Wooing New Readers

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In 1998, real estate agents with Coldwell Banker bought several thousand subscriptions to Sunset: the Magazine of Western Living and Southern Living for some of their clients across the country. For the agents, it was a chance to thank customers for their business and get future referrals. For Sunset and Southern Living, it was a way to boost circulation and gain new readers.

In exchange for buying subscriptions, the agents were allowed to advertise on the coverwrap that accompanied the magazines, plus provide information on where to find local offices and agents.

As publishers seek ways to boost the circulation of their publications, partnerships between magazines and other companies are likely to become a more common approach to the marketing effort. Time4 Media, a division of AOL Time Warner, is currently running tests of eight partnerships for its ski magazines, says Anke Corbin, assistant circulation marketing director. The goal is to have 15 partnerships in place by this month. Says Chip Block, Ziff Davis Media's publishing strategist: “When it comes to generating strong renewal rates and a high volume of subscribers in the right demographics with low customer attainment costs, partnerships have more potential than anything else I know of right now.�

Marketing partnerships have gained renewed interest among publishing executives now that the Audit Bureau of Circulations has overhauled rules that define a consumer magazine's circulation rate base. Up until last summer, only those copies sold for at least 50 percent of the basic subscription price counted as paid circulation. Under new rules that went into effect last July, paid circulation is defined as copies sold at any price. Publishers lobbied for the change because it allows them more flexibility to market their publications — especially as they face declines in advertising, circulation and newsstand revenues, as well as rising postage and direct mail costs. With the ability to sell magazines at lower prices, publishers have greater latitude to try new ways of attracting readers, says Dan Capell, editor of Capell's Circulation Report.

Historically, many publishers relied on sweepstakes agents to boost circulation; the chance of “winning a million dollars� was enough of an incentive to compel people to try some new magazines. But in the late 1990s, Congress attacked the sweepstakes industry for using “misleading tactics� to gain subscribers for magazines. In 1999, federal legislators ordered the sweepstakes industry to curb its marketing practices — a move that has nearly crushed the business. At their height, sweeps generated as much as one-third of new subscriptions a year, according to the Circ-Track 2001 survey of consumer magazines published by Capell & Associates in association with Circulation Management, an American Demographics sister publication. Today, sweepstakes generate just 7 percent of new subscriptions in a year.

Partnerships may be publishers' next great hope. They've been around since the 1970s, but are now gaining momentum. In recent years, marketers have learned a lot more about their customers, which has made their lists more valuable to others with similar target markets. “What makes them attractive,� says Block, “is that the partner's customers are in the same demographic and psychographic group as the publication, and the magazine has acquired a viable reader and potential renewer.�

Typically, partnership marketing refers to programs in which a company that teams up with a magazine offers a subscription in conjunction with its product or service. The partnership can take many forms, including a sampling program, a free trial offer with a paid subscription that kicks in at the end and a bulk subscription where the marketer pays the publisher in order to give magazines away to the consumer. Ideally, the publisher boosts circulation in a cost efficient manner, while the partner company gets to build loyalty among its consumer base.

One appeal of partnerships is that they can help reach specific demographics. That's why the success of a partnership depends on how closely the product is related to the magazine, says magazine marketing consultant Gordon Grossman, president of Gordon W. Grossman, Inc., based in Chappaqua, N.Y. In one such partnership, Rodale's Organic Gardening, now known as OG, teamed up with Gardens Alive catalog. The catalog gave free one-year gift subscriptions of the magazine to its customers. Gardeners who eventually renewed the subscriptions received a $20 gift certificate for items in the catalog. According to a member of the magazine's marketing team, renewal rates were better than those generated by subscription agency sources because the title was able to tap into a market of dedicated gardeners who represent its target audience.

Now, publishers and their clients have even more freedom to team up. AOL Time Warner is among the media companies pioneering this new age of partnerships. Time4 Media's four ski magazines, Ski, Skiing, Freeze and Transworld Snowboarding have partnered with various companies and groups such as the National Ski Federation, an umbrella organization for hundreds of regional ski clubs. These individual clubs send out special subscription offers to their members. A portion of the subscription revenues goes directly to the partner clubs, so there's an incentive for individual ski clubs to get involved, says Corbin. Aggressive efforts to team up with resort promotions are also in the works. “It's become more of a priority,� she says.

In addition to partnerships, the telephone “upsell model� is growing as a source of subscriptions, according to Capell. By teaming up with the Home Shopping Network and Ticketmaster Group Inc., Time Inc., which is at the forefront of marketing partnerships, is able to “piggyback� onto the end of inbound sales calls. Here's how it works: Typically someone calls up to make a purchase. At the end of the call, the customer is offered a magazine subscription or several magazines to chose from. Often the incentive is a free trial period before a paid subscription kicks in. It's usually paid on the same credit card as the items just purchased. However, the downside with any telemarketing sales vehicle, says Capell, is that it may not renew well. “It wasn't their prime goal,� he says of customers who sign up for trial subscriptions.

The offer can be targeted so that someone who just bought tickets to, say, a tennis match or basketball game might be sold Sports Illustrated. Entertainment Weekly would be offered to someone who just bought a ticket to a concert. Someone who has just purchased clothing through a women's catalog might be sold Real Simple or People, says Jeremy Koch, circulation chief at Time Inc.

Cultivating continuing relationships with customers may help magazines reduce some of the churn in their subscriber lists that constantly forces them to scramble for new readers. Continuous service, which involves automatic renewal by credit card, is increasingly popular. “It's come from nowhere in five years,� says Capell, citing circulation derived from continuous service at 5 percent to 10 percent. At Time Inc., some titles like People and Sports Illustrated that are closely linked to telephone upselling which start subscriptions via credit card, are on the high end: 30 percent of subscribers renew automatically via credit card.

From a company's standpoint, continuous service puts the burden of canceling on the subscriber. “It's nice to have inertia working in your favor, as opposed to against you,� says Koch. “One of the challenges of conventional renewals is that you have to get the consumer to actively opt in every time.�

Obviously the Holy Grail is credit card continuous service, says Ziff Davis publishing strategist Chip Block. But so far, most magazines have made little headway in converting people from non-credit card payments to credit card continuous service. Says Koch: “We're still looking for the major breakthrough there.�

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