The E-Newsletter EXPLOSION

Folio: The Magazine for Magazine Management, April, 2001 by Mark Miller

WITH THIS HOT NEW ONLINE BRAND EXTENSION, PUBLISHERS ARE BUILDING WEB TRAFFIC, CUSTOMER LOYALTY, REVENUES AND INNOVATIVE MARKETING OPPORTUNITIES. E-NEWSLETTERS ARE AN INEXPENSIVE AND EFFECTIVE MEANS OF MARKETING INFORMATION TO THE MASSES AND NICHES ALIKE. BUT AS THEY PROLIFERATE, PUBLISHERS FACE CLUTTER AND PRIVACY CONCERNS.

A year or two ago, everybody had a get-rich-quick Internet strategy. You'd build a few online communities, seal the deal on a bunch of strategic partnerships, line up banner ads, set up storefronts, plunge into e-commerce, announce your IPO-- and then sit back and wait for the Brinks truck to pull up.

Turns out that making money online is not as easy as it once looked. But as many magazine executives sit in strategy meetings reprogramming their next Net step, there is at least one online model that has publishers smiling: e-newsletters. These paperless quick hits of content have quickly emerged as one of the industry's most promising online brand extensions.

In the last year, e-newsletter subscription numbers have grown exponentially. In fact, according to a recent poll cosponsored by FOLIO: and Clientize, a Boca Raton, Florida-based consulting company, almost half of the industry's top-500 titles have at least one e-newsletter. (The poll surveyed magazines in the 2000 FOLIO: 500, a list of the top-500 consumer and business-to-business tides ranked by total circulation and advertising revenue.)

And publishers say they are just starting to understand the full potential of these products. First, they're multifunctional. They do everything from building reader loyalty, to driving Web traffic, to delivering ancillary ad revenue. Plus, publishers are using e-newsletters to test new product concepts, build e-mail lists and databases, sell subs to their magazines, and identify finer and finer niches in any given audience base. Another bonus: They're relatively inexpensive to produce.

Industry Week publisher Tern Mollison calls e-newsletters, which readers generally sign up for on a magazine's Web site, a potential "golden goose." E- newsletters are "a phenomenal opportunity to disseminate information to a microaudience," she says. And that opens the door to a slew of possibilities. "You could have dozens of these, priced at a premium, in which you are giving really quality information."

One characteristic that separates e-newsletters from other Internet initiatives is that the e-newsletter blueprint is familiar to publishers. "It's totally a magazine formula," says Bill Stutzman, general manager, Entertainment Weekly's EW.com. "You build a ratebase and you feed it. You sell ads against content that's informative." And that's very different from the way the Web operates, says Stutzman. "On the Web, you put it together and wait for people to show up. With this, we know how to acquire names, how to interact with them, how to do direct marketing."

Second, e-newsletters have timing on their side, say publishers. People now are generally more comfortable obtaining information via the Internet and e-mail, says Wyatt Kash, group publisher of Hanley-Wood's Magazine Interactive Group. "When it comes to getting a pair of eyeballs, e-mail is something that people really try to look at mast days of the week. Meanwhile, it's getting harder, with so many Web sites, to draw someone to a particular location consistently."

Third, this new method of distributing marketing and content information is extremely cost effective. According to Chris Roberts, director of account development for Messagemedia, a permission-based e-mail marketing and messaging solution provider that serves more than 600 clients, it costs "fractions of pennies" to send an e-mail newsletter.

You've got (too much) mail

As more and more publishers discover the benefits of e-newsletters, and Web users' inboxes start to reach server-space capacity, oversaturation becomes a concern. "We already have it," says Mollison, who is responsible for three e-newsletters. But if e-mail newsletters are handled correctly, publishers stand to win the war on online clutter, she believes. Because marketing messages are everywhere these days, there's a real need for more information filters. Newsletters, when done correctly, can act as that filter, she says.

"As long as readers feel the content is worthwhile, they will continue to subscribe," agrees Bruce Rogers, vice president of marketing, Forbes.com, which currently publishes six e-newsletters and has plans to expand to 30 by year's end.

Privacy concerns

The explosion of e-newsletters also brings privacy concerns to center stage, say publishers. In order to buffer readers from unwanted electronic solicitations, most publishers use opt-in methods to obtain subscribers. (See box, page 34.) "A person has to raise his hand and say send it to me," says Stephanie Fierman, chief marketing officer, Cahners Digital. "Plus, in every newsletter we offer the ability to unsubscribe." Some newsletters also ask readers to check a specific box if he or she wants to receive additional e-newsletters from selected advertisers or receive the e-newsletter weekly rather than daily.