FOLIO: Section Blogs by Audience Development

Optimizing Your Double Postcard Direct Mail Tactics

Bill Mickey — Thu, 13 Jun 2013 17:12:52 -0400

Whether you think direct mail is making a comeback or it never went away, the truth is publishers are returning to direct mail. The good news is that it does not have to be that expensive and a good example of this is the double postcard format.

Double postcards will not work for every publication or occasion—for instance, new magazine launches—but certainly in many cases, especially if your magazine is well-known, a double postcard may be just what you need to get back into the mail. True, you are limited in the amount of copy you can use, but sometimes less really can be more.

Consider offering “Risk-Free Issues”—always a good seller. Can you give away a gift? If so, why not test a premium offer against a non-premium offer and see what works best for you.

Despite being in the digital age, people still like involvement devices so consider one on the order card. The Spectator magazine once did an offer where the potential subscriber was told in the copy “remove this sticker to reveal an example of The Spectator’s sense of humor,” many people did, liked what they saw and placed that sticker on the order card and sent it back for a subscription.

If you can use the word “FREE” so much the better. I know spam filters do not like the word “FREE”, but it is a powerful word and at least in the world of direct mail there are no filters dictating what words we can and cannot use in copy.

A “reply by” date is also an effective way to move prospects to action, whether this is an actual date or “next Tuesday” or “within the next week.” A “reply by” creates urgency and should prompt the recipient to mail the reply card in straight away so they do not miss a great deal.

To increase response, pay the reply postage for the recipient. This increases your costs slightly, but the increase in response should be worth it. You could consider using a personalized URL, although giving the recipient an option may decrease response. The fewer options offered the better. You don’t want prospects putting the promotion aside so they can decide later what to do.

There are certain design restrictions that you need to adhere to for addressing as well as postal regulations, but any good direct mail writer and designer will already be aware of these. If you need information check the Domestic Mail Manual for specifics.

Double postcards are a good form of direct mail for many publishers and if you have never done direct mail before they are an inexpensive place to start.

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The Myth of the 360-Degree Customer View

Bill Mickey — Tue, 28 May 2013 14:57:53 -0400

One of the promises always made by consultants and system providers offering integrated audience solutions is “the single view of the customer.”

“You’ll tie together all of the ways you reach your audience—publications, newsletters, web traffic, webinars and events—and be able to see how each unique member of the audience engages with you.”

It’s a promise that puts stars in the eyes of b-to-b media executives. But beyond a few mysterious references to “complex algorithms,” very little gets said about the nuts and bolts involved in creating that single view. Namely, how do you match up all those engagement records from dozens of files and registration systems to make sure you correctly identify each unique individual?

Identifying the single customer used to have a much less glamorous name—de-duping. One of the most basic steps in the controlled circulation audit process was to check for duplication, and catching duplicate subscribers was (and still is) an obsession for managers and fulfillment companies. We even had inside jokes about it: One Halloween, the circulation staff at a big bto-b publisher dressed the same, wore name tags with their director’s name slightly misspelled, and called themselves collectively the "Dupes of Earl."

We would de-dupe lists for new subscriber promotion against our existing database, and de-dupe the responses again as we added them to the file. Then we would run a suspect dupe match and do a clerical check to identify duplicates the computer hadn’t caught. After all that, the auditor would find yet more duplicates—although we hoped few enough to keep within BPA’s (supposedly top secret) auditing tolerance.

What makes de-duping such a challenge? Well, to start with, we have all the normal variations in names and addresses that slip past a computer match. But in the b-to-b audience, it isn’t enough to pin down the same name at the same address. What about individuals who had offices at more than one of their company’s plants? Those who switched jobs mid-year and showed up at two different companies? People who got magazines at their home address as well as the office?

Knowing how much work it takes to identify duplicates in a controlled circulation list of 50,000 or so, I’m always floored when database companies brush by the question of how they will match up unique individuals across several million records drawn from multiple sources. And I’m even more dismayed when some admit that they simply rely on the new “unique identifier”—an email address.

At first it makes perfect sense: While everyone at the same business location shares one mailing address, each has a separate and unique email address. You cannot even create identical email addresses that point to two separate, unrelated inboxes. If you have one email, you have one individual. Right?

Well, half right. Yes, one email address equals one inbox. But a surprising number of businesses still have inboxes shared by multiple individuals. And a much larger number of individuals use multiple addresses. In my last company, I did an analysis of the 1.5 million records in our corporate database, and discovered that nearly 20 percent of our audience members had more than one email address on file with us. And 4 percent of our email addresses were connected to more than one individual at the same company.

If we had assumed each email represented a unique individual, we would have been hugely misled about the true size of our audience.

For the purpose of sending out an email blast, it may be enough to de-dupe by address only. But to accurately identify one individual across many points of engagement, and deliver a single view of each customer, we can’t avoid the tough, old-fashioned work we learned with controlled circulation. Accurate identification takes multiple levels of matching, multiple points of contact information, and usually some clerical clean-up after those “complex algorithms” have done their best. It’s not glamorous, but it’s a challenge we have to face to make our databases accurate and reliable.

Who knows? Maybe someday, at a Halloween party, we’ll see an integrated audience database team dressed up as the Dupes of Earl.

