A while back I was at a bar with a work friend and a long time veteran sales rep. We had stopped by a local watering hole before heading to a Rangers game at Madison Square Garden. Over a few drinks, our discussion turned to business and specifically how agencies had been aggressively negotiating down rates with publishers. Five percent, ten percent – even twenty percent year over year rate reduction goals – agencies had been forcing publishers to accept less money for their ad space. During our conversation, the sales rep said something that really stuck with me:
"This industry has changed a lot, it used to be a good deal when there was a little something for you (the advertiser) and a little something for us (the publisher), now it’s not a good deal unless you f$&#k us."
In the past few years there has been a lot of shaking up of the publishing community – and advertisers have used this instability to negotiate with publishers for lower and lower rates.
While negotiating cheaper ad space rates provides short term savings for advertisers, forcing publishers to work for less money ultimately deteriorates the quality of their product. In the long term, relentlessly negotiating ad rates actually hurts all parts of the industry: publishers, starved for cash, can no longer produce a quality product and may have to lay off employees (or close); advertisers, having starved the publishers, no longer have quality publications through which to reach their target audiences – and consumers no longer get a quality publications to entertain and inform them.
I’ve made this analogy before, but we can’t forget that the media industry is a Coevolution, just like bees and flowers, advertisers and publishers depend on each other to survive.
If all the bees in the world suddenly stopped pollinating flowers (or demanded 20% more nectar from each flower) then the bees would get more in the short term – but in the long term, all the flowers would die.
Short term benefits are hard to pass up (especially in hard times), but it’s important to keep an eye on long term trends. We need to be mindful of this – because I don’t think anyone would want to live in a world without flowers.