Digitized Editorial Builds Database Value

Folio: The Magazine for Magazine Management, August, 2000 by David Foster

Publishers who invest in the process of marrying their digitized editorial files with their marketing databases can expect a series of profitable revenue streams to result.

Database usage and sophistication among major publishers have advanced dramatically over the past decade. But for most publishers, the profit potentials of databases have been barely touched. Digitized editorial--when married with both subscription files and cyberspace lists resulting from e-mail and e-commerce activities-represents a new frontier for creating value that should persuade even medium-size publishers that the significant investments required to exploit database resources are justified.

Until now, building and maintaining databases has usually meant re-engineering the subscriber file, primarily to increase the efficiency of new-subscriber acquisition. There are all manner of models. At the most elementary level, publishers have appended demographic, geographic or lifestyle elements. Resulting segmentations have yielded additional revenue from list rentals.

However, the efforts have not necessarily led to increased profitability. Getting reliable data from third-party sources has been a significant handicap. There has also been a steep (and expensive) learning curve to discover what variables are most relevant, and to develop the appropriate models.

For most publishers, finding the right qualifying variables has been as elusive as the search for the Holy Grail. Unlike catalogs, where recency, frequency and amount of purchase are known to be highly predictive, a recent purchaser of anything may not be a likely buyer for a particular publication. At magazines, of all the tests that have ever been conducted, the highest yield qualifiers still are your dead expire files and the subscription list of your main competitor.

Some larger publishers, such as Conde Nast and Time Inc., have been breaking through this rather narrow base by experimenting systematically with their mass of resources. By looking at information across multiple subscription files--purchase patterns, term, pay-up and renewals--they have been able to construct intricate, and productive, new-subscriber acquisition and retention programs. At companies where there is abundant data on ancillary product purchases, such as Rodale and Reader's Digest, models that include affinity product purchases have enhanced the productivity of dead expires and renewals as well as prospect lists for new subscribers.

Controlling risk and cutting costs

Publishers' attempts to spread the costs and risks through co-operative ventures have so far met with little success. Neo-data's Publisher's Consolidated Prospecting Universe, Kleid Company's Publisher's Gateway and others have all fallen by the wayside. Nevertheless, publishers who need to boost or maintain extended ratebases in this lucrative advertising environment are continuing the search for more efficient ways to prospect for new subscribers. Hence, an increasing

number of magazines are signing up to test Circbase, offered by Experian, and Publishing Alliance from Abacus. The basic assumption here is that pooled data across a wider universe of buyers can yield segments based on constellations of interest derived from subject matter, types of items purchased, and purchasing patterns that are large enough and active enough to deliver an expanded number of customers efficiently.

Current database activity among publishers extends far beyond the search for new customers and more profitable subscription management. Where publishers have included sufficient information about readers in their databases, they have been able to increase revenue from advertisers by combining readership information with selective binding technology to offer more targeted messages. Farm Journal and Endless Vacation are prominent examples. For most publishers, however, cost and management expertise, as well as the complications of retraining the sales organization, have posed barriers prohibiting widespread availability and execution of this revenue-generating possibility.

Most recently the Internet has opened up an entirely new avenue of revenue enhancement and cost reduction possibilities. Collecting e-mail addresses is fast developing as an asset, sharing the spotlight with the traditional subscriber file.

Publishers anticipate that clean, qualified lists of e-mail addresses combined with demographic data, purchasing patterns, subjects of interest and related information can be used to cut costs of acquiring new customers, build higher retention among traditional customers, and generate additional revenue streams.

Combining good e-mail lists with other information to make up a database becomes, as current initiatives demonstrate, a gateway to online renewal offers, newsletters that can generate revenue through sponsorships, customer-loyalty-building opportunities, relationship marketing programs, one-on-one communications and even e-commerce potentials.

The online mother lode