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Thinking Through a Marketing Automation Program

Bill Mickey — Thu, 14 Mar 2013 12:15:30 -0400

I’m spending some time thinking about how I might create a marketing automation plan for new subscribers to my brands. See if you think this makes sense: I want to feed these newbies related content and products based on what I know about them, beginning as soon as is reasonable after signup. I know it all comes down to testing and reviewing the analytics, but there are a lot of layers to think about, so what do you think of these two potential testing plans:

Goals: Increase traffic to the website and signups to other products after initial subscription.
Method: Automated email messages timed to blast at specific intervals.
Scenario: Jimmy signs up for one of my brands, completing a lengthy form and telling me about himself and his company. (Currently I just send him what he asked for and occasionally send him other offers blasted manually, along with the eventual “renew your subscription” messages.)

Automated program option 1:
• After initial signup, create a subscriber score for Jimmy. This initial scoring will be based his demographic criteria, number of products he signed up for, etc.
• From the data he provided, build a logic program to determine the content that he would like most, and any other products that he didn’t ask for that might apply.
• 10 days after he signs up, send him a “best of” that content.
• 20 days after he signs up, send an offer for products that he should like based on his criteria.
Add to his score based on his response to those steps.

Automated program option 2:
• Set the subscriber score for Jimmy just like in option 1.
• Sweep the database every three weeks for demographic attributes prioritized by business value—those “hot topics” or key markets are sent before less important ones.
• After every database sweep, send content to Jimmy that matches one of the attributes he indicated on his form (over and above the products he asked for) along with a related product offer.
• Set a counter so he only gets each content type once as part of the campaign.
• Add to his score based on his response to the entire campaign.

Option 1 is more thoughtful and would require a big emphasis on analysis and judgment calls as to what the logic program would send to Jimmy. There are a lot of data modeling and industry/product variables to consider with this one.

Option 2 is more of a trolling-the-waters-to-see-what-gets-Jimmy-to-bite approach, but it’s still based on what he told me about himself. I like it because it’s simpler, with fewer variables, less modeling and this approach gives me a lot of chances to get in front of this guy with topics that he indicated interest in. I have some concerns about this plan sending too many emails though. If I do it wrong I might end up having Jimmy tune me out or worse, unsubscribe altogether.

What do you think, anyone doing something like this out there?

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For Publishers, Social Media Trumps Search

Bill Mickey — Tue, 05 Feb 2013 11:34:18 -0500

Online publishers of all stripes have invested heavily in search to drive reader acquisition. With a market size approaching $3B in 2013, the SEO industry has thrived on the data feedback loops created by analyzing the keywords that users enter into search engines before arriving at their sites or competitive sites. Yet despite continued growth in user search activity and increasingly sophisticated keyword analysis tools, 2013 is shaping up to be the first year that social media eclipses search as the leading source of referral traffic to publishers. How could this be?

Two parallel trends are driving this sea change. The first is Google’s recent shift to encrypt search keywords for a significant segment of search referrals. This move—followed by corresponding browser updates in 2012 by Firefox, Safari on iOS, and now Chrome to use Google SSL search by default—means that up to 39 percent of keyword data has vanished from publisher analytics systems. Less keyword data means fewer content insights, and fewer content insights means lower ROI from SEO. As publishers recognize lower yields from their search strategies, many will moderate their investment in this channel leading to reductions in search referral traffic.

The second trend is the torrid growth of user-powered content sharing on Facebook and Twitter that has turned a trickle of social media traffic to publisher sites into a flood. It’s worth noting that social traffic is not a new phenomenon—consumers have been sharing web content and URLs with friends and colleagues via email since the first Mosaic browser was released in 1993. What has changed is the way that social media sites structure and amplify a person’s network connections. The New Yorker article URL that was emailed to 10 friends back in 2005 would today be posted to 500 friends on Facebook and 1,000 Twitter followers. And as the Likes, Shares, and Retweets pile up, the reach and traffic impacts get magnified.

For example, The Atlantic recently reported statistics that measured social sources as 18 percent of total referral traffic across a basket of premium publisher sites. Search represented 22 percent of referral traffic. For an increasing number of publications, including The Atlantic, social traffic already far exceeds search in importance. As the quantity of search keyword data continues to decline—and as the quality of social analytics continues to improve—it’s not hard to imagine a tipping point occurring in 2013 where much of the time and resources currently spent against SEO will transition over to optimizing social channels.

A major wildcard impacting the relative importance of social traffic versus search is the steady growth in mobile content consumption. Specifically: Will mobile devices expand the overall amount of sharing and search behavior, or simply cannibalize existing desktop behavior? comScore’s November 2012 Search Query Report showed volumes declining by over 6 percent versus October 2011 on desktops. While growth in mobile search volumes offset those declines, the trend is clear: Consumers are substituting desktop queries with mobile queries. On the other hand, social network usage on mobile devices continues to explode, even as desktop-based usage also increases. According to a recent study by Nielsen, time spent on social media increased by 68 percent YOY on mobile devices versus a 24 percent increase on desktops.

What can publishers do to tap into this trend? With social media on track to surpass search, 2013 is shaping up as a pivotal year when social networks leapfrog search algorithms as a more important source of user traffic. Publishers have an opportunity to gain insight into what content is being shared the most, as well as what types of articles drive the most referral traffic, in order to continue to grow their readership and engagement levels.

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Telemarketing: A Splendid Circulation Source

Bill Mickey — Thu, 24 Jan 2013 16:12:04 -0500

Talking to your customers is always a good thing, and at the moment telemarketing seems to work very well for many publishers—but be careful as you can overstay your welcome.

