Direct-mail tests on the cheap - getting new magazine subscriptions

Getting new subscriptions by direct mail is so capital-intensive and risky that many smaller magazines never even attempt it. However, despite falling response rates--and warnings from some of direct mail's biggest proponents that conventional direct-mail marketing may no longer be cost-effective most large publishers still rely on it for growing their circulations, or at least maintaining their rate bases.

But for the small publisher who needs to prove out his new idea or provide evidence of future viability, to a potential investor, a direct-mail test is a must.

Unfortunately, developing a simple direct-mail test for a small magazine is sort of an oxymoron. No matter how basic you try to make it, it still has many levels of complexity. For most publishers, there are four questions that must be answered quickly when marketing a new magazine: 1) How should you price it? 2) What kind of direct-mail package will work best? 3) What kind of offer will draw the largest number of subscribers? 4) How big is the universe of potential subscribers?

These seemingly simple inquiries could easily require a matrix of 24 different tests against dozens of making lists, just to acquire the data most circulation directors would feel have enough depth to be statistically relevant. Here's why it gets so complicated and so costly.

Let's assume you're pretty sure that the market will support a $15 annual subscription price for your new magazine. Well, you'd better test at least one price point on either side, say $18 and $12, just in case you're wrong. Then you have to determine whether you can catch a new reader's attention with a relatively, inexpensive device, like a simple double postcard, or whether you'll need a more conventional direct-mail package--with a snazzy outside envelope, a convincing sales letter, a colorful brochure and a postpaid business reply envelope. Better test both--in all three price categories, of course.

You'll also need to find out whether potential subscribers will respond to a "hard" offer that requires them to send in their money before they see the magazine--or whether you'll need to lure them in with a free-sample-issue "soft" offer. Should you include a "bill me" option and offer a premium with each paid order? Or perhaps offer a discount for cash? You'll need to test all these options in every configuration against each other. So much for the simple test.

Unless you're willing (and able) to invest what could easily be more than $100,000 in printing, postage, design, copywriting, list rentals, etc., you'll have to settle for a scaled-down version to get the feedback you really need now.

For attracting investors, the most important number is how many subscribers responded to your subscription offer. Robin Wolaner (now president and CEO of Sunset Corporation and vice president of Time Inc. Ventures) was the architect of the original direct-mail test for Parenting, now a Time Inc. title. Because of her carefully orchestrated testing, she was able to convince Time Inc. to fund the venture before the magazine was launched. Her initial test consisted of two conventional packages. each with the same brochure, but with different outer envelopes and sales letters. With both packages, she tested a soft offer and a hard offer at $12 and $15. She mailed to 130,000 names drawn from 27 different lists. The total cost was about $1 per piece.

While this certainly wasn't an inexpensive test, it was fairly simple, using a matrix of only eight tests against a fairly broad list selection. Wolaner's goal was a high response percentage, which she achieved by keeping her testing to a minimum. The final result: a 5.7 percent overall gross response rate. After eliminating all lists that produced less than a 4.5 percent response, she was left with an average gross response rate of 7.2 percent from lists that represented a universe of 4.5 million names. Not bad numbers with which to go shopping for funding!

Wolaner's test can be easily modified for smaller magazines. I suggest testing both a hard and a soft offer with the highest quality conventional package you can afford. On top of that, I also suggest testing the same soft offer with a double postcard. Many magazines don't pull well with a postcard's limited sales space, but at Buzzworm it remains our control (i. e., best responding) package. It costs less to produce and mail, uses far less paper, and can be effectively printed on recycled stock. Also consider a "discount with cash" as part of the soft offers and a "premium upon payment" as part of the hard offer. The cost of the discount and premium can easily be made up in the savings on billing. Both of these devices can increase pay-up and help cut unnecessary paper use. (Be sure to escrow any money you receive from this mailing until you've launched the magazine.)

As for operating on a tight budget, consider trading some equity to a designer and copywriter for the creative work, or do it yourself (after examining many successful direct-mail pieces). See whether list managers will trade lists for the use of yours in the future. You can mail to as few as 50,000 names, drawn from a minimum of 10 lists, but going smaller could threaten the validity of the data. If you're really low on funds, test only your "must-have" price. With planning, you should be able to produce this test for about $30,000, and hopefully net the results you need to make your dream a reality!

Joseph E. Daniel is the the founder and publisher of Buzzworm, a highly, acclaimed, five-year-old independent environmental magazine with a circulation of nearly 100,000.

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