THE MATCH GAME: Partnership Marketing is HOT. And YOU Can PLAY, Too

Circulation Management, June, 2001 by Karlene Lukovitz, Marybeth Luczak

Partnerships look like "the next big thing" in subscription marketing. Here's the lowdown on the push to partner, advice on finding the right matches for your markets, and some current examples of the match game in action.

Selling magazines through agreements with outside companies is hardly a revolutionary idea. Over the years, many a magazine has struck a deal with a marketer of consumer goods with an audience of similar interests or demographics in order to reach targeted subscription prospects.

Sub offers have been inserted in everything from cereal boxes to computer packaging to cat litter. They've been featured in all kinds of catalogs. They've been sold as part of special interest clubs, and sponsored in bulk or offered as premiums by just about every imaginable type of company.

Such efforts have generally been lumped under the heading of alternate sources, or termed cooperative, bulk or insert programs, depending on their specifics. But in the past few years, the term "partnership marketing" has been cropping up more and more frequently--and recently, it's reached the status of buzz phrase. While it's sometimes used to refer to traditional types of alternate sources, partnering in its truest sense implies a more formal, ongoing and larger-scale relationship between companies and their brands.

What's behind the the push to partner? In a nutshell, rate base pressures and the new auditing rules.

Publishers' interest in forming sub marketing alliances with outside companies, through agents or on their own, took a decidedly more serious turn in the wake of the stampsheet/sweepstakes crisis.

That crisis was, of course, also the prime factor behind a push for major changes in the auditing rules. And for publishers in favor of change, dropping the 50-percent-of-basic definition to allow reporting magazines sold at any price as paid, while critical, was only half the mission. An equally important goal was revamping rules governing the paid reporting status of subscriptions sold through partnerships and clubs, premiums and combination offers to enable greater marketing flexibility.

All of the above was accomplished by BPA International in a new set of rules passed last October. Those rules allow for reporting subscriptions sold at any price as paid in return for greater disclosure, including break-outs of subscriptions at any price-point representing 5 percent or more of total paid subscriptions.

At ABC, the board gave first passage in March to a different plan, which also calls for dropping the 50-percent rule but includes a considerably more complex set of disclosures. And at this writing, ABC publisher and advertising committee members are still working to reach compromise on a number of specifics in time to present a fleshed-out plan for final passage at the board's early July meeting.

One challenge is drawing clear distinctions among various categories of subs, including club/membership/partnership, premium-sold, association-sold and combination sales. This process has meant grappling with some nettlesome issues, such as how the subscription price within combination, partnership and premium offers will be declared in audit reports and in consumer promotions.

The maze of existing ABC rules requiring that publishers break out the sub prices within club, partnership and combination offers have posed logistical barriers to striking deals with outside companies, complicated reporting for publishers and limited the appeal of such offers to consumers.

Key questions include: Will ABC publishers have to continue to declare the value of the sub portion of a club, partnership or combination deal in initial offers, and allow customers to deduct the magazine from the deal? How much latitude will publishers have in marketing and reporting subscriptions whose value maybe significantly lower than the other components of an offer?

While the basic ABC plan could be given final passage before all of the specifics are ironed out, many of these points are critical to publishers' goal of eliminating red tape and obstacles to partnership marketing and combination sales. "If publishers are forced to disclose a magazine's value up front and allow consumers to deduct it from a package offer, other companies won't be interested in partnering with them," contends one publishing executive. "It's too complicated and awkward. It's not how these deals work. This aspect needs to be handled on the back end."

The new BPA rules (which, unlike ABC's, allow for reporting of average price inclusive of premiums, rather than net of premiums) include relatively straightforward solutions for these issues. For example, with combination sales, publishers have a choice: Spell out the value of each component within a combination sale in the offer itself, or employ a formula on the back end that takes into account basic price, the value of the other components and any discounting to determine the magazine's price for purposes of audit reporting.