Newspapers Seek Smaller Ad Rate Hikes

By: Lucia Moses

In negotiating advertising contracts for the new year, newspapers are seeking smaller rate hikes than in the past, reflecting the reality of current economic conditions.

“So far, rate-card increases have been modest, more modest than I had anticipated,” said S. Scott Harding, chairman and CEO of Newspaper Services of America (NSA), the Downers Grove, Ill.-based buyer that reports it places more than $1.6 billion of newspaper advertising for its clients annually. The boost is “still more, frankly, than a number of other media. But this is, in general, not as aggressive as we would have thought.” The typical newspaper is asking for hikes of 3% to 4% for retail run-of-press (ROP) advertising, 5% to 6% for national ROP, and 2% to 3% for inserts, Harding said, adding that most of his bigger newspaper advertisers will be pleased with the rates he is negotiating.

One satisfied advertiser is Sears, Roebuck and Co., the Hoffmann Estates, Ill.-based retailer. Ranked as No. 6 among the E&P/Competitive Media Reporting “Top 100 Brand Advertisers in Newspapers” in 2000, Sears has more clout than most and came to the negotiating table looking for flat rates this year — and, for the most part, prevailed, said Bill Block, Sears manager for media planning. “Obviously, it’s a changing environment in the newspaper industry,” Block said. “Overall, they’ve responded pretty well.”

Even the smallest increase, though, is too great for some ad buyers.

“Most of the major metros are getting 5% to 7% [contracted rate increases], which, to be honest with you, in these times, is just a little bit insane,” said Ed Weiner, senior partner with New York-based media buyer Media First International Inc.

Although the increases vary widely from market to market — as newspapers bear in mind the economic pressure now on advertisers — Steven N. Barlow, publishing analyst for Prudential Securities Inc. in New York, estimates that, overall, newspapers will look for 1% to 2% net rate increases this year instead of the usual 3% to 4%. The pressure to boost rates, even by a little, stems from the fear that if they don’t, it will be harder to do so once the economy improves, Barlow said. “They don’t want to set a precedent of not asking for a rate increase.”

Newspapers are likely to get it, too, because, unlike most other media, there is only one option in most markets for advertisers who want to buy a local daily newspaper.

The Journal Register Co. in Trenton, N.J., for instance, said most of its 23 daily community papers are seeking the same 3%-to-3.5% rate hikes sought in previous years. The company position is that their customers accept the increases because the advertising works for them.

Some advertisers are likely to maintain their budgets, but decrease their frequency to compensate for the rate hikes, buyers said.

Sears, for one, will spend at a level “similar” to last year, Block said. “With minor exceptions, I don’t see significant reductions in spending planned for 2002,” NSA’s Harding said.

Advertisers often grouse about the complexities of newspaper rate cards, but Media First’s Weiner said now is the time for them to take advantage of the myriad of frequency discounts available to get the most for their ad dollar.

The economic malaise has brought mostly bad news for newspaper advertising, but there are exceptions. Harding said some newspapers have taken dollars from direct mail, which has suffered from postal rate hikes, mail-delivery problems, and consumer fears related to anxiety over anthrax.

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