Database marketing: a new secret weapon - includes related article

Folio: The Magazine for Magazine Management, Annual, 1994 by Karen Berman

If you're not involved in database marketing, you probably should be. Our primer shows you how to get the most from your investment in a database.

To hear some people talk, the question is not whether you'll get into database marketing, but when.

This form of computer analysis of your subscriber lists will dramatically streamline your circulation and customer-service efforts, facilitate new-product development and enhance your relationship with advertisers. But if you still have questions about plunging into a venture that could cost a half-million dollars or more, you're not alone. While a few publishers are actively using their databases, the majority have yet to get started.

According to some consultants, this reluctance isn't exactly something publishers should be proud of. "I don't see magazines doing a lot of database marketing," says consultant James Rosenfield. "I see them doing old-fashioned classic marketing" with their subscriber lists.

"It is a case where the industry is last to act, where they should have been first," adds Michael Yalowitz, a publishing consultant based in Meadowbrook, Pennsylvania. After all, he says, magazine publishers already have the raw materials in they need.

A survey of publishers by DIRECT, FOLIO:'s sister publication, revealed that fewer than 40 percent of publishers who keep databases overlay them with outside demographics -- a key indicator of database marketing activity. But that's hardly a surprise. The prospect of an open-ended expenditure that might not produce returns for several years is enough to make most publishers gun-shy. What returns can you get for all that money?

The question is almost impossible to answer -- for the moment, anyway. Publishers now pioneering in database marketing like to keep their numbers private, and magazine database marketing is still too young to have generated any rule-of-thumb equations for rate of return on investment. "You can't generalize," says Rosenfield.

"The industry is in its infancy" in database marketing, says Patricia Campbell, executive vice president of New York City-based Times Mirror Magazines. Campbell, like Rosenfield and others, is convinced that an intelligent database-marketing program will yield worthwhile returns, although she agrees that there are no formulas yet for calculating what they should be.

You can, however, expect a hefty initial investment and some open-ended maintenance costs. Constructing a workable database is a long-term undertaking. "It's a two- to three-year building process before you see much return on it," says William Black, a consultant based in Stamford, Connecticut. But returns will come, he says, in the form of reduced circulation costs and efficient promotions.

Once you've made the required investment, though, the uses of a database can be almost unlimited, say database-marketing proponents. For example:

* Circulation: Most magazines tackle this area first. Indicators like recency, frequency, dollar value of orders, lifetime value, renewal history, gift subscription orders, buying habits and non-payments can all be recorded and analyzed. The result: identification of your most likely prospects, effective promotions and probable returns.

* Customer relations: Your database can be used to resolve the problems of individual subscribers and track distribution flaws. The customer service operator who has access to a subscriber's files will be better able to retain a disputed subscription, says Victor Hunter, president of Hunter Business Direct, of the Barnabas Group of Milwaukee.

"If you're not managing |problems~ using a database, you put your basic subscriber file at risk," Hunter says. "You'll continue to put names in the top and you'll keep dripping names from the bottom."

* Editorial: The application of database marketing to the content of your magazine can be as simple as creating a regular column or a one-time insert -- or as complex as creating multiple versions through selective binding. Or you might create whole new magazines for niches you've identified.

* Advertising: There's a host of database marketing applications for your advertisers. When you can target your mailings to subgroups on your list, you make your magazine an attractive vehicle for drop-in ad inserts, selective-binding ad swaps, advertisers' reader-response postcards, single-sponsor, custom-publishing ventures or advertisers' catalogs polybagged with the magazine.

You can also share the results of your database-generated research with advertisers. Such data can be the basis of integrated marketing campaigns in which advertisers allocate their budgets among broadcast, print and direct marketing. Positioning yourself at the center of such a campaign lets you increase your share.

"More and more, you're not just selling against other publications, but other forms of communication," says Benjamin Ventresca, president of the Brandywine Consulting Group in Westchester, Pennsylvania. Database marketing "gives you an opportunity to get involved with integrated marketing with advertisers; you can be part of a whole campaign."