Is your audience as enthusiastic as you are? - tips for testing the market for a new magazine idea

Folio: The Magazine for Magazine Management, Sept 15, 1994 by Bruce Sheiman

A market test can prove that your target audience likes your new-magazine idea, too. Here are three proven approaches.

It is becoming more common for ambitious, would-be small magazine entrepreneurs to go beyond the conventional business plan and market-test their magazine ideas. The logic is compelling: Until a magazine idea is tested, it is just that - an idea. A test can go a long way toward proving to you and your prospective investors that your magazine has real market potential. Indeed, a fairly recent approach to finding money for a new magazine is to raise funding for a market test first, with the provision that if the test demonstrates significant reader and/or advertising potential, the remainder of the money will be sought to launch the magazine - generally from the same investors who funded the test.

There are two reasons for this modified funding approach: First, a testing phase leading up to a magazine launch is a way to get investors committed (and on the hook, so to speak) with an investment that is small relative to die amount required for a full-blown launch. Second, if a well-executed test does not achieve a minimum threshold, you can cut your losses and move on to something else.

Market tests generally take three forms. As a currently unfunded entrepreneur, you will have to decide which among the three would be most auspicious for your particular launch.

Direct-mail test: This approach is for a magazine that will depend largely on subscriptions for circulation. There are three reasons to do a direct-mail test. (1) It can give you and potential investors an indication of how prospective readers will respond to your magazine concept. (2) It will help you ascertain which of several promotional options are most effective. (3) It enables you to determine the size and scope of die mailing-list universe for your magazine. You do three things in a direct-mail test:

* Create a full-blown direct-mail package, including illustrations of covers and sample article ideas. It is wise to hire a professional copywriter and artist for this. Direct-mail writing is an art form that should be done only by those who have mastered its subtle techniques.

* Arrange to print and mad this package to a representative sample of appropriate subscriber lists. The usual size of a test mailing is about 100,000 names segmented into 10 to 15 lists. This requires a list broker, a merge-purge house, printers for the package, and a lettershop to mail the package.

* Offer a free copy of your magazine with no payment obligation. This is called a complimentary copy offer, and is standard in new-magazine launches. In this type of offer, respondents merely indicate a desire to receive the premier issue of your publication and, subsequently, an invoice, which they are not obligated to pay. In a direct-mail test, you send neither the magazine nor an invoice, but instead a follow-up letter explaining that publication is being delayed.

A respectable response to this kind of offer is 4 to 5 percent. Anything less than that should make you rethink your idea. One major disadvantage of a direct-mail test is the cost: For a 100,000-piece mailing, you can expect to spend from $75,000 to more than $100,000. Also, a direct-mail test does not tell you whether people will actually pay for your magazine - only if they have an interest in receiving the first issue free and an invoice.

Frequently, a direct-mail test is followed up with a survey mailed to respondents, or focus groups are conducted to gain information about demographics.

Newsstand test: This approach has become the preferred method for many major publishing companies with new-magazine concepts. And, consequently, this is the method with the greatest influence on investors.

Unlike a direct-mail test, a newsstand test requires a real magazine. An obvious disadvantage of a newsstand test is its high cost, which can begin at $200,000 for just one issue of a national consumer magazine. Newsstand tests are not for die financially frugal. In theory, you could consider a newsstand test of just 10,000 copies. But this is problematic. Even if you could get distribution to national newsstands, a small distribution will tell you very little. You will not achieve a sufficiently large sample size.

For a newsstand test of 100,000 copies or more, a respectable performance is anything above a 50 percent sell-through. Although 50 percent is higher than the industry average for an established title, it is considered average for the first issue of a new magazine; after all, this is the time in your publication's life cycle when reader interest and curiosity are highest.

Advertising test: Another important sector to test is the advertising community. A favorable response from prospective advertisers can go a long way toward impressing investors. For this you will need to create, at the very least, a prototype issue that shows representative pages from your magazine. Like the direct-mail test, this requires that you have fully thought out the magazine's editorial and graphic presentation. In addition, you will need to create as close to an actual media kit or sales presentation as possible.