Avoid the temptation to ask your customers everything in one go. This will confuse some, annoy others and may result in an order not being completed. This is true for both paid and controlled publications, but for different reasons. If someone is receiving a magazine free of charge it is reasonable to elicit some information from him or her; this is the reason they are getting the magazine free, after all.

However, if you ask too many questions it may result in a firm but call-ending hang up. Ask the subscriber if you can send a follow up email with some more questions that it would be useful “for us to know, so that we can serve you better.” If they say yes, the telemarketing company can probably send the email out straight away.

If the person you are calling has paid for a subscription, be careful when asking for information. Many subscribers feel paying for a subscription also pays for their privacy. However, people are also very flattered when you seek their advice or opinion, so how you phrase your question can be the difference between getting the information you want and the aforementioned call-ending hang-up. Flattery is almost always a good thing.

When choosing a telemarketing company, take time to review the references you got from them. Talk to people in the industry to see if they have an opinion. The company you choose is going to represent you in a one-to-one conversation with either your subscribers or prospects—this will reflect on your company so choose wisely.

There are very few methods of promotion where we have direct interaction with our customers or prospects. Telemarketing is one, and you only get one chance to make a good first impression—do not let price be the only factor that dictates your decision. There will always be at least one caller who complains, that is normal. If you are conducting a large program, probably more than one complaint will be received. Calmly call the account manager at the telemarketing company, have them review the call with you and make a decision together on how to resolve any issues.

If you are prospecting for new orders, review the results the telemarketing company sends each day and after a few days of calling, prioritize the calling so that you can get the maximum number of orders for the least amount of money—especially if paying by the hour. Ensure you key each list correctly and that you do measure like for like. Comparing a list that has a 30 percent conversion with 5,000 names called cannot really be compared to a list that has a 10 percent conversion but only 1,000 names called. Many a bad decision has been made on too little information.

For many years, telemarketing was considered the “bad boy” of circulation. Nobody really wanted it on his or her Publisher’s Statement. Now, just like black coffee, eggs, chocolate and red wine—all in moderation, course—telemarketing has a good reputation and can be a splendid source of circulation and revenue for publishers.

Roy Beagley is Director of Publishing Services for Tyson Associates Inc. Roy started his career at The Economist and then The Spectator in London. He moved to the United States in 1992 and since then he has worked with Tyson Associates handling many controlled and consumer publications. He is editor of Circspot.com, a website for circulation and audience development professionals.

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Congress Leaves USPS Hanging

Bill Mickey — Thu, 03 Jan 2013 16:09:57 -0500

Add the USPS to the list of unfinished business left by the now-adjourned 112th Congress. As it muddled its way through negotiating terms for avoiding the fiscal cliff, the legislation the Postal Service was looking for fell by the wayside, prompting Postmaster General Patrick Donahoe to voice his disappointment in an official statement.

Even with hearings, lobbying from ABM and MPA and a raft of restructuring initiatives done over the last two years, the USPS is still in major crisis mode. And any major operational or pricing changes going forward could have a significant impact on publishers.
Ranks have been reduced by 60,000 carriers and 70 facilities have been consolidated, but the USPS is still losing massive amounts of money, to the tune of $25 million per day. And it's already defaulted on its $11.1 billion Treasury payments and has no money left to borrow. "As we look to the coming year, we are on an unsustainable financial path," warns Donahoe. "We will be discussing with our Board of Governors a range of accelerated cost-cutting and revenue generating measures designed to provide us some financial breathing room."

For the full statement, click here.
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To Test or Not to Test—That’s Never the Question

traphael — Tue, 04 Dec 2012 14:29:39 -0500

Whenever you do a promotion, it is always worthwhile building in a test—you can learn so much from testing and there are so many different things you can try.

While $60.00 can sound like quite a lot of money, expressed as 60 cents per 100 issues can somehow seems far cheaper. How do I know this? I recently got this offer from The Economist and I subscribed straight away. In fact, my eyes were so focused on the “60 cents” when I got to the check out page and saw the amount of $60.00, I had a moment of panic—but I subscribed all the same.

If you cannot test a price, test a term—$60.00 for one year or $35.00 for six months. A test of this type will tell you lots about your readers and if the test fails, well, actually no test fails, you just learn and move on to the next test.

“Pay in Advance” as opposed to “Bill Me Later” is a good test to try. If your magazine is not well known, “Bill Me” is often the stronger offer. I will always try out a “Bill Me” offer to review a publication but will think twice about having to pay some money up front—even with a money-back guarantee.

Remember, you can only really test one thing at one time. If you test price and term together as outlined above, and the test wins against your control, you will not know what made it win—price or term. So, test price or test term, not both together.

Testing used to be far more expensive than it is now, mainly due to the invention of email. By sending out emails on a regular basis, you can test yourself silly if you want and learn a great deal. However, what works in one medium may not work for another. If you test a “50% Off The Cover Price” offer in an email and it wins, then for email this would become your new control. But, don’t then turn to direct mail, phone or fax with the same offer and expect the same result—it probably won’t happen. What you need to do is take what you learned from one medium and then test it in another medium and see what happens.

