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Mid-Day devises a successful category-centric ad pricing strategy

19-October-2004
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Mid-Day devises a successful category-centric ad pricing strategy

It’s impractical to believe that publications charge same rates to all their clients. In fact, it all depends on negotiations. However, in the case of Mid-Day, it is interesting to look at the picture more closely as the reason for rate differentiation here is very different. The tabloid shifted to category-wise rate card in May 2004. Mid-Day follows a modus operandi where rates are in proportion to what is delivered for each product category relative to competition.

Let’s take a close look at the technique of changing ad rates. “What we have done is define the most relevant TG for as many as 22 product categories,” explains Cyriac Mathew, Marketing Head, Mid-Day. “Then we matched each of them with the target that Mid-Day delivers and based our ad rates on that. Our rates are in proportion to what we delivered for each product category relative to competition. Effectively, this means that we cannot charge the same rate to all advertisers, as all publications normally do.”

The process has given Mid-Day its current form of differential or sectoral pricing structure. States Mathew, “The revenue and not just the volume of business has been on the rise and we are confident it will continue to grow, because, advertisers have even felt more comfortable with the transparency apart from the rate benefit.” As he informs, the organisation’s rate card has 22 different rates, “These rates are based on the number of relevant readers that we deliver for each product. To give an indication, we charge a lower rate to a five-star hotel than to other services. The same holds good for premium properties, international appointments and so on,” he adds.

Subsequently, categories like entertainment, events, mass-based retail, credit cards, insurance and the like have higher ad rates as these are the categories where Mid-Day delivers much larger relevant target numbers. “The difference between our lowest and the highest rate is more than 100 per cent. Hence, this is differential pricing in its true sense,” states Mathew.

As is known, Mid-Day’s readership is predominantly male and falls in the age group of 15-40 years. So, products like insurance, credit cards, cars priced below Rs 5 lacs, retail lifestyle products, restaurants, education, TV channels, etc., become prime clients for the publication.

Does the differential pricing structure change with page and position? Mathew explains, “The differential pricing structure applies to product categories and not to pages. Hence, ads of any category can appear on any page. But yes, there is the usual premium that is applicable to all categories on a few special pages.”

Dwelling more on the reason for putting such a system in place, he says, “Because of our business objective, we wanted to re-establish the value that we deliver. We felt that it ought to have been applicable to a much wider range of products. So, our defined objective is to be the most cost-effective newspaper in the country among comparable media products.”

The new system of pricing has been in place since May 1 and, according to Mathew, the results are encouraging. “Revenue, and not just business volume, of business has been on the rise and we are confident it will continue to grow because advertisers have felt even more comfortable with the transparency apart from the rate benefit,” he says.

At the end of the day, it is circulation and readership that decide who does business with a newspaper and who doesn’t. So, how does the industry view the differential ad rates technique? There are those who believe there is logic in the method. Arpita Menon, General Manager, Lodestar, said, “The logic behind the method is simple. By reducing charges for advertisers, who would otherwise not consider a product like Mid-Day in their media plans, you encourage them to advertise with the paper.”

However, on the other hand, there are advertisers who do not see this as an opportunity to look at the vehicle in a different light. Sharing more on this, Divya Radhakrishnan, Vice-president, The MediaEdge, said, “If the vehicle doesn’t suit the product, why would the advertiser buy space on it? As a matter of fact, discounting categories only emphasises that there are products that don’t consider Mid-Day as an apt vehicle and I don’t think dropping prices would change that.”

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