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Using Electronic Media to Acquire, Renew Subscribers

After all the buzz, the hype, the bad news and bursting bubbles, many circulators are finding ways to market profitably on the Internet in 2004. That’s good news because while direct mail is and will remain the workhorse, online channels offer many unique benefits.

Circulators aren’t the only ones making this discovery. Industry news sources report the rebound of online advertising. Famous brand-name companies are devoting a larger portion of their ad budget to this channel. Publishers are, too, in search of the Holy Grail of acquiring more subscribers at a lower cost and keeping them longer.

Whether you’re taking the first tentative steps online or want to grow beyond what you’re doing now, it’s important to remember the realities of Internet marketing.

A few years ago, click-through rates were in the stratosphere. The logical conclusion was that online advertising was a boon for direct marketers. Then CTRs went south, and online publishers changed their tune to claim online advertising was the ultimate branding vehicle.

Today, users are clicking again, cautiously and judiciously.

Right now, the most effective way to elicit a click, which is the first step in acquiring a subscriber, is through keywords and paid search. The problem circulators face is that they compete with agencies buying the same keywords.

Also, users searching via keywords are not looking for a subscription offer. If you deliver a “subscribe now” message first, you alienate a potential subscriber by not delivering on his request.

To capture as many keyword clickers as possible, the “subscribe now” message must be secondary on whatever page the user lands on. PC World magazine takes this strategy even further by embedding order forms on every page of the Web site. Not only is there a sales message, there’s a way to reply.

Online users have been trained that clicking on an ad hijacks them from the page they’re on. But new forms of advertising let users stay on a page while interacting with an ad.

Discover magazine tested this concept. It created an interactive online ad that had the dual goal of branding and eliciting trial subscriptions. The ad had three sections: take a science quiz, see headlines in the current issue and sign up for a free preview issue.

From a branding perspective, click-around rates within the ad were healthy, indicating good interaction with the brand. From a direct marketing perspective, Discover was able to gain trial subscribers cost-efficiently – after optimization.

But the volume wasn’t there. This is a key challenge with online marketing. Unless you have a huge media budget and there are multiple sites that can deliver subscribers at an acceptable CPO, online will not provide the quantity of subscribers that direct mail does. This means you have to judge success in this channel based not on quantity of orders, but on a cost-per-subscriber basis.

Similar volume issues apply with e-mail for acquisition. Since the rental list universe is small and untargeted, and response rates are low, you won’t get many new subscribers through this channel. So you have two options.

Option one is to build your own house e-mail list. Advance Publications Inc., owner of Conde Nast magazines, does a nice job of this. It uses e-mail to attract customers by inviting them to participate in contests and sweepstakes or to sign up for a free e-mail newsletter. It’s a fair value exchange. Conde Nast then uses opt-in e-mail to upsell and cross-sell its stable of magazines.

Option two is to recognize that e-mail is a weak acquisition vehicle but a powerful retention tool. Too many direct marketers have a knee-jerk reaction to try to make everything work for acquisition. Low-cost e-mail is like dangling a carrot in front of these cost-conscious DMers. But acquisition e-mail is too impersonal to work for a highly personal medium. After conducting multiple tests, it is clear e-mail works best when a relationship exists between sender and receiver.

When a relationship exists, e-mail can work gangbusters, especially for renewing subscribers. Hachette Filipacchi has been renewing subscribers through e-mail for about a year and a half. Its program coordinates e-mail and direct mail. This combination nets more renewals than direct mail alone. Yet when the circulation department dug deep into the P&L, it learned something surprising. It made financial sense to both mail and e-mail certain segments because order rates were high enough. But there were segments that shouldn’t receive both efforts because the numbers simply weren’t there.

Based on the pockets of success, Hachette wants to expand its e-mail renewal program. But it does not have enough e-mail addresses in its database. So it is aggressively pursuing enhancements to its e-mail database, a challenge in this day of spam-savvy consumers. Hachette’s circulation department is exploring e-mail append. And it is building an online order center for recipients of offline communications.

As an incentive to renew electronically, Hachette is considering enriching the offer with extra issues. Circulators shouldn’t be reluctant to take these kinds of steps. Circulation lore says that subscribers can be trained. Using offers wisely will teach subscribers to renew online. It’s a win-win situation: Even with an enhanced offer, circulators save money on the renewal. They also develop goodwill with customers by giving them a bonus. From the consumer side, subscribers get a better deal and a hassle-free renewal.

This article has explored just a few, obvious Internet channels. There are others. And though a lot has been learned, much more testing is needed.

That said, three safe predictions can be made: Consumers will grow more comfortable transacting online. New interactive technologies will be developed. And circulators will imagine innovative Internet strategies. All of which indicates that online will grow to play a more significant role in acquiring and renewing subscribers.

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