You can test design and copy as well, but remember just because you do not like the creative does not mean it should not be tested. We used to mail out a really bad re-qualification effort for a client that was a lurid pink matched with a green (the effort, not the client). It was so bright it used to make us all feel ill just looking at it. Have you ever seen a black and white cover of a magazine that is shaded pink? The trouble was it got the best response ever. Every year—year in, year out—we tested something against this stripy pink and green abomination, but the abomination always won. We even had a rival company come in and look at all the efforts we sent, and the first thing they said was, “This has to go, it is awful”—and they were right, but it got the most orders and at the end of the day, that is what it is all about.

So build in some tests, you will learn a lot and it does not have to be expensive. Remember that when a test wins, it becomes the new control—and then you start testing against that. Who said life is a circle?

Roy Beagley is Director of Publishing Services for Tyson Associates Inc. Roy started his career at The Economist and then The Spectator in London. He moved to the United States in 1992 and since then he has worked with Tyson Associates handling many controlled and comsumer publications. He is editor of Circspot.com, a website for circulation and audience development professionals.

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To Scan, or Not to Scan? That Is the Question

Bill Mickey — Thu, 18 Oct 2012 16:50:30 -0400

I got quite a few phone calls this past week from fellow circulators concerning the article that was posted on Audience Development's website last week on action code response rates exceeding direct mail rates.

I am not going to say who called me in this article, let them get their own fame, but the best call was from someone who simply said: “What the hell is an action response code?” Actually she used another word instead of “hell,” but I don’t want to be censored in my first month on this web site.

Some of the figures were pretty astounding to be sure but direct marketers have always said the less the people have to do to respond, the better the response will be. And here, all you have to do is scan a code with your phone.

These codes have increased in usage over the past year and will continue to increase although be careful where you use them. I saw one on a billboard high above the West Side Highway in New York and many drivers were driving and trying to scan the code on the billboard at the same time. Action response codes are really good on the page ads in your magazine as this means people no longer have to rip out a page to take action. Let’s be honest, how many subscription orders were ever gained from space ads? Now, however, a quick scan and you have an order.

Codes can be used on all manner of things; I would love to run an insert card that is quite simply a response code just to see what happens. Generally I think it is a good idea to inform people what will happen when they scan the code, but if anyone has ever run a card with only a code printed on it, I would love to know how it worked.

The beauty of these codes is they are so adaptable. You can use them in renewals linked to the subscriber’s record, on invoices, for new subscriptions—the possibilities are endless. Perhaps we should all have these scans tattooed on our foreheads which would make getting through airports so much easier, but I digress; this is 2012 not 1984.

If you have not experimented with action response codes, it is worth your while to investigate using them. I do not have an iPad which I know makes me pre-historic, and I do not have an iPhone but I do have a mobile phone that I am just about able to switch off and on, and one of the few apps I have downloaded is a QR scanner—and if I have one, you know it’s serious.

There is one caveat to all of this, the article started “digital action codes have become the most-responded-to form of print marketing” but at no point was it ever made clear what people were actually responding to, so an expectation of huge increases in new subscriptions and renewals may be unrealistic but these action codes are going to be around for a little while so exploring their possible usage is, as Martha Stewart would say “a good thing.”

Roy Beagley is Director of Publishing Services for Tyson Associates Inc. Roy started his career at The Economist and then The Spectator in London. He moved to the United States in 1992 and since then he has worked with Tyson Associates handling many controlled and comsumer publications. He is editor of Circspot.com, a website for circulation and audience development professionals.
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Publishers Fiddle While the Newsstand Channel Burns

Bill Mickey — Thu, 16 Aug 2012 09:40:33 -0400

To paraphrase Senator John McCain—let’s have some straight talk. The newsstand as we know it is nearing endangered species status. How much further do newsstand sales have to decline before publishers take corrective action?

It’s well known that newsstand sales are in the dumper, but the depth of the audited publication sales slide in the first half of this year is even greater than has recently been reported by the media. A 9.6 percent sales decline (reported by the media) is huge, but the extent of the actual slide is more than 20 percent greater.

The reason for the difference is that the numbers reported by the media only represent the sales status of titles that were audited in both the first half of this year and the first half of last year. It doesn’t, however, include titles audited a year go, but have either ceased being audited and/or have discontinued being published. Examples include; Soap Opera Weekly, Soap Opera ABC, Soap Opera CBS, Cooking with Paula Deen and Spin. If sales data from discontinued/no longer audited titles are included in the calculation, the overall unit sales decline is estimated (based on preliminary ABC reports) to be a breath-taking 12.8 percent and a corresponding 12.2 percent fall in revenue.

The Newsstand Channel Is Being Hollowed Out

The devastating first-half sales are, as we’re all aware, not an anomaly. The steep decline began in the first half of 2008 and has essentially continued unabated since then. A brief recap illustrates the accumulative depth of the sales slide:

The unit sales of audited publications have declined nearly 45 percent in the last four and a half years. Since 2007 it’s estimated that by the end of 2012 the annual unit sales of audited publications will have fallen from about 930 million to 510 million—a staggering annual sales loss of 420 million copies. The revenue will have declined from $3.2 billion to approximately $2.4 billion.

What’s Gone Wrong?

There are many explanations for this decline—the great recession, fewer store visits and a more cost conscious consumer. But the most significant has been the impact of technological change that has increased the proclivity of consumers to acquire news and information on a range of mobile devices that are offering better and better user experiences. Together all of these things have contributed to the decline.

Should the Decline Have Been So Steep?

