My publishing training was a bit unorthodox, in that it began when I found myself charged with running a publishing company without any experience. In the early days – and perhaps even now – there were a lot of long-held industry practices that didn’t make all that much sense to me. It was only a couple of years ago when I first heard of distress rates – I didn’t like the sound of them then, and I don’t like them now.
Some publishers, particularly those with very set targets, have a policy of offering any unsold space close to their deadline at greatly reduced rates. I remember when I was first asked by a customer to do this, I nearly spat my coffee across the desk.
Economics 101 teaches us that people respond to economic incentives – if I charge $2 for muffins and $1 for cakes, more people will buy cakes. Sure, some may still prefer muffins, but others will respond to the price. If I increase cakes to $2 and reduce muffins to $1, I will sell more muffins and fewer cakes, right?
So if I charge people $2 to book their ads in good time, and $1 to wait til the deadline – what should I expect them to do?
Distress rates reward your worst clients and penalise your best customers equally. How is it fair to the customer who does the right thing by you and books their campaign in advance, to the turn around and offer a competitor a better deal for waiting til the last minute?
It’s a tough market, and I’ve come across some trade titles recently that are struggling to make the targets they used to make and selling distressed space in response. You can see why this is tempting, but it’s surely the beginning of a death spiral – and as word gets around it will get harder and harder to get anyone to commit on time. Publishers need to value their offering, and if you truly believe your advertising has value, your customers need to understand this too.
To do this, publishers should reward the behaviour they want to encourage. If you’re going to offer discounts, offer them to companies that book in advance and pay on time.
If customers want to book in after your deadline, a better industry practice would be to charge a premium for the space.
Doing so firmly establishes the boundaries of the relationship between publisher and client, and reinforces the basic, common sense principle of rewarding your best customers.