Time's tactics show a way out

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Brian Wolfe can't understand why many publishers view circulation as, at best, a break-even proposition rather than a potential revenue source.

At Time Warner's Time Inc., where Mr. Wolfe is president of Time Consumer Marketing, circulation is practically a religion. TCM has 350 staffers and "we are counted on to provide a substantial amount of revenues and profits," he says. While Mr. Wolfe wouldn't cite a specific number, he says his division contributes between 40% and 60% of Time Inc.'s profits.

While Mr. Wolfe doesn't pretend to have hard-core solutions to all the magazine industry's ills and he readily admits that some initiatives didn't hit as big as he'd originally hoped, he strongly believes that pushing ahead with new circulation strategies is one of the best ways to counter the "big body blows" the industry has taken.

Current Time Inc. circulation initiatives include marketing partnerships, free-to-paid offers, continuous subscriptions and combination sales.

"They take it much more seriously. They almost play in a different game," says Chip Block, vice chairman of USAPubs, a direct marketing company specializing in magazine subscription sales.

Time Inc.'s circ focus comes from the top down. The company's executive ranks are loaded with consumer marketing types. Mr. Wolfe and his predecessors, including his direct supervisor, Exec VP John Squires, "tend to be smart and risk takers. They're willing to gamble and try new things," says Dan Capell, editor of Capell's Circulation Report.

One of TCM's trademarks is aggressive testing of circulation initiatives. "A key to what we do is we have a test and learn culture," says Mr. Wolfe.

The other key for Time Inc., the world's largest magazine publisher, is the company's scale. "A lot of what they [are able to] do is because of their bigness, their staffing," Mr. Capell says. TCM hires go through extensive circulation training, including an overview course taught by Mr. Capell.

While Time Inc. has long been viewed as one of the industry leaders on the circulation innovation front, the company has ratcheted up its efforts since the stampsheets were licked. Mr. Wolfe declines to quantify the loss from the demise of stampsheets, which garnered large amounts of cheap subscriptions. However, Mr. Capell says that in the mid-1990s, stampsheets provided about 25% of new subscriptions across the magazine industry. As for Time Inc. making up the overall stampsheet losses, Mr. Wolfe says, "I'm not sure we've made up 100 %, but we're close."

Mr. Wolfe says the loss of the stampsheets was a "double hit" because, along with losing the outside source of subscriptions, the same rules that killed the stampsheets put the kibosh on Time Inc.'s own sweepstakes direct mail.

some hiccups

"It took some time, and there were some hiccups," Mr. Wolfe says, but "we've done a nice job on the direct mail." The challenges included the creative development of non-sweepstakes packages and the cultivation of new lists. "It took a couple years to flesh the whole thing out," he says.

One of Time Inc.'s most successful subscription strategies is its marketing partnerships. Buy a compact disc at Best Buy and end up with an offer for Entertainment Weekly or Sports Illustrated. "We've had some success with retail partnerships in particular," Mr. Wolfe says. Other existing partnerships include Mothers Work maternity stores for Parenting and Musicland for Entertainment Weekly.

"We're pushing for more. They're very successful," says Mr. Wolfe. The deals bring in "hundreds of thousands" of new subscriptions annually. Most of the partners get a cut of each subscription sold.

Retail partnerships depend on several factors for success. "The affinity has to be there and make sense," Mr. Wolfe says. "If it doesn't make sense, it's a non-starter." The partner also needs to have stable management that supports the program. One program, with an office supplies retailer, failed because the management didn't get behind it; they flipped it out to their sales team but didn't give incentives for selling the subscriptions.

Mr. Wolfe says offering a benefit to the customer helps capture the sale. Time Inc. has put free-to-paid offers to work with great success. Developed by Synapse Group, which Time Inc. partially owns, free-to-paid offers give readers a chance to sample a magazine for a few months before the subscription is charged to a credit card.

"Free is a pretty powerful word," Mr. Wolfe notes. Synapse and in particular its president-CEO, Michael Loeb, are widely regarded as the most innovative players in the subscription sales space.

Time Inc. is also pushing ahead with continuous subscriptions, in which subs are automatically renewed on a consumer's credit card without a blizzard of renewal notices. "It's been a dream for 10 years, and [companies] have been really working on it for five," says Mr. Capell.

As the dream has become a reality, it's become clear that continuous subscriptions are not the shiny penny Mr. Wolfe once hoped they would be, but it's not too shabby either. "When we first started, we were thinking we could convert 80%-100% of our file," he says. "That's just not going to happen. Some people are just not comfortable" with continuous subscriptions. The company goal for continuous subs is now 50% of total subscriptions. Right now, they're at 20%.

get subscribers early

Though Mr. Wolfe originally thought business magazines would be an easy sell for continuous subscriptions, it turns out it's not what the customer reads that's key-it's who they are. Younger subscribers are more likely to sign on for the program. "It's easier when you get them from the beginning," he says.

Younger is also better for online subscriptions. Mr. Wolfe says he originally thought online sales would replace stampsheets, but that hasn't panned out. Online accounts for 5%-10% of Time Inc.'s subscriptions. "It's a nice source and it's growing," Mr. Wolfe says. The good news on the online front is that the credit card sales result in retention rates that are "quite good."

Thanks to an Audit Bureau of Circulations rule change in 2001, Mr. Wolfe has a new circ love-combination sales. When subscribers renew one title at full price, they're offered a second title for free. One example: People subscribers are offered Teen People. The idea so intrigues Mr. Wolfe that they've run 20 combination sales tests over the last year.

"It's pretty powerful over the phone," he says. The offer benefits both magazines-it's a value-add for the host and the free magazine gets a yearlong test run.

Mr. Wolfe, who's spent his 20-year career with Time Inc.-including a stint running one of the company's holdings, former sweepstakes giant American Family Publishers-is concerned for the state of the industry but says he's "bullish" about Time Inc.

One problem he's especially concerned about is that the "perceived value of a magazine is declining" with customers. Though Time Inc. has maintained higher subscription prices for its titles, some publishers continue to lower prices to drive subscription numbers up. Says Mr. Wolfe: "You and a date can go to a movie and eat popcorn and spend less than you would for two one-year subscriptions. We need to restore the value of magazines."

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