In this 4-year period of unprecedented change a substantial sales decline would certainly have been expected. But should it have been so severe? I would argue the decline has been exacerbated by a timid publishing community and the restraints of an antiquated newsstand channel distribution system. The channel has, in effect, been held hostage by a costly, inefficient system loaded with duplication of effort. This is largely a product of its two-middlemen (wholesalers and national distributors) configuration.

Years ago the channel probably required a two-middlemen check and balance approach in order to meet the needs of accommodating a vast distribution network with over 500 independent wholesalers. Today just three wholesalers control the majority of all magazine newsstand distributions and the two-middlemen configuration seems seriously out of date. However, the corrosive often adversarial nature of this configuration continues to persist, which has seriously thwarted the prospect for channel reform.

As I indicated in a February story (after the audit bureaus reported last year’s second-half sales) the magazine newsstand had reached viral conditions and it was clear that the desperately persistent decline was now feeding on itself. Six months later the first half results (the steepest sales decline in recent history) only confirms the viral nature of channel conditions.

Publishers and Wholesalers: Coping in the Age of Newsstand Austerity

Publishers
For years publisher’s newsstand actions were dictated primarily by competitive self-interest. They largely ignored the health of the supply chain and the financial sustainability of its wholesaling “partners.” These actions, although seemingly counter productive, were precipitated by the huge diversity of the publishing community (like herding cats) and by the knowledge that they had a range of other alternatives (not just newsstand circ) for delivering readers to meet their circ level requirements.

The trend to less single copy circ has been continuing for many decades, but the recent 4-year newsstand sales decline, coupled by the advent of digital (replica) circ, has intensified the effect of the newsstand sales decline.

Let me give you a current example of how this works. People Magazine, the undisputed newsstand sales leader, experienced a nearly 19 percent decline in newsstand sales in the first half of this year. This translated to a 214,000 drop in newsstand circ. But People’s total paid circulation (nearly 3.6 million) remained virtually the same as it was in the year previous period (actually it was up about 6,000). To compensate for the “lost” newsstand circ, the subscription circ was increased by 220,000—this included a 77,000 increase in verified circ. Additionally People reported (for the first time) 37,000 replica circ.

The point here is publishers have alternatives for compensating for “lost” newsstand circ. But it comes with some serious tradeoffs. Adding subscribers to meet circ level requirements generally increases reader acquisition costs and, of course, the added subscribers remove potential newsstand buyers from the market, which has a subtle, but real, impact on future newsstand sales.

Wholesalers
On the other hand wholesalers have far fewer alternatives for compensating for declining newsstand sales. Essentially those alternatives come down to reducing costs and increasing scale (growing market share). That’s exactly what’s happened. Wholesalers have lowered costs by reducing staff, consolidating distribution management at central locations and curtailing much needed system improvement investments.

Although it’s difficult to measure the sales effect of these cost-saving initiatives, by all accounts the cost containment strategy of wholesalers has definitely contributed to the sales slide. In the process the three remaining wholesaler groups continue to battle for market share. The News Group, one of three major wholesaling groups, has recently taken the Kroger account (a major seller of magazines) from another super-wholesaler, The Source. The News Group and Hudson News teamed to buy CMG, a large national distributor, from Hearst and Condé Nast. It’s still too early to read the results of this precedent-setting move, but I suspect it’s quietly resonating in the market. All of this appears to be setting up the inevitable battle for wholesaler survival among the three remaining wholesaling giants. This battle may come to nothing, but in the interim it’s helping keep the fragile newsstand channel in an unsettled condition.

In a declining newsstand market publishers have options, albeit they’re often costly. Wholesalers have a lesser number of viable options for coping in a down market. They are desperately trying to keep their financial ships afloat, while fighting a market share battle, which could eventually reshape the newsstand channel.

It’s Up to Publishers to Save the Newsstand Channel

Publishers have alternatives for replacing “lost” newsstand circ. This, however, has provided a false sense of security that has partially blinded them to the perils of a newsstand channel with greatly diminished capabilities. Yes, the prospect of more digital circ is in publisher’s future, but let’s be clear about the realities of consumer magazine publishing—for many years to come publishing survival will continue to be based on producing quality print products, attracting a cadre of advertisers, cost effectively acquiring print readers and protecting prime sources of circ (reader) acquisition.

None of the many circulation sources is more important than the newsstand. Without a viable newsstand sales market the prospect for the survival of consumer magazines will be seriously diminished.

Wholesalers and publishers, whether they like it or not, are bound at the hip. Publishers desperately need a viable newsstand channel and wholesalers need publishers that are fully committed to producing product with retail sales appeal.

What Can Be Done to Slow the Sales Slide?

At this juncture it’s not a matter of growing sales, but slowing the devastating 10 percent rate of annual decline. It’s no secret that channel efficiencies can be improved, duplicate effort eliminated and costs reduced. If that happened it could go a long ways towards stemming the severity of the sales fall.

If publishers and wholesalers needs are mutually dependent why aren’t these things being done?

Resolve the Scan-Based Trading Issue

There is no simple answer. But if I were to pick the major sticking point it involves the publisher/national distributor/wholesaler battle over how to adjust to the effects of scan based trading. Scan based trading now dominates wholesaler relationships with their major retailing clients. However, publishers/national distributors have not fully accepted this reality. It’s too complicated an issue to fully discuss in this note, but the gist is it revolves around publishers accepting scanned sales data, shifting inventory control to publishers and coming to grips with the so called “shrink” factor (the difference that may occur between scanned data and actual counts). There are also some audit bureau issues involved.

