By Barbara Love
These are the worst of times for circulators, particularly when it comes to the deteriorating list environment. Circulators have to lift response to meet their goals and traditional methods aren’t working;not by a long shot.
The challenges are many, and they are inter-related. Lists are fatiguing and the size of lists is dwindling. Generally speaking, response rates have plummeted. People feel bombarded;even harassed;by messages. At the same time, list costs are rising, even though many magazines still don’t have the healthy ad revenues needed to pay for those lists. As a result, circulators are being asked to generate more responses and more revenue.
CM interviewed circulators and suppliers to uncover tips, tricks and secrets to address seven interlocking list challenges. Here’s what we found:
PROBLEM NO. 1: LIST FATIGUE
To combat list fatigue, circulators have to be more creative than ever and try new tactics. Sometimes that means thinking counter-intuitively and doing the opposite of what other list users are doing.
Overuse of the most commonly used list selection criteria is the problem, contends Jay Schwedelson, corporate VP, Worlddata. "Every mailing that goes out the door, whether it is a sister publication offer or a list rental offer, is trying to select the same set of names," he says.
"Generally, these selects focus on direct to publisher (DTP), with recency and then some enhanced element that is desirable for the particular offer," Schwedelson says. "What you are left with is a tiny universe of names that is used over and over again."
Continue to test the segments that are often overlooked to see if not using those names will help drive results. Says Ed Larkin, director of business development, Merit Direct: Do as catalogers do and look at the seasonality of the list and whether it plays into the universe itself. When do most of the buyers respond? Do what season does the list have the greatest influx of new names? Look for incremental contacts at existing customer sites, Larkin says. If, for example, you know that sales executives at large insurance companies tend to respond to your offer, look for additional sources that will allow you to mail deeper into those existing customer sites. If you use modeling and you have a productive model, where there is some drop off, omit the good buyers that you are using and build a new model on the remaining names, he says. Usually you can identify an incremental universe of productive names. Remail your best lists;the ones at least 25 percent above index. Typically the remail response rate won’t drop more than 10 percent, and you can usually negotiate a lower price for reuse of the list. Look for lists that have both regular mail and email addresses, according to Larkin. If you email preview or follow-up to a direct mail effort, you can often get a 40 percent boost in your response rate. In some instances the preview email is more effective; in others the follow up email is more effective. Carefully examine the sources of the lists and treat the lists separately if you can. For example, there’s a lot more value in a direct to publisher name vs. an agent-sold name. If the agent names don’t work as well, don’t discard the universe outright. See if you can negotiate a lower price on that segment of the list. Larkin suggests you either enhance your list with a compiled file or join a co-op database. The co-op could enhance your list with buyer data or build a good customer model for you. Co-ops are a good way to build a buyer file quickly. "It’s a finite list of people who are interested in whatever your subject matter is," says Sam Cardonsky, senior VP, I-Behavior, whose company has a co-op database.
Co-op databases have not been of much interest to magazines to date, although nearly every cataloger participates in a co-op database. "The complication for magazine people is you have to share your information with others," says Cardonsky.
Another reason publishers balk at co-ops is that they see joining a co-op as diminishing their list rental income.
Nicole Bartholomew, senior product marketing manager, cooperative databases, Experian, points out that a cooperative database requires that an eligible mailer contribute its file to pull from the database;a give-to-get scenario.
PROBLEM NO. 2: PLUMMETING RESPONSE RATES
When all is said and done, however, circulators know some of the best lists are right in your own back yard;registrants to the magazine’s own events, e-newsletters and web sites. They are working these lists harder.
List fatigue is not the only reason why response is declining. From a mailer’s point of view, you want to use a list that replenishes itself over time, advises Charles Mast, consumer marketing director, Dennis Publishing.
See if the problem of list fatigue is really package or product fatigue. "If you have list fatigue with a fresh list," says Mast, "the chances are you have package or product fatigue." Use new marketing tactics. Explore new testing methods. Debbie Winders, VP circulation, IDG’s Computerworld, is doing a lot of search engine marketing she hasn’t done before and a lot of integrated marketing programs, but she insists that’s not enough. "One of the things I am testing this year is very different from what circulators would think of in terms of direct marketing," she says. "Sounds weird, but I am thinking of testing the Taguchi Method."
