The Problem With Shrinking Lists (And How to Conteract It)
Mailing lists are shrinking for a variety of reasons: High costs, competition and privacy issues, to name a few. There is no data-driven piece of research documenting the fact that lists are shrinking, but the bottom line is that many circulators are faced with a huge problem; There are simply not enough responsive names out there to keep up with the amount required for new subscriptions. â€śMy clients are seeing their control lists shrink, and are finding it ever more difficult to identify new lists through testing,â€ť says Greg Jones, consultant at Granite Bay Media. â€śWhen they do find a new list through testing, it is usually smaller in universe by comparison to their average list.â€ť
Where Have All the Names Gone?
List fatigue problems stem from different sources. And shrinking issues arenâ€™t going to go awayâ€”they may in fact just continue to worsen due to three different, but connected, factors:
1. Increasing Costs: The costs of lists are increasing, along with printing and postal rate hikes each year. Some say the number of valuable names received from direct mail doesnâ€™t yield the results needed to pay for it. â€śItâ€™s more expensive for publishers to use direct mail to get subscribers,â€ť says president of circulation outsourcing firm Circulation Specialists, Greg Wolfe. â€śItâ€™s sort of a vicious cycle. You have fewer good names so you mail less, so your file is smaller and then you canâ€™t sell it to others as easily. So youâ€™re not making the profits you need, and you canâ€™t afford to buy more names, so itâ€™s a spiral effect.â€ť
2. Competition from Other Entertainment and Information Distribution Sources: Radio, television, newspapers, the Internet and magazines are all offering the same valuable information and entertainment to consumers. And where there are so many options, people are often opting out of magazine subscriptions. â€śI think when people are asked to opt in or out for magazine subscriptions they are opting out,â€ť says Ralph Monti, president of Special Interest Media. â€śPeople are bombarded with all types of offers and they are trying to insulate themselves. They are in the choice business, they want to choose and push rather than be pulled with whatever they do.â€ť
3. Privacy Issues: â€śThe biggest challenge weâ€™re seeing is our ability to contact new subscribers,â€ť says Eric Rutter, vice president of controlled circulation for Reed Business Information. â€śIn the old days there were essentially no external restrictions placed upon our direct marketing efforts. Today, due to our internal privacy policies as well as recent legislation, the number of potential subscribers we can contact has greatly diminished.â€ť
What Circulators Are Doing Now
To keep renewal rates up, consumer and b-to-b circulators are relying on old fashioned, but cheaper, direct mail and telemarketing, while dipping in to online technologies to keep up with the dwindling list problem. â€śOur most promising new sources are coming from our own online efforts or partnerships with other online marketers,â€ť says Granite Bayâ€™s Jones. â€śThe shifting of resources from traditional direct mail to alternatives might require upfront investments in testing or technology, and carry a higher risk because they may be too new to have a track record.â€ť New online subscription efforts are fueled by ideas from online marketing companies and experts, in an effort to bring the largest universe of potential subscribers to the Web site. Some are trying free online newsletters, search engine optimization, and keyword programs.
According to Monti, the average subscription renewal rate used to be about 65 percent, although now he suspects it is less for some. He says the best way to drive subscription and renewals is through editorial. â€śIf youâ€™re not renewing in the mid 60s percentage-wise you should really look at if itâ€™s circulation or editorial driven,â€ť he says. â€śIf youâ€™re confident enough in your editorial you should be able to swap lists because your readers know who your competitors are already.â€ť
Rutter, who works predominantly with b-to-b titles, says he has almost completely omitted the use of direct mail for new subscriptions, relying more so on telemarketing and online resources. â€śWe donâ€™t use direct mail anymore because itâ€™s no longer economically viable,â€ť he says. â€śInstead, weâ€™re working to exploit every natural touchpoint with potential subscribers, primarily through our Web sites and e-newsletters, passalong efforts and any other place where we interact with potential subscribers.â€ť
Working with competitors and advertisers to get new names is a traditional method, while a lot of circulators are looking into modeling. But both methods can be difficult and expensive. Model building costs about $4,000 on average, while renting outside lists adds to the price and yields fewer usable names. â€śYou end up paying for names you donâ€™t use, and for running charges,â€ť says Wolfe.
According to Wolfe, new alternatives should definitely include database modeling. Kable Fulfillment Services, along with Mal Dunn Associates, a consumer database and products services company, are working on a 100 million-name database of magazine buyers that will be offered by selection based on model building. The database, called PubcoBase, has names based on purchasing behavior from participating publishers, overlaid with enhanced data. It is available to all publishers at a rate of $35/M for participants.