Scanned-based trading is a thorny issue, but resolving it may hold the key to unleashing the prospect for improving efficiencies and reducing channel costs. Publishers and wholesalers should be encouraged to resolve the scanned-based trading differences, which, in turn, will enable them to get on with the task of working more cooperatively to address the more important issue of stemming the sales slide.

I believe the ball is in the publisher’s court. They must step up to bat and get this done. If not the future for the newsstand looks very gloomy.

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REMAG Pilot Program to Launch in December

Bill Mickey — Thu, 09 Aug 2012 14:41:22 -0400

REMAG’s sprawling and multi-faceted kiosk program would not be easy to announce in two to three words on a newsstand magazine cover. In fact, it would be hard to explain in 25 words or less. It’s new, fresh, innovative and, from a blogger’s point of view, a little complicated. But the program is, in fact, all about the newsstand sales of magazines, so it deserves our attention and comprehension.

REMAG’s Blake Patterson called me to give me an update on the program. Since I blogged about this last year, REMAG has added a step. The program works like this:

1) Remag sets up a magazine recycling kiosk in participating retail stores.
2) A store customer brings a magazine back to the kiosk for recycling.
3) When the magazine is entered into the kiosk a screen comes up listing some local charities and schools from which to choose.
4) After the charity is chosen a coupon screen comes up. The customer may select four coupons from the categories of choice.
5) The coupons are printed from the kiosk with the code for the donation embedded in the coupon.
6) After each coupon is redeemed, a nickel goes to the charity that the customer has chosen.

Since a customer can redeem up to four coupons per magazine recycled, that means that a potential donation of 20 cents will go to charity for each recycled copy. That charitable donation is currently paid directly by REMAG, who believes in this model enough to subsidize it.

When I first blogged about REMAG’s idea, the response from my readers was enthusiastic. They called it a fantastic idea, bringing sustainability into the realm of print publishing, not only by recycling the product but by incentivizing the further sale of magazines.
SEE ALSO: Can Magazine Recycling Boost Retail Sales?
I liked the idea because we badly needed then, as we do now, something new in our world, something positive and forward-looking. The REMAG model seemed promising. It still looks promising, combining, as it does, magazine sales, sustainability and charitable donations—or, as Patterson puts it, three great stories to tell.

“We’ve always spoken about a magazine purchase as a value proposition extending beyond the purchase itself,” said Patterson. “This adds massive value to the transaction, value that a customer can discover directly, by walking over to the kiosk and finding the coupons and charitable donations available.”

Given how ambitious the program is, it’s no surprise that it has taken a full year to launch the pilot. But launched it finally will be, in eight News-Group-serviced Save Mart/Lucky stores starting in December. There will be two kiosks per location, one per entrance. And the EPA itself has reached out to REMAG to start a program in Puerto Rico, where landfill space is running out. As a result, REMAG is setting up a pilot in three Super Max locations in Puerto Rico starting in February 2013.

What REMAG is looking for from the publishing community now, as they were a year ago, is visibility, participation, and support. How can we as an industry build magazine sales through this? How much can we boost newsstand sales from the entire category by, for example, having a generic coupon for all magazines? Or for all the magazines published by a single multi-title publisher? And a final great question: What more can the rest of us do to help?
SEE ALSO: Magazine Publishers Family Literacy Project

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The Web Should Make Subscription Management Easier

Bill Mickey — Tue, 31 Jul 2012 17:34:00 -0400

My grandfather passed away many years ago at the ripe old age of 88. He left a legacy that included perpetual fruitcakes (not referring to my brother, but to a multi-year post-death pre-paid Christmas delivery of doorstop cakes to everyone in the family).

This happening in the 1980s gave the family an annual holiday giggle and we wondered why grandpa did this (was it a six-year special or a legacy joke?). Since this was pre-Internet and, most likely, pre-credit card renewal, grandpa, likely wrote a check, mailed it and ultimately balanced his checkbook (a real book).

Which gets me to 2012 and other types of legacies. How about the legacy subscription? I spent an hour Saturday morning trying to cancel my Wall Street Journal subscription on its website. It isn’t because I no longer want the Journal, it’s because they have offered me (by mail) a far superior offer than my perpetual subscription that renews with my credit card.

As an aside, you would think that they had audience development and list managers who would de-dupe and catch this stuff.

But my catching it on Saturday didn’t much matter. And that is because unless I want to telephone the Journal’s subscription department, there is no way to cancel my subscription on their website (or at least none that I could find). While I am not suggesting anything sinister in Murdoch-land, I am suggesting that there may be some folks trying to think of me as one of those perpetual fruitcakes.

I am not picking on the Journal—this is true for many publishers. I think it is time to own up to some not-so-great practices and adopt better ones. Auto-renewal is fine, but there does need to be an easier “out” and an easier way to understand when you can get out without having to wait on a phone call or read endless Qs and As, particularly when you are given better offers. I do like the way some of the titles are set up in the iTunes Store. Esquire has nailed a very civilized way of getting in or out of a subscription online. So has the new Huffington. But then there is the always-elegant The Atlantic, which politely thanks me for my support for 10 issues but I can’t figure out when my support began or ends.

