Media agencies: Fairfax switch to SMH and The Age is the right move – but ad page rates must drop

Australia’s media agency bosses have warned Fairfax it will face a tough negotiation over ratecard when it resizes its flagship mastheads The Age and The Sydney Morning Herald.

One of the reasons Fairfax has taken so long to move to the compact, tabloid-sized format is because of commercial concerns. The experience in other markets including the UK where broadsheets have converted to compact was that although print costs were reduced and there were slight sales uplifts, advertisers felt they were getting less for their money – particularly when it came to full page ads.

Simon Davies, head of publishing at media agency OMD, told Mumbrella: “Obviously it is a different format so you would expect pricing to change off the back of that. We have seen this in the UK where you have had a number of broadsheets change to a compact format so we will be tapping into those experiences over there.”

The move is likely to see sales conversations based around a seven column rather than 11 column grid. Davies said: “Certainly for a 55×11 full page, you wouldn’t be paying for a 38×7 full page.”

Sev Griffiths, national investment director at UM, predicted that a revised ratecard also potentially offered new business opportunities to the publisher. She said: “This could be an opportunity for Fairfax if they get their price structure correct. It could open the doors for new advertisers, so there is an opportunity there. Taking out a full-page ad in a broadsheet is expensive so going to a smaller size could open the doors for smaller advertisers to put them on their schedule.

 But she warned that Fairfax would have to cut page prices. “I think the market expectation is that the single column rate remains intact so it is going to be a challenge for Fairfax if they want to keep the cost the same. In terms of market place they will certainly find resistance if the size is reduced. Fairfax has to demonstrate its value to advertisers, so I don’t think it will be an easy thing for Fairfax to accomplish. I really think it is going to be a tough ask for clients and advertisers to accept it.”

However, agencies have still mainly welcomed the move, which will put the SMH and The Age into the same format as stablemate the Australian Financial Review which is already compact sized.

OMD’s Davies said: “I think he majority of people will be pretty positive about it. We’ve had the Fin Review as a premium newspaper that is very successful in a compact format. If you have the right editorial content you will attract readers, so I think that ultimately the content is more important than the format.

Griffiths said clients would be cautious about whether the format change diluted the quality of the content – pointing to News Limited’s Courier Mail which she said had weakened when it moved away from broadsheet. She said: “When the Brisbane Courier Mail downsized there seemed to be a loss of integrity in terms of brand value and journalism, but I think Fairfax can retain their editorial stance. But they have to demonstrate that, and until it happens it is a wait and see approach.”

Meanwhile, Toby Hack, PHD’s national MD, said: “In general I think you will see a lot of people happy that format has changed. It has been taking place all over the world so it is no surprise.”

Meanwhile, journalists’ union The Media, Entertainment & Arts Alliance has attacked Fairfax for dithering over the switch of format.

Acting federal secretary Paul Murphy said: “For more than a decade this company has dithered about a switch from broadsheet. It has been an ongoing saga as management stalled at making tough decisions in an increasingly difficult environment. Now, after years of doing nothing and in the twilight of the print media era, management has finally made a decision.”

Comments


  1. Ben
    18 Jun 12
    12:43 pm

  2. I never recall fairfax actually charging above a tabloid rate for a full page anyway… and dont get me started on their distress rates…

  3. Pete
    18 Jun 12
    1:08 pm

  4. Surprising to see the agencies coming out and demanding rate cuts…actually surprising they’re even here, shouldn’t they all be over in Cannes

  5. Tony
    18 Jun 12
    3:14 pm

  6. What a ridiculous negotiating position for the media agencies to take up.

  7. bob is a rabbit
    18 Jun 12
    3:33 pm

  8. Agree with Tony. Ridiculous. You buy a full page so it’s the only content on that page. Size does not change this fact. And, as the article mentions, when the UK papers switched there was a slight increase in audience…more eyeballs usually means higher rate.

  9. paul
    18 Jun 12
    4:03 pm

  10. Just a quick one, but aren’t newspaper rates calculated at CCM rates…so by default a 55×11 will already decrease to a 38×7 rate. Fairfax are still within their right to increase their CCM rate to ensure that the 38×7 will cost the same as a 55×11 otherwise revenue will most certainly decrease by around 30%

  11. Malbino
    18 Jun 12
    4:14 pm

  12. I have a 40 inchTV, does that mean advertisers pay less to reach my screen than large TV screen owners?

  13. Malbino
    18 Jun 12
    4:15 pm

  14. PS Try and read a large screen format on a crowed train or plane.

  15. Logic
    18 Jun 12
    4:15 pm

  16. based on this media agency logic, fxj should have INCREASED the size of the paper 2x … then they could have charged 2x for the ads and all financial problems would be solved!

    those jokers in pyrmont didn’t even see this completely obvious fix to their problems!! ;)

  17. Think again
    18 Jun 12
    9:31 pm

  18. The delays on changing to a compact size had little to do with ad rates — Fairfax has successfully negotiated this issue many times before when shrinking sections such as Spectrum. The reason for past delays has been because of the difficulty of adjusting the metro printing presses – hence the shutting of Tullamarine and Chullora .