Solving the partnership puzzle

Folio: The Magazine for Magazine Management, July 1, 2002

Byline: geoff van dyke

Last year, breathless over the anticipated circulation gains from marketing partnerships, Time Inc. spent six months negotiating a subscription promotion deal with a bank. Then it spent tens of thousands of dollars to set up fulfillment. So did the subscriptions come pouring in? Hardly. "It's been a bust," says Ken Godshall, senior vice president for partnership marketing and new business at Time Consumer Marketing, Inc. But Time Inc. isn't the only publisher that's been disappointed.

For years, magazine executives kvetched about antiquated audit rules. Unable to count any sub that wasn't sold at half the basic subscription price, publishers had to abstain from lucrative marketing alliances. If the laws were lifted, publishers reasoned, circulation rolls would swell. When the rules finally did change a year ago, it was suddenly open season for hunting up partnerships that weren't bound by price points. But despite a good deal of noisy firing, magazines are mostly coming home empty-handed. It's still early, of course, but partnership marketing remains mired in start-up difficulties, and all those profitable new subscribers remain largely predictions. The entire project has fallen considerably short of expectations.

Consider the case of Time Inc., whose partnership possibilities were supposed to be endless thanks to its merger with America Online. Time Inc. was so fired up it even bought a majority stake in Synapse Group, a firm specializing in upselling magazine subscriptions with catalogs. Yet the contribution of partnership marketing to the publisher's overall source mix today is "at the margins," Godshall acknowledges, adding that, "For the typical magazine, we're still in the fledgling stage."

According to CircTrack, the joint survey conducted by sister publication Circulation Management and Capell Associates, respondents said that only 2.2 percent of their new business in 2001 came from marketing partnerships. American Express Publishing, to cite an example, expects to pull down just 50,000 to 100,000 new subs via partnership marketing across all five of its titles this year, although it insists it has met its own expectations so far.

This is not to say that anybody is ready to throw in the towel. New subscribers have to come from somewhere, and the old-fashioned tools don't work anymore. Direct mail is too expensive - and too widely ignored by consumers inundated with junk mail. Sweepstakes are a thing of the past. Slumping newsstand sales have only added to the pressure on ratebases.

That's where partnership marketing was supposed to come in. Last year, both BPA International and the Audit Bureau of Circulations gave circulators more flexibility in creating partnerships. (To appease media buyers, the auditors required publishers to disclose how these subs were sold on publishers statements.) The marketing partnerships that resulted held out the tantalizing prospect of consumers who already have a proven affinity for a given publication. If you're buying tickets for a Yankee game, after all, there's a good chance you might like Sports Illustrated. And unlike other tactics, this one is cheap. "This is a relationship where your cost-per-order is very, very low," says Michelle D'Sa, director of partnership marketing at American Express Publishing. As a result, she says, subs obtained this way are quite profitable.

But publishers across the board are finding that successful partnership marketing is a lot harder than they thought it would be. It's tough to find allies. Hammering out deals can take months. Making those deals work takes different skills than traditional circulation. Ad sales and marketing departments, which have not worked closely with circulation in the past, must be apprised of what's going on. And fulfillment? "Nightmarish," says Bridget Wells, director of partnership marketing, agency and ABC services for Hearst Magazines.

"Everybody's looking at partnership marketing," says Carole Mandel, a New York-based strategic marketing consultant. "But there's a learning curve, and we're still very early on in it."

inside the trenches

Two years ago, American Express Publishing's senior vice president and chief marketing officer, Mark Stanich, decided that partnerships were going to be important enough to create a staff position dedicated to finding, developing and executing deals. "I realized that it was never going to show up at the top of anyone's priority list no matter how important it was, because it's so hard to do - it's so out of the mold," he says. "You need a head of partnerships to sift through it, figure out where the bang for the buck is, focus the efforts, go talk to the right ones, and then be able to pass off the operations stuff."

With such titles as Travel Leisure, Food & Wine, and T L Golf seemingly custom-made for affinity partners, Stanich tapped D'Sa about a year ago to work closely with the ad sales and marketing departments, to identify potential partners, oversee the development of deals, and coordinate back-end operations. No small task, to be sure. Says Stanich: "It's a hard skill set. You don't want your basic renewal manager doing it."