"The online arena has totally changed the way we're all doing business," said Michelle Feit, president of ePost Direct, the e-mail list division of infoUSA's Edith Roman Associates, a list marketing company.
"Publishers are asking us to bring their properties into the 21st century."
Part of that means creativity on the part of circulation executives in coming up with marketing solutions based on a company's subscriber file.
"I think as we continue to all build out our digital medium, it's about developing different audiences for the e-mail newsletters and the webcasts and the white papers and the other digital media events we have going on," said Gloria Adams, senior VP-audience development and book publishing at PennWell Corp.
"That falls into audience development," Adams said. "It makes our jobs challenging."
Feit agreed. "The challenge for us and for our publishing clients now is to have products for their advertising clients to be able to reach their audience through all of these different mediums, including podcasts and webinars and e-mail," she said.
In the past year, for example, ePost Direct conducted a beta-test of a business co-registration program for clients. Because of its success, the lead-generation product was rolled out formally several months ago, Feit said.
"That's an example of a new online product that we're really driving for our clients, and we can offer them increased list-rental revenue based on their subscribers," she said. "We see that growing." Feit said the product is something that would never have existed in the offline world.
Another company that is helping publishers generate new revenue is Kroll Direct Marketing, which has introduced U.S. records on many of its international lists. For example, global executives receiving European-based publications that have provided their e-mail addresses are added to the record. "It's a way to reach a qualified executive that hasn't been tapped before," said Leland R. Kroll, president of Kroll Direct.
The latest postal rate hike is also proving to be a circulation challenge, and direct mail marketing subscription campaigns are suffering.
"The increased postage rate is only going to hurt us," said Brad Mitchell, director of circulation and IT at Babcox Publications. "If they're talking about a 20%-30%-40% increase in postage, there's no way marketers will mail to as many [prospects and customers]. The May increase will have a domino effect for us. We'll see smaller orders."
Mailers collectively expressed shock and outrage following the Postal Regulatory Commission's recommendation earlier this year of steep hikes in postal rates and several changes in requirements for mailers that will go into effect this month.
The complicated rates drew criticism from the direct marketing and publishing industries. Although the average increase will be 7.6%, some mailers could see increases of as much as 40%, according to some in the catalog industry.
E-mail and telemarketing often pick up the additional slack in lieu of direct mail postal campaigns.
"In publishing, the names that are most used are the telemarketing names," said John Papalia, president of Statlistics, a list management company.
Adams at PennWell endorsed that view.
"Direct mail doesn't work for us from a circulation standpoint, so we do a lot of telemarketing," she said. "Direct mail is really almost extinct." Adams said that e-mail and telemarketing are important channels, but it's not always easy.
"From a list renter standpoint, the problem is there are not enough good lists out there that are rentable," she said. "They're holding back, or they're not renting phone numbers, or they are saying, 'I'm not renting to publishers or to specific magazines."
In addition, Adams said that a lot of associations and trade shows that she does business with no longer rent their phone numbers.
As more and more people turn to e-mail as an alternative, issues in that channel have arisen as well.
"Our e-mail lists are difficult to sustain at any large quantity because people opt out. The reason they opt out is we 'kill them'," Adams said, meaning publishers have a tendency to send too many e-mail marketing messages to customers, thereby alienating them .
"Getting the e-mail address isn't that hard," Adams said. "Being able to rent it is difficult because people opt out from receiving information from third parties. They don't mind giving it to you
for the things they want, but they want to hold it close so they don't have 50 e-mails a week coming from us."
Papalia said he believes e-mail will continue to become more prominent with marketers, "but the response rates are down versus a few years ago," he said. "It's another marketing element but not a panacea."
Mitchell considers e-mail as a solid revenue stream going forward for Babcox.
"E-mail marketing is still a very strong list source," he said. "I've read about lists tailing off and e-mail marketing not being as strong, and that's [often] industry specific. If you've got good opt-in lists that haven't been saturated … some of these e-mail lists are effective."
Babcox publishes automotive magazines and is in what Mitchell calls "middle to low-tech markets."
"We have not hit the peak yet for e-mail marketing," he said.
Mitchell said he does see much smaller and targeted list-rental orders from marketers that are paying close attention to results, and that can be a challenge. "They're getting more savvy with their dollars," he said. "With mail costs being so high, and even e-mail costs, we're seeing very targeted buys. It's smart marketeering, and we have to fight to keep minimum orders."
"We're dealing with a lot of smaller orders."