1. Most media pricing structures reward the buyer with frequency discounts that can run well over 40% in some cases. The open or one time rate, while higher, has to be competitively priced because many initial media evaluations are made from the one time rate.
2. To make matters worse, a great deal of print media negotiates even further discounts than what published discounts offer. Similarly, TV and cable may throw in extras that become additional rate cuts/incentives. Thus, everyone discounts quite heavily.
3. Sad to say, this approach can turn media into a commodity product for many advertisers.
4. Ironically, a true commodity product, movie popcorn, has a much better pricing strategy than most media. Regardless of what theater you go to, the pricing structure for movie popcorn is the same.
5. The movie pricing rate strategy for popcorn is the inverse of how media prices itself. The biggest purchase of movie popcorn, a large sized bag, is priced at a very profitable and high five dollars. A medium sized popcorn bag receives but a 10% discount, e.g. $4.50, though it is giving the buyer about 40% less popcorn.
6. The smallest popcorn bag is still priced quite high at $4.00; which is extremely profitable. That's just a 20% discount for receiving 70% less product! Now, imagine what would happen if movie theaters started discounting their popcorn. That's why they all have a similar pricing structure.
7. It is a well known fact that movie theaters make more money on concessions than on the movie tickets they sell. Could media companies learn something from this?
8. Media companies, especially print, are focusing the lion's share of their operating budgets and investments on their basic print product. Movie theater owners have figured out how to make more profit from an ancillary revenue stream then from their main reason for being, i.e. to show movies.
9. The popcorn for media companies is Digital! Hopefully media companies will stop giving their popcorn (content) away for free or allow others such as Google to do so. Imagine if movie theaters allowed their customers to bring soda, popcorn and candy bars into their theaters? They would lose their main profit center.
10. Movie theaters had to invest in hiring people to man their concession stands and have adequate real estate devoted to them. This was an investment. Maybe media companies need to adapt to the popcorn business model.
Steve's new book You Can't Fall Off The Floor - The Insiders' Guide to Re-Inventing Yourself and Your Career chronicles his 50 year career working for over 25 different companies with 189 lessons learned and insider tips from Gayle King, Cathie Black, Chuck Townsend and 28 others; Blacker is still going strong today as a partner in Frankfurt & Blacker Solutions, LLC. His web site is blacker-reinventions.com and e-mail address is email@example.com
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