Marketing budgets and freedom
17 May 2008
“Peter, I find your articles very insightful. I am at a start-up stage of subscriptions where there is a lot of learning taking place, hence our biggest challenge here is to figure, when setting budgets, the profitability of campaigns and the benchmark nett realization figure to aspire to.
With regard to reinvesting – no we do not it’s booked as revenue and taken away. Cost of production and fulfillment do feature as service/ marketing costs of a campaign. With regard to profits again it’s not invested.”
This quote from a marketer working in one of the largest international publishing houses shows how restricted budgets can destroy creative freedom to make profits.
How does your publisher budget for marketing?
Some publishers (two or three) have well-staffed marketing departments. By this I mean they have three or more people who’s job it is to bring subscriptions in.
But often, creativity and effectiveness are stifled if these people do not have the freedom to do their job. And this will depend on how the marketing department and the promotions they run are organised.
Supposing, for example, you decide to commission and run a subscriptions campaign for a publication. You have decided that you want to grow (or sustain) circulation and there’s no better way.
Without going any further I can tell you now, before you begin, that you’ll FAIL.
You’ll end up with a few hundred new subscribers that in a year or so will dwindle down to the level that existed before you started. Then you may just give up. In some cases, publishers close the title or sell it.
Why?
Because you have organised a campaign. And a campaign isn’t what your publication needs.
A campaign is for when you’re organising a one-off promotion. £200,000 spent on TV, radio or posters will generate a lot of newstrade traffic (which the newstrade won’t want to contribute to, by the way).
But a subscriptions promotion isn’t a campaign. It is a marketing process.
Of all the queries I deal with the most common are the basic ones: drafting and designing a direct mail package, house ad, or loose insert card.
But this is just the beginning of a promotion. Unless an expert eye is kept on the proceedings things are bound to go wrong — just like in the editorial and advertisement departments.
The publisher has the product — his publication. Unfortunately he hasn’t the promotional expertise within his management team to sell subscriptions. And unlike newstrade promotions, there is little advice available to guide your money to the best spots.
This isn’t at all surprising — a top subscriptions marketing person earns more than an editor or advertisement director. But then he or she isn’t needed in the office on a daily basis.
The promotion is just one of the first steps in an extremely sensitive chain of events that does not end until the new subscribers are profitable and renewing at an average of 90% a year. That’s what is called a successful promotion.
But can it be done? The chances are your titles are not renewing at this level at all. But pick up a pen and work out what it would be worth to your company in extra profit if your subscribers renewed at 90% instead of, say, 65%.
First of all, your trading statement would be transformed because each new subscriber would be worth an extra 25% a year.
This means it would be worth your while to bring many more subscribers in.
Next, let’s look at the extra annual revenue:
For a publication with 10,000 subscriptions at £60 the annual revenue is £600,000.
Increasing the renewal rate from 65% to 90% will increase revenue by £150,000.
You can see how attractive it would be to increase your subscriber base to 50,000 and bring in £3 million.
The marvellous thing is that this can be done — if you’re organised to achieve it.
This means creating and planning the process from promotion through to renewal — and using techniques that suite your market. With planning, all of the above is attainable.
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