The Web should up the game for publishers and subscription management. Right?
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For Some, Digital Revenues a Sorely Needed Boon

Tue, 29 Nov 2011 11:17:54 -0500

As far as inflection points go, this is a good one. In a Reuters story, the Financial Times Group says it's expecting content revenues (subscription and single copy sales) to at least equal, and possibly overtake, print advertising revenue for the first time this year.

During the London portion of the Reuters Global Media Summit, FT CEO John Ridding acknowledged the rough advertising climate, which has put extra pressure on digital to perform. The FT's online operation, says the report, now accounts for 30 percent of its revenues.

In the first half of this year, the group boosted profits by 10 percent. Digital subscriptions are the main driver, and were up 34 percent during the period. The FT's web app, famous for ditching Apple's app store, reached its one millionth registrant in mid-November.

It's still difficult to determine the overall size of the business, however. In other words, quickly rising digital content sales is all well and good, but is it adequately covering the decline of print ad revenues?

Meanwhile, The Economist, in which the FT Group has a fifty percent stake, says it reached 100,000 paid, digital-only circ by the half-year point—twice the amount compared to the same period last year.

Elsewhere, in what could be an aberrant blip or a sign of the times, The Atlantic says its digital advertising revenue beat print ad revenue for the month of October—51 percent of ad sales to 49 percent. That 49 percent is still a record-setting amount, however, says the magazine.

Moreover, The Atlantic's digital ad revenue for October is up 89 percent over last year and 37 percent better year-to-date.

All of this is in the face of a sharp drop in third-quarter print advertising. According to PIB numbers, consumer magazine ad pages fell 5.6 percent in the quarter compared to the same period in 2010. That decline erased the gains for the year, which is now down 1.1 percent for the first 9 months.
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Newsstand Difficulties Persist, But There Is Hope

pubintern — Thu, 18 Aug 2011 09:57:12 -0400

The speed of the newsstand sales slide is intensifying. And that's very scary. In the first half of 2011 the unit sales of audited consumer magazines fell 10.7 percent to 329.7 million and retail revenue declined 10.6 percent to $1.272.0 million. Since 2001 unit sales have declined 47 percent and retail revenue has fallen 30 percent.
The decline is breath taking, but by now it's certainly not news. The newsstand channel is seriously troubled, but even in its darkest hour there's opportunity for publishers that are not faint of heart. There will be rewards for publishers that can read the tea leaves, properly interpret the trends and act decisively. Let's look at some recent developments as a means of achieving future insight.

Hearst and American Media Increase Their Newsstand Commitment
Hearst buys the Hachette publications and increases its newsstand revenue market share by over 10 percent. American Media takes control of Source Interlink's two soap publications (Soap Opera Digest and Soap Opera Weekly) and acquires OK! Weekly from Northern & Shell and increases its revenue market share to 16 percent. These two market leaders have made major newsstand commitments-certainly positive signs for a troubled industry.

The Pace of Publisher Consolidation Continues to Rise
The six major newsstand publishers (Time, Inc., American Media, Bauer, Hearst, Wenner, Conde Nast) now control 78 percent of all unit sales of audited consumer titles, up from 71 percent a year ago. The newsstand channel influence of these six companies will only increase in the years ahead. But other publishers can survive on the margins if the bigger players do the heavy lifting necessary to effect much needed newsstand channel reform.

Weekly Celebrity Titles Losing Appeal
These titles previously helped sustain newsstand sales. But in the last year they have lost some of their appeal. Their combined unit sales were down 15.7 percent in the first half of this year. But their market influence is still big. They have a massive 30 percent share of the audited consumer magazine market so their recent sales decline has had a huge dampening effect on the market as a whole. However, in the newsstand's zero sum environment it's very possible they have left room for other titles to prosper.

Rise of Low Priced Women's Titles
Three low cover priced (less than $2.50) women's titles (Woman's World, First and All You) have prospered in this down market. They now represent a significant 15 percent of all audited publication unit sales. In the first half of the year their aggregate unit sales were flat and their retail revenue increased 1 percent. They are a model of how to prosper in this market and their low price appeal is an indicator of the price sensitivity of this market.

Checkout Versus Mainline Sales
Checkout sales (68 titles) fell 10.5 percent, slightly below the market average, while mainline sales decreased a little more than 14 percent. As bad as things were at the checkout they were even worse on the mainline. Retail chains concentrate their efforts at checkout to the detriment of the mainline. More publisher effort in developing new retail outlets is required in order to reverse this trend.

Male Titles Suffer the Most
Male oriented titles now represent only about 20 percent of total sales, down from 27 percent ten years ago. The decreasing demand for male titles has helped accentuate the decline of mainline sales. This is a stark reminder that the newsstand is primarily about selling women's titles.

Electronic Editions Beginning to Impact Newsstand Sales
Wired is, perhaps, the best example of this new phenomenon. It's believed that Wired per issue newsstand sales were about 67,000 to 68,000 in first half of this year. But they showed single copy sales of 82,000 on their ABC report. This might be an extreme example, but clearly replica edition sales are going to start eating away at the newsstand sales of many other titles.

Wholesalers in Cost Containment Mode
Wholesalers are concentrating on reducing costs to the detriment of sales. Publishers should be cognizant of how their actions affect sales.

Computer Assisted Distribution Systems Hold Promise
Publishers are discovering new opportunities for improving efficiencies by using computer assisted distribution systems driven by MagNet and/or wholesaler direct data. These systems are available at all national distributors and in some instances used directly by publishers. Their use is in its infancy and it's expected that they will be much more effective over time. They hold out the real possibility of significantly increasing the industry efficiency levels, which would be a huge boost.

