Time Forms Direct Subsidiary to Boost mag Circulations

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Time Consumer Marketing has launched Time Direct Ventures, an independent subsidiary, on the heels of its success building subscription circulation through partnership marketing. Time Direct will offer partnership marketing programs not only to Time Inc.'s stable of titles but to outside publications as well.

An agreement with Home Shopping Network was just finalized, and other partners will be announced soon, according to Ken Godshall, senior vice president at Time Consumer Marketing, a division of Time Inc., New York. Home Shopping Network's TV customers will have the opportunity to subscribe to Time Inc. publications as well as other consumer magazines. Time's publications include Entertainment Weekly, Fortune, Life, Money, People, Sports Illustrated and Time.

"We're interested in working with all the major publishers. Right now, we're identifying with Home Shopping Network individual magazines we want to include," Godshall said, though he declined to name specific titles. "We'll include magazines that are a good fit with the kind of customers Home Shopping Network has."

Discussions with catalogers and other companies that have large inbound customer call volumes are also in the works, but no deals have been finalized.

Time's move represents a departure from traditional circulation building efforts at a time when the industry is in great need of innovative new sources of business. Those channels, particularly selling through sweepstakes subscription agents, have consistently performed poorly, and publishers continue to wrestle with ways to compensate for the shortfall. Mired in lawsuits and legislative constraints, the two largest agents - Publishers Clearing House and American Family Publishers - showed steep declines in 1998 performance, down 29 percent and 37 percent respectively, according to Capell's Circulation Report, Ridgewood, NJ. Solo direct mail efforts, that don't necessarily assure acceptable response rates, are costly.

Sunset Publishing Corp. and other publishing companies have used partnership marketing successfully in the past, but Time Inc. has formalized the approach. Time's new venture competes with existing companies such as Magazine Direct.

"We feel that partnership marketing as part of our overall strategy is potentially a very large new source," Godshall said. "If you add up all the work we're doing with the programs, this year we will probably sell somewhere in the range of 600,000 to 750,000 net new subscriptions."

In terms of new business for the publisher, that return represents close to 20 percent of its overall business goals. "The creation of new, discrete sources is on our mind, and partnership marketing is one of our best working ideas," Godshall said.

Partners in existing programs include Ticketmaster, MBNA, Capital One and MCI WorldCom. With Ticketmaster, customers are offered trial subscriptions to either Entertainment Weekly or Sports Illustrated based on the type of ticket purchased. A "soft offer" is made to the credit card subscriber, with an opportunity to sample the magazine for two months. After that, Time charges the consumer's credit card for an initial six-month term, and they are then renewed continuously on the credit card, which eliminates the need for repeated direct mail renewal notices.

"It is already the largest new business source for Entertainment Weekly," Godshall said.

Continuous service is something Time and other publishers are testing based on the success of alternative subscription sellers, like New Sub Services, Stamford, CT. Most of its existing partnership programs employ the continuous-service business model.

"We think it will promote higher retention rates, lower promotion costs, and give us a relationship with our subscribers that will allow us to forgo all the renewal notices and telephone calls that we now use and call retention marketing," Godshall said.

Partnership marketing programs for publishers also are economical for publishers.

"We're looking to partner with companies that have large consumer franchises, that have typically very large marketing projects that we can draft behind," Godshall said.

Marketers typically make significant investments in ongoing marketing programs, and partnership programs give publishers the opportunity to piggyback onto existing efforts and forgo traditional promotion expenses in direct mail or commissions to a subscription agent. And the magazine offers added value to the marketer, which needs to differentiate itself by offering incentives to potential customers.

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