Hard Selling Made Easy

Folio: The Magazine for Magazine Management, June 1, 2004 by Susan Thea Posnock

Byline: Susan Thea Posnock

Publishers spent the 1990s throwing money away wooing subscribers with splashy, two-to-four page full-color promotions, which often just landed in the trash. But these days publishers have traded in that razzle-dazzle for the Plain Jane of direct mail packages: the voucher. The good news is that vouchers are a cheap way to corral hard cash up front. The bad news is it may not work much longer.

What makes the voucher distinct is its utter lack of distinction. It looks like a bill: typically a plain envelope (bearing official looking statements like "private correspondence" and "open immediately" in a small, inoffensive font). Inside is an invoice-like slip touting an "exclusive offer" or "special discount."

This Plain Jane looks awfully beautiful to media companies enamored with the up-front cash it generates from subscribers. It's so popular because it's allowed publishers to move from traditional soft offers (pay later), which on a P&L basis were not advantageous, to hard offers (pay now), says Charles Teller, executive vice president of Paradyszmatera, a direct response media services firm. "It's cheaper to produce while providing the same net response,"

The voucher package is favored by 60 percent of the industry, according to Paradyszmatera. In 2003, the company reported that hard offers had surpassed soft ones in the share of total offers tracked by its promotion-tracking resource, MarketRelevance.com.

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In 2000, 55.3 percent of offers tracked were soft; by 2003, that percentage had dropped to 42.9. "It's a significant trend and it's largely attributable to vouchers," says Glenn Lalich, research director for Paradyszmatera. A 2003 study by the New York-based list and data firm LDSGroup Inc. confirms the voucher's continued popularity. The study, reported by Circulation Management magazine, tracked 260 pieces last year, identifying 49 percent as voucher/professional courtesy packages, compared with 40 percent for the previous year.

In particular, magazines with high brand recognition have had great success with vouchers. "We think it works because it's very simple and to the point," says Time's direct mail manager, Wendy Kelly. "For a title like Time, people know what it is, so it doesn't need to be explained." She says the magazine has had a 30 percent lift in response with the voucher format.

And because the majority of vouchers are hard offers, the number of readers who actually pay for a subscription is significantly higher. Pay-up rates for the typical free trial could be anywhere from 35 percent to 55 percent, compared with 80 percent for the voucher, says Christian Dorbandt, vice president of consumer marketing for the Primedia Consumer Media & Magazine Group (a division of Primedia Inc., publisher of Folio:). "And a very high percentage actually enclose the check in the envelope."

The voucher is also significantly less expensive to mail. The cost (not including lists) is about $200 to $250 per thousand mailed, says Teller. In comparison, a 6 x 9 editorial package costs $350 to $400 per thousand, and a jumbo package of 8.5 x 11, $500 to $600 per thousand. "We're probably saving hundreds of thousands of dollars," says Dorbandt. He estimates the voucher format accounts for about 85 percent of the company's direct mail packages. For titles like Motor Trend, Bike and Snowboarder, vouchers are the direct mail option of choice.

The secret to the voucher's success in attracting subscribers is the value offer, says Dorbandt. "It's so emphatic about savings. It doesn't talk about, for example, Motor Trend being an automobile magazine. It's expected that you understand what Motor Trend is."

And most people who receive direct mail promotions can't be bothered to read pages of copy. "With the voucher approach it's a quick read and either you're interested or you're not," says Time's Kelly.

Lalich agrees, saying the basic psychology of vouchers resonates for readers. "You have to open it because it looks important and when you look inside you get the impression you're getting the best price," he says. Packages that identify the discounted price as a "professional courtesy" flatter recipients. It's the perfect sales tool in the current value-oriented Wal-Mart culture, Dorbandt says.

Vouchers aren't a panacea. They're only appropriate for certain magazines, and there's some concern that people may pay the voucher because they confuse it with a bill. While the language of the voucher spells out that it's a subscription offer, Dorbandt says he worries about consumer confusion. "I find this difficult to conceive, but I worry that people do think it's an invoice and that state attorneys general are going to think it's an invoice," he says. "We've received complaints from government agencies, not from people who ordered, but people who filed a complaint saying, 'You're sending me an invoice for a product I never ordered.' "

However, he says it's hard to imagine anyone paying for a product they don't want. "We satisfied the authorities that we were not invoicing people for unordered merchandise," he adds.