As one of the most important strategic levers for revenue and profit growth, pricing is often under-managed at most companies. This is especially true in newspaper media organisations, which have traditionally viewed pricing from a tactical lens, thereby giving little focus to it in the overall scheme of things.
The industry trends/practices we observed in pricing were:
- Rate card drive, static, and ad-hoc pricing.
- High degree of incentivisation by sales teams.
- Low-tech, manual and people-dependent.
The fallout of these practices has been a continuous erosion of advertising yields for newspaper businesses over the course of the last several years, driving down both revenues and profitability.
Times Group, the largest mass media company in India, has been a pioneer in the area of newspaper pricing with several disruptive innovations — invitation pricing, bundled rate cards, private treaties, etc. — to its credit. To turn the tide on the current paradigm of sub-optimal pricing, we once again led the way by incorporating “right pricing” as an important strategic lever to drive growth and profitability.
We initiated a “pricing excellence” transformation programme to win back margins through yield increase. The programme had the following objectives:
- Create the industry’s first indigenous scientific and dynamic pricing system, called “Pricewise.”
- Establish a streamlined, automated, transparent, and audit-compliant approval process for authorising deals and features.
- Use advanced yield management techniques to drive yield increase.
To begin, we created a dedicated in-house pricing team comprised of subject matter experts to conceptualise and operationalise the pricing system. The team used advanced statistical techniques to dynamically determine floor pricing for editions and packages based on input parameters (month, day, size, page position, edition cost, circulation, etc.).
The prices quoted by the system reflected realistic field prices and formed the backbone for the operational decision-making in pricing.
Once the pricing algorithms and supporting technology backbone were developed, the next onerous task was to operationalise the system on field given the scale — 2000+ sales force and a substantial geographical spread — to the 70+ offices of our sales organisation.
To achieve this, we put in place several enablers. We supported the programme with full leadership commitment to ensure smooth cross functional collaboration across sales, technology, and pricing teams. We designed a streamlined, transparent process flow for the new system, as well as numerous workshops to train the sales teams on the new processes.
The centralised pricing team provided real-time sales support to the sales reps. We aligned incentives for the sales force with the pricing focus, and incorporated yield targets in key responsibility areas of teams.
Migration of pricing packages on the new system was done gradually. Complete adoption took place over a period of more than 18 months.
The implementation of Pricewise reversed the trend of declining yield. We witnessed a sharp growth in yield, mirroring the adoption of Pricewise. The deals and features authorisation process became more transparent, contributing to a reduction in discounting on premium inventory and faster authorisation, resulting in reduced cycle time and fewer blocks.
This enabled sales teams to focus more on selling, thus increasing their efficiencies. The increase in yield translated into higher margins in a difficult operating environment and was the single largest growth driver for the company.
The overall results have been stupendous. This, however, is just the beginning. We plan to evolve Pricewise from a dynamic pricing tool to a consultative pricing tool, incorporating modules for analysing price volume elasticity, cross sell and upsell combinations, etc.
As always, we will continuously strive to revolutionise the advertising world.