reader (or PDR, our blanket term for all portable devices that enable digital content consumption, including laptops/netbooks, smartphones, PDAs, e-readers, and tablets) ownership are on a meteoric rise. However, allowing ourselves to become blinded by hype could prove disastrous to our bottom line.

So be careful when doing the math, and take care not to taint your statistical analysis with unsupported assumptions. Just because something worked for your competitor or a major national magazine doesn't mean it will work for you. A splashy iPad app may seem like a foolproof idea, but if you can't get your readers to purchase it or advertisers to invest in it, all that expensive design will become an eyesore.

The technology may be changing, but the rules of engagement haven't. Never dive headfirst into new technology without the proper research and strategy, no matter what headline-worthy statistics and forecasts you've read.

Meredith L. Dias is research editor of STRAT.

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Posted in Online (RSS), Technology (RSS)

New STRAT Feature: Digital Hype Watch

Posted on Thursday, October 14, 2010 at 12:21 PM

With so much hype out there about digital, publishers need someone to cut through the spin and deliver rational analysis of digital publishing and its possibilities.

In future issues of STRAT, we will include a feature entitled "Digital Hype Watch," to help publishers make strategically sound use of digital channels to reach readers. The hype watch will examine digital magazine research and its media response, cutting through hype and statistical misinterpretation to help publishers make informed decisions.

Posted in Online (RSS), Technology (RSS)

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Posted on Thursday, October 14, 2010 at 12:21 PM

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