Media Forum: Will clients back NI model?

Are advertisers likely to support the new sales strategy, Alasdair Reid asks.

A month ago, the Big Media Debate (an industry forum sponsored by News International and Haymarket Brand Media) reached a not-entirely-unexpected conclusion: media owners have reached the end of their tether.

A combination of factors, most of which have common roots in the recession, have been driving down prices and turning media into a commodity. In an era when cost is pretty much the only item on the agenda, the whole notion of value has been squeezed out of the marketplace.

Paul Hayes, the commercial managing director of NI, was at the event as a representative of the sponsors and as a star member of the panel - and there were those who expected his contribution to be rather volcanic.

If so, they were destined to be slightly disappointed. True, Hayes pointed out that the business had reached a tipping point (although not in a good way) and made dark predictions about what might happen if agencies failed to meet the ambitious promises they've been making to their clients.

He also insisted that serious players such as NI need to get a return on the investment they make in delivering quality content and, therefore, quality audiences. But this was a modulated performance - and perhaps his restraint was tempered by the knowledge that NI was about to take matters into its own hands.

It has, in short, revealed that it wants to tear up the old trading system in which ad space is costed in terms of the space (as measured in column centimetres) that it occupies on the page and instead price its inventory on the basis of the size of the audience consuming it.

NI wants the newspaper medium, like television and other media, to be sold on the basis of its cost per thousand eyeballs; and it wants the titles that deliver rapid cover to command a clearer premium. It argues that this is not about "hiking" prices because, actually, it will be offering greater efficiency - but if advertisers chose to spend a greater share of their budgets in NI titles, then so be it.

Will they though? Alison Brolls, the head of marketing planning, global marketing services, at Nokia, confesses she's not really made up her mind yet about this one. There are still, she says, more questions than answers. For instance: "Long term, aren't newspaper circulations and readership on the decline so will this not just weaken the case for NI's papers over time? How will we ensure full transparency over target audiences coded by advertisers and their agencies? And how will NI papers be able to trade competitively against their rivals, which will be keeping to standard trading procedure?"

Brolls won't be the only client asking such questions - and NI will be developing its answers as it presents to advertisers and their agencies over the coming weeks. Meanwhile, Marc Mendoza, the chief executive of MPG Media Contacts, reckons there's a Back To The Future aspect to all of this.

He says: "These days we have buyers who just buy all day - and if it looks like NI is charging too much, they'll just shift the money on to telly. And if telly is too expensive, they move it into outdoor. These days, when a great deal of client activity is multimedia, it has never been easier to do that."

Andy Pearch, the director of the consultancy MediaSense, agrees - implementation of the new model could have unintended consequences, as it may invite a new basis for comparison of NI inventory with other media. And there are other potential wrinkles too: "In a nutshell, NI is demanding a greater share of insertions, to reflect the true value of its titles. I think this will be difficult to achieve in the real world, for two reasons: first, newspaper readers are very loyal, so there is little additional reach to gain from the second insertion, which produces a poor return on investment. Second, the majority of press budgets are well-established, so there is also a capital cost barrier to allocating the tail end of a press budget to high circulation titles."

But Simon Davis, the managing director of Walker Media, agrees it could provide a common currency, not just across NI's onand offline products but with Sky Media's inventory too. There are potential weaknesses in the model, he points out, but, on the upside, he concludes: "It seems that NI is advocating a return to the old days of cost ranks and variable pricing by audience, which is no bad thing if it encourages greater transparency and a renewed focus on absolute price across schedules. That should benefit agencies trading line-by-line."

MAYBE - Alison Brolls, head of marketing planning, global marketing services, Nokia

"If NI papers trade on an equalised cost-per-thousand model that invites advertisers to make CPT comparisons cross-media, won't this strengthen the case for TV?"

MAYBE - Marc Mendoza, chief executive, MPG Media Contacts

"It's a throwback to a time when there were planner-buyers who'd get a rate appropriate to the campaign. But these days we just have buyers - and I'm not sure if they're going to accept this."

NO - Andy Pearch, director, Media Sense

"This strategy could have unintended consequences. Arguably, trading on column inches has shielded newspapers from unflattering CPT comparisons with competing media."

MAYBE - Simon Davis, managing director, Walker Media

"It may provide a common currency across paper and pay-walled digital products. NI may still deliver unique cover within newspapers but reach is easily and cheaply bought, particularly online, so revenue growth in the papers will have to come from volume and share."

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