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There is no such thing as price-quality ratio

By Clement Charles, CEO & Founder, AllTheContent News Agency
After nearly 15 years of experience in media, ten of which were spent managing my own companies, I have learned that one of the most fundamental rules of economy is purely theoretical, and that actually, there is no such thing as a price-quality ratio.

Media and other sectors are comprised of two main types of buyers, and therefore, sellers: on one hand, those whose number one purchase criterion is price, and on the other, those whose main parameter is purchasing real quality. Of course, those who put price first have nothing against good quality (but are not willing to pay more for it), and to a lesser extent, those who focus more on quality are often open to paying less.

Strangely, while most buyers willingly admit to being guided by logic and focused on best value for money, this ratio is blatantly absent when transactions are analyzed. This applies to all value chains, from government invitations to tender to choosing (however dictated by resources) between “bargain” and “deluxe” foods at the supermarket. Of course, when it comes to luxury accessories, a brand’s notoriety can make it possible to sell low range products at “quality” prices.

Whether it is motivated by an explicit strategy revolving around purchases or by a buyer’s implicit psychological motivation, this behavioral tendency can be found across the media and communications sector.

In terms of communication, the market has long accepted the notion of an ecosystem bringing together agencies who offer expensive services, perceived as high-end, with more specialized, more competitive independents. The fact that the former externalize a large portion of their orders to the latter, by overseeing project management and taking comfortable margins along the way, changes nothing. Clients are still going through agencies, convinced that at those rates, the service they are purchasing can be nothing other than high-end. An independent photographer often misses out on luxury brand orders by proposing services at rates which are more than sufficient for him, but sadly too low to be perceived by his client as reflecting its brand’s influence and high standards. Between both poles, an emerging tendency of independents uniting to form a “collective agency” is gaining ground, encouraged by increasingly accessible telecommunications and a 2.0 logic applied to talent networks.

The same logic, though not articulated, can be applied to media and new media markets, the first remaining generally concentrated on quality, whereas the second gravitate more towards low rates to make up for high volumes. In practice, traditional media and new platforms blend both strategies together depending on departments, thematic sections and targeted target audiences: a Web site or television channel will always be able to invest hefty amounts to purchase key content, offsetting their investment by “quantitative” purchases in other areas.

The idea of convergence may modify this tendency. Well executed, convergence between media frees up budgets, thereby offering superior quality to all. Obligatory media-technology convergence lessens sectorial barriers, informing actors more effectively and giving way to more intense market competition. As for the unavoidable convergence between audiences, consumers and “active users,” it puts value creation back in the center of the user-media relationship, between emitters and receivers.

After several years, I realized that many of our launching issues in 2001 stemmed from the fact that no one was interested in price-quality ratio, when all of our products owed their specificity and their rarity to this unique combination. Today, I’m convinced that we could not have chosen a better flaw, as it now seems obvious in this first digital decade of the third millennium that it is finally time to keep the price-quality ratio promise, to better hold onto our audiences while continuing to make business grow.

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