What Does It All Mean For Publishers?
The newsstand market is shrinking and morphing in some unexpected ways. But publishers, like Hearst and American Media, that stay committed to the business and are able to adapt to changing conditions are likely to prosper at the newsstand in the years ahead.
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Building a Loyal Audience? That's a Business Model

pubintern — Thu, 16 Jun 2011 11:48:12 -0400

This post is run with permission and originally appears here.

As I pointed out in my previous post, advertisers don't buy page views they buy audience. A publisher's business model has to produce and monetize an audience. So what kind of audience is profitable? A loyal one. Here is the proof...

The Revenue Model 
Because audience engagement is the unit of monetization and because each member engages differently, the revenue contribution and profitability of each audience member varies. For example, assume a fly-by audience member generates on average three page views. With a $30 RPM, each fly-by is worth $0.09 in revenue. Now compare that to a loyal fan generating 100 page views a month or $3 of revenue per month (i.e., $36 per year).

The revenue model can be plotted as shown in the figure above. Charting audience versus their revenue contribution illustrates the revenue model for a publisher. On the left, highly engaged fans contribute good revenue and on the right, each fly-by generates a small incremental amount of revenue.

The Cost Model  
Aside from advertising sales, the two primary costs in digital media are associated with producing audience members namely audience development and editorial. Since a target audience is finite, acquiring new audience members becomes increasingly expensive as the size of the audience grows, due to the decreasing number of potential audience members remaining. Additionally, as the audience grows so does diversity and the need for a broader range of content at a larger editorial cost. The increasing cost to acquire and engage the audience is represented along with the revenue model in the following chart.

The Profit Model 
Of course profits are made when the cost model is below the revenue model. For the fly-by to be profitable, the cost to produce the content and acquire the page views of the fly-by needs to be below $0.09. Acquiring an audience of 30M fly-bys per month would only generate $2.7M in revenue per month or a little more than $32M per year but the costs of that are likely to be much higher (e.g., Demand Media cost model).

By contrast, the cost to produce the content and acquire the page views of the loyal fan needs to be less than $3 per month to be profitable. Research by Scout Analytics shows the importance of a loyal audience to profitability in a revenue model. A loyal audience is made up of all visitors minus the fly-bys and usually constitutes about 20 percent of the unique visitors but are responsible for about 80 percent of all page views. This means that 80 percent of the revenue capacity (i.e., ad inventory) comes from a loyal audience while about 20 percent come from fly-by visitors. So even though fly-bys make up the vast majority of unique visitors, their revenue contribution is astonishingly low. In other words, generating revenue from fly-bys is the same as chasing page views, but building loyal audience is building a business model.

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Keep an Eye on What You’re Marketing, Not What You’re Becoming

Bill Mickey — Tue, 02 Nov 2010 10:40:25 -0400

This fall, the MPA, the trade organization that once was the Magazine Publishers of America, took an early jumpstart on the surefire newsstand trope by changing its focus and logo, dropping “magazine” from its name, pushing it to its tagline, and essentially stating that the M, the P and the A no longer mean anything.

Short of using a symbol akin to that of The Artist Formerly Known as Prince, I don’t think the MPA could have devised a better update. The insiders-only acronym, followed by the vaguely inclusive tagline, perfectly reflects the state of the industry the association represents.

Yes, it has gotten that head-spinning out there. While most magazine marketers are (hopefully) clear on what they are trying to do, an industry observer would have a tough time finding a common theme.

After a couple of lean years, business model variations are exploding.

Some are aggregating well-targeted audiences for advertisers to reach, while others are chasing the highest possible volume of eyeballs. Some are focused on selling content, while others devise advertising “solutions.” Some use their publications as lead generation for a pyramid of goods and services, while others create communities. And some still simply sell magazines.

Without joining the tortured—and mostly pointless—musings of what a magazine is and is not, audience developers and consumer marketers really ought to stop and take stock of what it is that they are selling—and against what competition.

To be sure, we’ve always known that we’re competing against television, newspapers, Web sites and other mainstream content providers. But when the offerings and platforms start to multiply, the competitive set expands too.

Increasingly, our newsstand copies find themselves competing with gum packs and water bottles—for share of wallet and share of retail space. And the oft-reviled verified copies no longer only compete with each other; they are getting crushed by smart phones and text messaging.

Peter Drucker, the father of modern management, famously wrote: “Because the purpose of any business is to create a customer, the business has two—and only two—basic functions: innovation and marketing. Marketing and Innovation produce results, all the rest are costs.”

This provocative viewpoint ought to make marketers feel good about themselves, especially as direct-to-consumer marketing slowly continues to acquire luster. But it’s not the entire story. As the industry continues to fragment through various reinvention attempts, there’s a risk that customers too will be a touch disoriented about what to expect from magazine media.

Until recently, the transactions, and resulting relationships, were as clear as those of ordering a Happy Meal. A customer places an order, receives a magazine within a few weeks, and then decides about renewal a year later.

That straightforward relationship is no longer a given and customers can’t be quite sure of what it is that’s being offered to them. X issues of a pub? The joining of a community? Cash for convenience on something I could get for free?

Absent a uniform, predictable relationship, deciding to enter a “commercial relationship” with media providers takes a little more deliberation—and that definitely hurts demand.
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