How to Calculate Advertising Rate Cards
Rate care is an “old media” term used initially used by newspapers and adopted by television and radio broadcasters. The rate card was primarily just that: a small, folded-over card printed with the prices, or rates, the merchants would have to pay for the various types of advertising options. Broadcast time was sold by the number of times a commercial was aired, and print by the number of “inches” that the total advertising used.
The rate card often featured a coverage map for broadcasters, and other information to make the media outlet attractive to the potential advertiser. The advertising rates could be changed as often as every few weeks or even only once a year depending upon the market and individual situation.
Determine the number of people who view or listen to the medium. The more accurate this number is the better the rate card will be respected.
Survey the area media to find out what their rates cards are. Calculate the average cost per thousand, or CPM, for a basic advertising schedule for a representative group of media. For example, if radio station WXYZ has 40,000 listeners at one time, and they charge $100 per commercial for one basic commercial then their CPM would be 100 divided by 40, or $2.50 to reach 1,000 of their audience members. A CPM for a newspaper that reaches 200,000 readers and charges $750 per inch would be 750 divided by 200,000, or $3.75.
Determine your basic ad rate by taking the average CPM of the media around you and multiplying it by your audience numbers expressed in thousands. For example, if you have 15,000 listeners at any one given time, then an average market CPM of $3.00 would give you a basic rate of $45.00 per ad.
Calculate rates showing how much of a discount you’re willing to give for various actions by the advertiser. For instance, buying guaranteed advertising for 13 weeks instead of just one week may get a 15 percent discount. Or purchasing 1,000 line inches total over a month receives a 20 percent discount.
It is considered time to raise the rate card prices when 80 percent of the available advertising space/time is sold out on a consistent basis.
Premium times or spaces can have higher rates than normal.
Advertisers are very cynical and believe that all rate cards are “rubber.” The general assumption is that every rate card is inflated by at least 50 percent and therefore the advertiser will always try to get a further discount.