Marketers Express Hope for Sweeps, Even in Wake of AFE "Curtailing"

Circulation Management, March, 2001 by Karlene Lukovitz

When confirmation came during DMA Circulation Day that American Family Enterprises has been reduced to a skeleton crew and some test programs with an uncertain future, few in attendance at the late-January event seemed surprised. (See page 17 for specifics on AFE's status.)

In the wake of the prolonged sweepstakes crisis and AFE's 1999 filing of Chapter 11, followed by its decision to get out of sweeps entirely last September, most consumer marketers seemed to agree that the news was sad but anticlimatic. The industry has had three years to absorb the shock of seeing the stampsheet mailings of AFE's American Family Publishers and those from Publishers Clearing House reduced almost overnight from one of its biggest subscription sources to virtual trickles.

According to knowledgeable estimates, during the pre-crisis peak years of 1995 and 1996, American Family Publishers' sweepstakes mailings produced about 20 million subscriptions per year.

The highly public crisis centering on the stampsheet agents also spurred major publishers to make large investments in non-sweeps package tests and shift to less profitable and renewable sources, in order to get out of sweeps as rapidly as possible: Time Inc. once relied heavily not only on its AEE division but on its Guaranteed & Bonded sweeps programs. Now, according to some sources, Time is the last Time Inc. title to use sweeps--and it, too, may drop the incentive. Sweepstakes pioneer Reader's Digest and its sister titles have also worked overtime to significantly reduce dependence on sweeps business.

Yet, sweepstakes continue to show signs of life within the publishing industry, as well as within other types of direct marketing. Sweeps and fast-50 promotions continue to be used by quite a few smaller publishers (consultant Gordon Grossman counted 39 titles using them as of 1999) and by one or two larger ones, including American Express Publishing.

And now that the public furor has calmed down, some executives predict that sweeps will make a fairly rapid comeback. "It would be difficult to exaggerate how serious the sweepstakes crisis has been for circulation marketing," said Ken Godshall, senior VP, partnership marketing and new business development, Time Inc. Consumer Marketing, during DMA Circulation Day. Noting the news from AFP, he also confirmed that "almost every Time Inc. magazine has withdrawn from sweepstakes marketing and returned to non-sweepstakes direct mall of one kind or another." Nevertheless, he said, "I predict that sweeps will make a comeback in the next couple of years. It will be on a new footing. It will be fun and simple. It will almost certainly come from a company other than Time Inc."

Like other consumer marketers, Godshall also points to a notable improvement in results of this year's major PCH winter mailing as a heartening sign.

"I've been encouraged by PCH's recent performance in the mail, and have high hopes that they will not only rebuild their direct mail business on a sounder footing, but connect it intelligently with the online presence they've developed in PCH.com," he said.

As of early February, results were still coming in from the January mailing, which had about a dozen segments, according to PCH executive director, public relations Pete Pedersen. However, Pedersen confirmed that the mailing has yielded "significantly more subscriptions than we'd planned on."

Pedersen acknowledged that current mailing volumes are still far smaller than in pre-crisis days. However, he points out that this year's plan was based on last year's plan, "and while weren't able to reach those goals last year, we're exceeding them this year." Pedersen also noted that PCH significantly increased its prospect mailing in the second half of 2000 and is adding a mailing of "pretty good size" in this year's first quarter.

"People assume that we're happy to see what's happened at AFE, but we're not, because they were a strong competitor and it's a negative for the publishing industry," Pedersen said. "But it has no effect on our business. We continue to be committed to sweepstakes. We believe that sweepstakes are not only viable, but a strong marketing tool." Pedersen says that improved creative and lists are helping results, but that he attributes the upswing "mainly to the absence of negative publicity."

Veteran circulation executives also point out that sweepstakes have demonstrated their resiliency on other occasions in the past. While nothing ever approached the cataclysmic nature of the late-'90s crisis, stampsheet efforts have been periodically challenged almost since their inception.

Response dipped and recovered after each such challenge (including a PCH agreement in the early '90s to adjust its creative to settle actions by the attorneys' general of 14 states). The difference this time around, however, is not only the severity of the repercussions, but the industry's apparent awareness that promotions can never again be allowed to edge over the line between salesmanship and misrepresentation.