The Taguchi Method was devised by a Dr. Kowalick and is currently being used by some large companies, including Dell, to significantly raise response rates on ad campaigns. They say it works tremendously well on direct mail.
"It allows you to test a whole bunch of different methods at once," says Winders, "copy, creative, lists. I have to find out if the testing of this is economical. I read about this method in Inc. and Forbes. No publishers have tried it yet for direct mail."
PROBLEM NO. 3: NO NEW LISTS; SHRINKING UNIVERSES
"There really aren’t many new b-to-b lists available for email, phone or direct mail," says Winders. "The universes are all the same and they are getting smaller."
Go outside your category for lists. "If you are a mailer faced with a shrinking universe, you have to go outside your category and obtain lists with similar demographics that you have not used," says Mast, who works with consumer magazines. Schwedelson, however, contends there are plenty of new lists coming on the market every day. Extend your list management contacts, Schwedelson says. One reason these lists aren’t used is the breakdown in good old-fashioned list brokerage services, he contends. "Brokers are so accustomed to calling the same 10 or so list managers for ideas that they fail to do any real research to find the diamonds in the rough." "Over 500 list managers exist in the marketplace," he says. "Many of these firms manage files that are never included in many circulators’ plans." Be open to new ideas. Says Martin Stein, president, RMI Direct Marketing Inc., "You can’t wait for the next perfect list to come onto the market. There are plenty of lists available and various ways to get to them. "If possible, try to use different creative that would best match up with the new list testing campaigns," Stein says. "Most of all, use your broker for new ideas and pricing arrangements. "Really the sky is not falling," he adds. "Just great opportunities for mailers and brokers who want to pioneer new list ideas."
PROBLEM NO. 4: PRICING PRESSURES
SOLUTION: PLAY FAIR ON BOTH SIDES
Publishers play on both sides here;renting their own lists and buying others’ lists. From the point of view of selling your lists, Mast says, "We spend a lot of money acquiring lists. They are responsive lists and fair value should be paid.
"You don’t discount just to make the sale. You have to make sure you get your rate. If you negotiate the rate for a sale, it will hurt you in the long run."
When it comes to buying lists, it’s a different story, of course. Circulators want to pay as little as possible for lists. This confounds list seller Cardonsky, who at one time worked for Harvard Business Review, Portfolio, and Art & Auction magazines.
PROBLEM NO. 5: POSTAL AND PACKAGE COSTS
SOLUTION: DOING LESS DIRECT MAIL
"It might sound self-serving because we sell lists," Cardonsky says, "but much more is spent on postage and package costs. That dwarfs the amount of money spent on lists. I truly don’t understand why list buyers spend so much time on this. It’s the opposite of the 80-20 rule."
Whenever possible, circulators are trying to deal with rising postal and package costs by getting away from direct mail.
"High direct mail costs have shifted a lot of promotion to telemarketing or electronic communications," says Jerry Okabe, VP audience development, Primedia Business Magazines & Media.
"The effectiveness of telemarketing and email has increased," Okabe says. "We now do 70 percent of subscriber qualifications by email. We do very little direct mail. We would do more by email if we had addresses. But a lot of our subscribers don’t have email addresses or they don’t want to communicate that way."
PROBLEM NO. 6: MULTI-CHANNEL SOURCE TRACKING
SOLUTION: CREATE A MATCH-BACK SYSTEM
If a circulator mails a magazine offer to someone and the recipient goes to the Web site instead of putting their credit card number on the mailed offer, the Web site may get credit for that subscription. That is unless the magazine and its customer service reps are diligent about getting source codes and there is an effective match-back system in place to match the response to the promotion where source codes are not captured.
Publishers may say, "This list didn’t work very well because we got only x responses in the mail." They could end up cutting a list that did better than it appeared because they can’t track the response.
"We know for a fact that a large number of people getting direct mail do go to the Web, because we see a big lift in responses on the Web right after we drop a direct mail promotion," says Winders. "We give everyone a code, but you can’t force them to use it."
"If you go back a couple of months, you’ll find you can attribute a sizeable number of uncoded orders back to the sources," says Larkin. "It’s realistic to be able to match 20 percent of uncoded orders to a list, and that can make a difference as to whether you use that list again or not. You may have to pay a service bureau for this extra effort, but it may be worth it in terms of more accurate tracking."
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