Should Digital Sponsorship Cost Less Than Physical Sponsorship?

We recently saw a question through ASAE’s discussion board where someone inquired about the pricing of digital sponsorship components versus physical sponsorship components. 

Specifically, this organization was moving their print magazine to a digital version and their advertisers requested a discounted price for digital magazine ads because they knew that the organization would have cost savings by moving to digital.

This is a strategic request on the side of the vendors. They understand that you have cost savings, and therefore if you request the same pricing for advertising, you're getting a bigger cut of profitability and their assumption is that they, too, should have savings so that it's a win-win. 

While I don't fully disagree with this logic, I do disagree that the advertisers should automatically pay less. 

Here's why:

If we are basing our prices on value and not on our costs, then my push back to the advertiser would be “How much less value are they getting by us moving to digital?” 

I would argue that they are getting more value by us moving to digital, and therefore the price shouldn't go down. With print magazines, the only metrics that you have are “How many magazines are sent?”

But with digital, you not only have “How many people have access to the digital edition?”, but also “How many people clicked through to open it?”, and potentially, depending on the platform that you use, you can even zone in on “How long they've spent on specific pages?”, “What they've clicked through from your digital magazine to sponsor landing pages?”, and therefore you can give even more concrete data of their interaction with sponsored content within and how many people then took action from seeing sponsored content within your magazine.

This really is a question of what your pricing metric is. 

A pricing metric is the unit by which you price. What this means is if your advertisers are paying for space size, let’s say a quarter of a page, a half of a page, or a full page, then they are paying based on how much space they take up with an advertisement within your publication. 

That might be how this organization was pricing. But if we change the pricing metric to “How many people get access to the magazine?” then that changes the willingness to pay for your vendor. 

If you normally have 3,000 people who receive this publication, and your membership team and marketing team are able to grow readership to 5,000 over the next few years, suddenly advertising prices would go up by about half because you acquired more readers and therefore the value of the pricing metric has gone up. 

If we want to get even more molecular, we could have the pricing metric be “Engagement with sponsored content”, which is something that you can really do well with digital but not as easily with print. 

With print, the advertiser would have to do something like include a promo code or a specific URL that is only used for that advertisement to track how many people utilize that specific URL or that code, and there's no guarantee that someone reading a print magazine will utilize that. They might just Google the advertising organization and go to their normal homepage.

But with a digital publication, you can actually enable people to click through and therefore you can say that out of 3,000 readers for this publication, 400 of them clicked through to your call to action.

I can guarantee to you that if the pricing metric is “click-throughs”, that's of a much higher value per click than just viewership. 

The bottom line here is that while your costs have gone down, the value that you can provide through specific data and metrics because you moved to digital, has gone up and therefore the value to your advertisers has gone up. 

Maybe your price should actually be going up.