"The real difficulty happens if you still sell ads on a linear inch basis," said Chris Kubas, vice president of Toronto-based Kubas Consultants. "You still haven't fixed the underlying problem: How do you maximize revenue per page?"

With national advertisers grudging more and more about expensive ad premiums and new media competing with newspaper classifieds, maximizing ad revenue is becoming an essential issue.

A newspaper shrinking in size has three options to maintain its ad revenues: print more pages (defeats the purpose of decreased page-width), raise rates for lesser space (doesn’t sell well to advertisers) or accept less revenue.

None of the options are viable. Therefore the answer lies in changing the ad revenue model from being linear to modular.

Modular ad rates are based on the percentage of the page’s size that they occupy. For one, they save valuable calculation time and thus improve – supposedly – negotiating potential with advertisers.

Further down the road, a graduated pricing system provides better rates as the ad grow bigger. Reversely, reducing an ad size makes it more expensive – proportionally.

“This method has both positive and negative reinforcing behavior for advertisers," said Kubas. "This is why modular ads are so beautiful. There is a penalty when you shrink your ad size."

"People have to realize that they can't do what they've been doing in the past," said Kubas. "Now is the time to change - there are no alternatives. The marketplace and audience are demanding something different from newspapers."

Of course, this new model is based on the fact that ad rates are appropriately chosen to provide a better incentive for advertisers. If not, the latter certainly won’t buy into small and expensive ad space, and might not be able to afford to pay for large ads regularly.  

Source: inlandpress.org through Ifra