Readers' Digest Makes a Comeback in Australia

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SYDNEY - Readers' Digest is testing direct response radio in Australia as an adjunct to traditional direct mail techniques to boost circulation. It has also tested DRTV and is looking at telemarketing as a future option.

"Initially we will be looking to upsell on incoming calls, as distinct from cold-calling," Nick McRae, the managing director of the Australian Readers' Digest Company, said.

The company is also looking at the Internet, although McRae said "our site is in its infancy and now provides customer service and corporate information only. We're awaiting a global framework which is being developed in the US company."

With a circulation of 470,000, the Digest is the third largest magazine in the country. As elsewhere in the world, the company is using the publication to promote and cross-sell other Digest products.

"We make the bulk of our profits from the products we sell to people who come to us via the magazine subscription, and while I can't provide you with sales figures, I can tell you we wouldn't do it if it wasn't worth our while," he said.

"For this reason, we manage our circulation to a certain level to ensure the quality and profitability of the magazine, as well as the flow-through impact on the rest of the business.

"Our competitive position in relation to other magazines in this market is an important consideration. The magazine plays an integral role in our total business, and circulation reflects this."

Digest circulation is different from that of other Australian publications. Only 8 percent is sold on newsstands, while the rest is subscription sales.

"This is very unusual in the Australian marketplace where the bulk of magazines are sold via newsstand and other retail outlets," said McRae. The Digest has had time to study this market, having entered it right after World War II.

It has geared editorial content to Australian readers with about one-third of each issue derived from local sources. The rest is "the best of the global stories that come out of the US magazines and the other 47 editions," McRae explained.

"Our readers love the local content, but one of the key reasons they choose to read Readers' Digest is the unique window on the world it provides."

The editorial team in Sydney also handles the magazine's South African and English-speaking Asian editions.

The Digest has had problems in Australia, as in most other markets, but McRae said "our core business is in the final phase of recovery and we are doing very well here now."

One reason for the recovery, he added, is that "direct marketing as discipline is experiencing huge growth in Australia." The country is now one of the "big five" in terms of the company's revenue and profit.

Direct mail remains the Digests' bedrock and it has no trouble finding the right lists to target prospective readers. "We have access to publicly available documents like the electoral roll and the telephone book," McRae said. "The only real list issue we have in Australia is that list brokers deal in gross rather than net names, which is something we are working on with them to reverse."

Promotions are created locally and used not only in Australia but in other Digest markets.

Asked about prospects for moving into the sale of healthcare products, a direction CEO Tom Ryder has promised to take the company as a whole, McRae said "we are awaiting global direction but believe healthcare is a market we can succeed in locally."

Overall, he said, the "Australian market is very much like the US market, except it is much smaller, so niche affinities that may be viable in the US due to sheer volume of population may not work for us here."

However, he noted that mainstream products that scored big in the US also did well in Australia. He cited the book "Foods That Harm, Foods That Heal" as an example.

"We localize products, of course, but the concept is the same," he said. "The traditionally strong affinity areas are virtually the same - cooking, gardening, do-it-yourself, and travel, with newer affinities being developed like computing, the Internet and children's products."

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