Five reasons niche media price digital packages too low
According to Kenny Katzkrau, publisher of RedBankGreen and founder of Broadstreet, there are several reasons that niche publishers may be pricing too low.
Most publishers today do not simply add digital into print packages as a value-added buy, which negates the importance of website views, how different print audiences can be from digital audiences, and the unique advantages of digital ads, such as speed to launch and interactivity. But publishers overall are still unsure how to price their packages. Should it be based loosely on CPM, what going rates are, and what competitors are doing?
In a 2023 webinar, Katzgrau shared a few common beliefs he sees that hold publishers back from building a formulaic pricing strategy that supports higher pricing.
In it, he explains Four Pillars of Pricing and Packaging, and based on these theories, we’ve also created Pricing worksheets to build packages in blocks that support your business model.
But first, it is helpful to examine assumptions publishers make that may prevent them from adopting new best practices:
* I need more traffic to charge more. For most media, a bare minimum level of traffic to be attractive to an advertiser is 10k a month in page views. As long as niche media have this minimum amount or more, however, their highly valuable defined audiences are worth more than individual views.
“Selling eyeballs is not what works. It makes your product a commodity,” he said. The goal is to avoid any apples-to-apples traffic comparisons that don’t value the exclusive audience engaged with specialized content. One of the ways is to sell more than a “banner ad,” such as a premium ad or sponsored content on a share of voice model.
* I need to know what other publishers are charging. Katzgrau points out that knowing what other publishers charge doesn’t mean they have gotten the pricing right. He provides a chart of pricing ranges he’s seen for various products but only as a guide. Pricing ranges are all over the board, with B2B ranges increasing, especially when expertise and problem-solving are included.
* I need to stay at or below what competitors charge. It’s always daunting when a niche gets crowded in by other players offering similar products.
However, by providing unique products and extra value, the “apples-to-apples” comparison dissolves. Sometimes, the additional value is you – your customer service, expertise, and willingness to take responsibility for helping to solve the advertiser’s goals. “While there is obviously an upward limit, pricing moves up based on solving the problem. What they are buying is expertise.”
* Assuming price and demand are directly co-related. Counter-intuitively, he said that low pricing rarely aligns with the publisher’s goals and implies lower value to the customer.
Finally, he notes that customers who do go with the lowest pricing are typically more demanding to work with. “Cut out the “trouble makers,” he said by adjusting prices to a range that meets the media’s business goals.
• If my clients haven’t asked for a product, they are uninterested in it. Media may be iterating from the needs of advertisers, but media who get creative with products may be able to show advertisers products they don’t know you have, especially packages that address a real problem.
“They have a problem but don’t necessarily have the solution,” he said.
Instead, he argues that the media should focus on building packages in blocks that add up to get the media to its next-level revenue goal – plus a profit of 20% – and then figure out how to create unique products and make extra value into those packages. He also noted that companies spend 2 to 13% of total revenues on marketing, so while there is an upward boundary, there is typically plenty of room.
To get started, see Four Pillars of Pricing and Packaging and Use these Digital Revenue Model and Pricing worksheets to build packages in blocks that support your business model.
Many thanks to Kenny Katzgrau for sharing these concepts. Katzgrau is the founder of Broadstreet, publisher of RedBankGreen, and champion of underdogs. “We’re a small, fun, and dedicated team of thinkers, dreamers, engineers, and misfits that cares deeply about what we do. ” He lives in Redbank, New Jersey. You can reach him at Kenny@Broadstreetads.com.
