Traditional publishing business models: Advertising revenue
Advertising sales revenue is the money publishers make from selling space in their titles.
Most publishers set aside printed pages or parts of printed pages for advertisers. The number of pages compared to the total number of pages in a publication is known in the business as the advertising ratio.
Paid for publications have a lower advertising ratio than free publications.
Advertisements fall into two categories:
- Display advertisements are larger and more colourful – they can have highly creative text and images.
- Classified advertisements are smaller and usually only text with a minimum of graphics.
Magazines typically sell display advertising by the page, although they offer double page spreads, half pages and other formats.
Newspapers sell pages, but they also sell column centimetres (or column inches). Classifieds sell as column centimetres, as lines of text or in some cases by the word.
The more you buy the cheaper it gets
The more advertising an advertiser buys, the cheaper the rate per column centimetre (or page if they are buying magazine ads). So a full-page is cheaper than two half pages and so on.
Publishers offer advertisers discounts if they commit to buying a series of advertising over a period such as a year or six months. So, booking a year’s worth of advertisements in a monthly magazine is cheaper than buying 12 single advertisements.
Some advertising positions attract a premium rate. On newspapers this would be the front page and maybe the front pages of the internal sections. Magazines typically charge extra for the back cover and possibly the inside front cover. Successful titles can also get away with charging a premium for early right hand pages or other attractive sites.
Agencies and commission
Advertising is often placed by specialist media buying companies who develop strategies for their clients and negotiate with publishers. These companies earn a commission. Typically this is between 10 to 20 percent of the booking’s value.
In return for commission, media buying agencies contract to pay their invoices by a set date after publication – typically a month or so after the advertisements appear.
Advertisers who buy their own space are known as direct clients. They can haggle over prices, but unless they are large-scale buyers of advertising, they have less clout than agencies who can buy in bulk. It is often harder to collect money from direct clients than from agencies.
Rate cards
Publishers issue rate cards which show the prices or rates for each type of advertisement. Historically they were physical cards, but now they are usually available online, try Googling the term to see some.
Rate cards prices are often, but not always negotiable. They also describe available advertising formats. Depending on circumstances rates shown on rate cards are negotiable.
When an advertiser or a buying agency buys advertising they are usually buying reach that is a publication’s ability to reach so many potential customers.
Advertorial
People in the business use the term advertorial when publishers offer advertising linked to editorial features, or in some cases when a publication’s editorial integrity itself is up for sale.
Advertorial deals come in many flavours. Many publications are more or less entirely made up of advertorial – if an advertiser pays for space they are given a degree of say over what appears in the publication’s editorial content.
More credible titles wall off areas of content for advertorial projects. These might be clearly marked with terms like “advertising supplement” or “special advertising feature”, but it isn’t always immediately transparent to the reader.
Some publishers run editorial-style material provided by advertisers and charge for it. Others allow advertisers to send copy for inclusion alongside paid advertisements.
Publishers may or may not allow advertisers to sign off on their advertorial content. Some publishers will have journalists write advertiser-friendly copy for these sections, others keep up a strict demarcation between editorial and advertising.
The advertising business model
As a rule, free publications are more likely to run advertorial and compromise editorial integrity for commercial consideration than paid-for titles. Paid titles are less likely to take this approach. Some paid titles have little in the way of advertising and charge a hefty premium for quality editorial content. This works best if they can manage a high circulation.