Rule Change Alters List ManagementNot everything can be blamed on the boom-to-bust economic fears of the past nine months. There are factors that have been changing in direct marketing for longer than that.
The demise of the mega-magazine subscription agencies (American Family), or their weakening, has played a major role in subscription levels, base rates and advertising rates for space in many publications.
The new 50 percent rule change in the circulation marketing practices that has been approved by the Audit Bureau of Circulations and the similar changes in the BPAI will affect the size of subscriptions and types of individuals who will be subscribing to many magazines in the near future.
From a circulation point of view, this is probably good news for many consumer magazines, as well as magazines that bridge the business and consumer marketplaces. For sure, we will see more premiums, discounting of pricing and trial offers.
The main challenge for any responsible circulation director will be how to convert the short-term subscribers into long-term renewals at a more traditional pricing structure.
However, when they go out to rent lists or exchange a list in the future, these changes in the rules will offer new challenges that have not been met before. Response rates will change, and not necessarily for the good.
A person who subscribes to a magazine offer in winter 2002 will probably be responding to a substantially cheaper subscription rate and may be given an offer for a shorter period as a trial.
According to the new rules, this person is an active, paid subscriber. A year ago this would not have been the case. Good for space sales, probably bad for the list renters.
How we in the list industry start to redefine different types of subsets of subscribers will affect the success of the campaigns that we will be working on with our client base.
It may be that a recent expire who paid "full-boat" for a subscription only one year ago may be a more qualified target for a magazine offer than the most recent hotline sold at a much lesser rate and for a trial period.
Under normal circumstances, or better put, under our current system, expires are worth less than actives. In certain upscale magazines, financial magazines or business-to-business paid magazines, this may not remain true. We will have to report and show who the various subscribers are and what offer they responded to.
At least 15 years ago, the following happened: A certain magazine list had, time and time again, been on the short list of list rentals for one of my magazine clients. The magazine's subscription prices were similar (average unit of sale), the profiles on the rental list and on my client's file were constant, and, therefore, after at least 10 rentals, ranging in size from 10,000 names to 150,000 names at a clip, I had a fairly good read on what my expectation level could be on this rental file (all other variables, including seasonality, were taken into consideration). Finally, the day came when I placed an order for more than 200,000 names. It bombed.
Needless to say, my client was not happy, I was shocked, and both of us needed to analyze how this could have happened. The answer was that the new circulation director for the rental file had slashed the subscription price more than 60 percent, thereby widening the population and loosening the demographics and the profile of the new subscribers. In other words, the name of the list was the same, but the people subscribing to the magazine were different. My firm immediately tested recent expires, and our response rates returned to almost normal.
Over the years I have often thought of this story, and it has relevance to what will become the norm in the magazine list business in the next several months.
Until the new rate-base initiatives become the norm and we all have a good look at how the demographics change or remain the same, circulation directors and attentive list brokers would do well to seize the opportunities of recent expires, full-term subscribers and renewals. Renewals as a separate select might be an interesting rental.
A usual line that I and many others insert in magazine list brokerage orders is "omit agency sold." We may now have to place more omissions into our standard select criteria. Of course, the one constant for all those in direct marketing is measurability. Therefore, what is required to take advantage of all of these new criteria is to test, test, test. n