How should our association set advertising and sponsorship rates?

Setting your rates for advertising in and/or sponsoring your association’s publications or events can be difficult. However, there are a few steps that will get you close to the ideal pricing

– Start by benchmarking your association’s publications, events and other potential advertising/sponsorship vehicles against those that have the same target audience. This is important not because one profession or industry is better than another, but because each profession or industry tends to have different buying habits.  A waste hauler may not seem as prestigious as a university professor, but from an advertising standpoint the waste hauler may be more lucrative because the purchasing levels of equipment and services may be much higher.

– If you cannot find relevant benchmarks for your association that have the same target audience, use benchmarks that have similar audiences in terms of size, purchasing power and demographics.

– Closely compare the target audience demographics of your association’s offering versus the benchmark.  Is your association’s target audience more specific, more serious, more proven?  Does the association publication or event have more or less credibility than the benchmark?  The answers to these questions will help you adjust your rates versus the benchmark on a “target cost per thousand” (TCPM) impressions basis.  This number represents the cost of getting the advertiser/sponsor message to the chosen target audience one time.

– Note the use of the term “target audience.”  This is critical because if the benchmark publication has much broader distribution across several target audiences while your association’s offering provides greater focus on one key audience, the non-targeted cost per thousand (CPM) may not be relevant.  As a simple example, consider that Time magazine may have a low CPM, but its audience is not well defined.  On the other hand, a trade magazine that is focused on one specific industry can command a higher CPM.In reality, that is because the target CPM is more relevant.  It is likely that the trade magazine would have a TCPM that is very close to other options for reaching that specific target audience.

– Quality of audience matters.  Your association members have shown their interest in their profession by joining the association.  Moreover, your association advertising and sponsorship vehicles may be more credible than a trade publication that is sent free of charge to anyone who says they are in the industry.

– The downside of association publications tends to be their limited circulation.  While an association audience that consists of members tends to be of higher quality, the problem is that it may not represent all of the target audience for that profession or industry.  This may not affect your pricing directly, but could impact sales because advertisers may wish to reach the entire industry and find the association offerings to have too low of a reach.  The effect is that you may need to lower your association’s advertising/sponsorship pricing to make it worth the advertiser’s time.  This depends heavily on whether there are alternate marketing vehicles and what percentage of the target audience your association reaches.  If there are many alternatives and your association reaches only a small percentage of the target audience, that will significantly hurt your sales and therefore pricing.  But if your association offers the best way to reach the target audience or your association reaches a high percentage of the target audience, this problem diminishes greatly.

– The other part of the association advertising/sponsorship rates question is how many ads/sponsorships you will sell.  Again, benchmarking against other associations or for-profit entities will give your best estimate.

– There is one other consideration for the association:  How much is required for the budget?  During the course of the rate-setting exercise, you may realize that you cannot set rates high enough to meet the budget required to produce the association publication or event.  In that case, you may wish to raise rates to the required level and proceed anyway.  Be careful in doing so, however, as going forward with high rates simply because they are required may result in poor sales and missing the budget.  As you might guess, it’s very important to do the benchmarking study and rate-setting exercise in the feasibility-study stages rather than after the decision has been made to go forward.

– As a reality check, be sure to discuss the potential rates with potential advertisers/sponsors before rolling out the association’s rates.  While the advertisers/sponsors may have their own agenda (e.g. keep rates as low as possible), their feedback and advice may prove invaluable.

Setting your association’s advertising and sponsorship rates is both a science and an art.  But by examining relevant benchmarks, adjusting for qualities or deficiencies particular to your association, and running the proposed rates past several advertisers, you will be able to create the ideal rate structure that will maximize non-dues revenues for the association.

Have you had to set rates for your association?  What advice would you give other association executives based on your experience?


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