Why your database won't sell - includes related article

A number of multi-title publishers have spent a lot of time and money creating their own internal databases. Active and inactive subscriber names, as well as other internal names, have been merged, purged and overlaid with additional data. Large publishers have created databases with millions of names. But they can't seem to rent them--let alone use them effectively for their own promotional activities. Small publishers with some half-million names may have this problem when their databases are combined with names from catalog companies or other sources. Why don't magazine databases produce the desired results?

The first problem is the update cycle. Because of the high cost of running millions of customer names against one another, the best update cycle that publishers can justify is quarterly; nonetheless, most publishers can afford to update only on a semiannual basis. But even a quarterly update cycle keeps your best customers--typically, your most recent buyers--out of your active database.

List renters want monthly hotlines immediately, not three months later. And, when a publisher makes a selection from the database for an internal mailing, the names are just not as fresh as they should be--which means response suffers. Subscriber files are changing daily, and no database seems to be able to manipulate these frequent changes fast enough to take advantage of the best names.

Another problem is that the circulation business is source-driven. Circulation directors monitor all new business and renewal activities by the source of a subscription, such as direct mail, agent, insert card, and so on. This may be adequate to run a circulation business, but categorizing by source does not meet the needs of most of the marketers who want to rent from your database. What is missing, and what they need, are mail-order buying and behavior characteristics.

If you want to sell someone a magazine subscription, it may be adequate to know that person is a previous direct-mail buyer of a subscription. But to sell other products and services to magazine customers, marketers want to know what other mail-order purchases subscribers have made, when they did it, and how much they spent.

Overlays aren't the answer

The bottom line is that subscriber databases are best suited for only one thing: selling the customer subscriptions to other magazines. This is one of the main reasons why catalog marketers cannot make magazine files work. Publishing databases prove beneficial only to other publishers. And that is not the way to grow your business into new markets. Why not supply the missing information on mail-order buying behavior with overlays from other sources? The problem is twofold: Overlay data are generally not timely, and the match rate to your subscriber file will be poor (a 50 percent match rate is good). Even more important is that most overlay data available on the market involve demographic information such as age, income, presence of children in a household, and so on. What's missing are mail-order buying habits. Why? Because mail-order characteristics are hard to compile and maintain. So overlay data do not enhance the marketability of your subsciber database.

Let's take a look at the names that are in magazine databases. What do we know after the massive database has been created? We know which subscribers are buying other magazines. But a multi-magazine subscriber is not the same as a repeat mail-order purchaser. They simply have more than one interest that is served by more than one magazine. in addition, the average dollar value of a magazine purchase (frequently less than $20) is low for the mail-order business. Typical mad-order-catalog buyers spend $75 to $100 per order and buy with much greater frequency than magazine subscribers. So without additional information, a magazine buyer is at the lower end of the mail-order buyer chain.

The magazine circulation business is dominated by gimmick offers (free issue, sweepstakes, premiums, etc.), which don't produce good, long-term mail-order buyers. In addition, most magazine files come from direct-mail agent-sold business. These names are just not good prospects for most mail-order offers. We already know this in circulation; renewals from direct-mail agent business are poorer than from most new-business subscription sources. Therefore, it is difficult to sell other mail-order goods and services to these names.

The sad truth

Publishers create databases in the hope of delivering more targeted selections for their advertisers. Or else they build databases to create joint ventures with their own advertisers to market by mail to segments of their audience. The sad truth is that most direct-marketing advertisers know that magazine space advertising doesn't work as well as other direct-marketing techniques. After all, mail-order advertising is not a prime category for most magazines, and in some cases is frowned upon and discouraged by publishers. Therefore, joint-marketing possibilities between mail-order companies and magazine databases are usually quite limited. And most general advertisers, the lifeblood of most magazines, don't know how, to use direct marketing.

RELATED ARTICLE: ... And what you can do about it

Magazine databases won't become a major marketing and income resource for publishers until they can provide additional mail-order buying data about their subscribers. Catalogers and other direct sellers will want to know whether your readers buy by mail, the kinds of products or services they choose, and how often and how much they spend.

How do you collect that data? You must survey subscribers on an ongoing basis through inserts in your magazine, on billing and renewal notices, and maybe even on questionnaires in your new-business direct mail. Some publishers try to survey attendees at magazine-sponsored events.

Expensive? Yes, but there are ways to reduce costs. Consider, for example, selling one panel of a three-panel questionnaire to an advertiser. Or divide a panel into sections and sell sections to catalogers for lead generation. Over an 18-month period, most magazines will mail to every single person in their file, so collecting the necessary data shouldn't take terribly long.

Of course, before you begin a wholesale data-collection campaign, you should test several versions of your questions to see whether they depress response and, if so, how significantly.

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