Dear Penda: How do I set prices for my sponsorship packages?

In our first Dear Penda column, LION News Revenue Coach Penda Howell answers questions about sponsorship pricing, third-party advertising, and strategies for business development.

“Dear Penda” is a news revenue advice column featuring questions from LION Publishers members and answers from our News Revenue Coach Penda Howell. LION members can submit their questions here.

Is there a good pricing formula or baseline when launching a sponsorship program? We’re a young nonprofit newsroom that covers two disinvested neighborhoods where roughly 50,000 to 55,000 people reside. We have nearly 400 subscribers to our email, a combined 1,600 social media followers, and 350 text subscribers. I’m not sure, however, that these are even the numbers I should be using or thinking of when designing a sponsorship program. — Curious Commercialist

Because your audience stats are still modest, I would recommend charging a flat fee per month for the program that incorporates sponsorship exposure on all platforms. A traditional CPM model won’t work here yet because of the relatively low audience numbers, but you should feel very comfortable asking for and getting roughly $2,500 to $3,500 per month in sponsorship revenue across all platforms and asking for at least a three-month commitment, but shooting for a six-month partnership. — PH

Our advertisers before the pandemic were basically emerging small businesses like ours. One year later, many of these entrepreneurs are still struggling to afford any paid advertising. We definitely need to expand our base of advertisers to larger anchor partners with solid, reliable marketing budgets, such as local hospitals and car dealerships. However, we don’t have any existing relationships with these larger entities and our emails are going unanswered. Any advice for reaching marketing/advertising decision-makers and building relationships while in-person networking still doesn’t really exist? — Your Friend With FOMO

For the community-based, emerging small businesses with challenging budgets, perhaps offering a one-time discount to advertise now would go a long way toward establishing a relationship going forward. Be clear with them that this is a one-time offering to help them through this challenging time. The expectation should be that when the time comes, they will renew or advertise at the normal rate. A business listings page like this one would be good for these advertisers. Approach a local community-based nonprofit about sponsoring that listings page.

As for approaching and establishing relationships with anchor partners, you might try starting with these companies’ PR or communications departments and offering, for free, the opportunity to publish free press releases on local programs they might be running at the time. This will help you establish a relationship with the business and get to know a contact person who can then introduce you to the proper decision-makers in the marketing department to discuss paid advertising. Be sure to share a piece of your original content that resonates with the potential partner, and ask for an opportunity to discuss how you can help them expand the messaging around that given topic. — PH

“My local news business got an email from someone at Infolinks Media who wanted to “purchase a long-term guaranteed advertising placement” on our website, with a budget of $10,000-$25,000. Can you help vet and verify this pitch? — Skeptical Sleuth

This sort of service is good as a back-fill option, or for publishers who are simply not interested in fully monetizing the content they produce. It also requires a fairly decent amount of back-end work by someone on your team and requires time to learn, integrate and use the software. I wouldn’t engage with this sort of offer as an emerging publisher, but I might consider using it in the future to back-fill inventory that you’re unable to sell directly.

To illustrate the tradeoff here, a $10 to $25k annual budget represents $1,000 — $2,000 per month based on a variable CPM and reaching certain benchmarks. If we assume monthly audience metrics of 100k per month at a $10 CPM, that would give you $1,000 per month, hopefully, from Infolinks. Conversely, if you direct-sold that inventory and managed the process yourself, you could realize net revenue of $1,800 to $2,000 for the same inventory and ad units on your site. — PH

“Could you share some strategies for converting potential sponsors to committed sponsors? For example, we recently launched corporate memberships that include perks tailored for small businesses, from a business listing to native ad-style content in the newsletter. We’re evaluating ways to have sponsors dip their toes in with one-off campaigns while showing the value of our engaged audience. Is there messaging or specific efforts that convert best?” — Sponsor Seeker

Converting potential sponsors into committed sponsors is one of the toughest hurdles to clear — but once you’ve done it, you’ll have a partner for the long haul. I might prepare some marketing collateral using content that’s relevant to a sponsor’s particular priorities. An article related to the sponsor’s product or service would be a good place to start. Wrap the content around the potential partner’s value proposition and include several links in the article to the sponsor’s website. Create a series of ads, banner and tile, and have links embedded that take the reader directly to the story on your site. I would also create a newsletter around that specific topic that links to the article on your site. Package this with your audience metrics and this should be very attractive to a potential sponsor and will go a long way in establishing you as a valuable marketing partner. — PH

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“Dear Penda” is a news revenue advice column featuring questions from LION Publishers members and answers from our News Revenue Coach Penda Howell. LION members can submit their questions here.