Could a different advertising strategy have saved Newsweek’s print edition?
BOSTON, October 25, 2012 – Newsweek may have been able to capture more ad revenue from its print edition, according to an analysis by Simon-Kucher & Partners, the world's leading pricing consulting firm.
When comparing Newsweek to one of its main competitors, Time, the analysis found that the latter publication earns 36% more ad revenue per copy. If Newsweek had closed this gap, it would have taken in $50 million more revenue in 2011 and likely earned a modest profit.
“It is critical for magazine publishers to realize that closing the ad revenue gap between them and their competitors could be the key to keeping them alive as digital distribution becomes more popular,” said Andre Weber, a partner based in Simon-Kucher’s New York office and head of the firm’s U.S. media and telecommunications competence center. “Had Newsweek managed to resolve this, they may not be in the position they are currently in.”
This ad revenue disparity is also apparent among several other popular titles. The most staggering difference comes from the entertainment industry magazines. Simon-Kucher’s analysis found that People has a 155% ad revenue per copy premium over the comparable Entertainment Weekly.
“Magazines need to look at a few key areas to help solve the mystery of prices for print advertisements: perceived value, segmentation options and bundling solutions,” Weber said.
The first question they must ask is how well do they know their perceived value relative to competitors? To answer this, they must look at it from the advertiser’s perspective.
When looking at segmentation, how well do they understand their customer segments and their specific needs? This will allow the magazines to better target their offers, hone their marketing messages and figure out where they do and do not have room to adjust prices.
Similarly, how well do they differentiate ad prices based on a segment’s willingness-to-pay? Some options worth considering include: time (i.e. how far in advance the advertiser commits), content (i.e. what the ad says), relationship to the customer (i.e. new versus existing customer), amount of exclusivity, or industry.