11 Powerful DataBase Applications

11 Powerful DataBase Applications

Patrick E. Kenny

How can you cost justify that marketing database you’re dying to build? Here’s a look at nearly a dozen ways that magazine publishers are using databases now to generate circulation, ancillary and list revenue and to reduce promotion costs–plus a look at some hot, new Net applications under development.

THE PHRASES “CUSTOMER RELATIONSHIP MANAGEMENT” and “one-to-one marketing” are ubiquitous these days. But at core, they come down to using new technology to achieve a longstanding direct marketing goal: Addressing your customer as an individual, rather than as part of a large, undifferentiated universe.

While the more advanced frontiers of CRM remain to be conquered, many publishers are already applying the power of marketing databases in myriad ways that bring them closer to their customers, build revenue, and slash inefficiencies from their marketing programs.

Thanks to advances in technology and the rising costs of traditional acquisition methods, medium-sized and even smaller publishers are now often candidates for database marketing.

Magazine publishers also have a significant advantage in the database arena because of the nature of the business. Many of the data requirements for a marketing database are already present in every magazine subscription file. These files are not only name- and address-based, but contain transactional data on orders, bills, payments, cancels, bad debts, renewal activity and donor status–some of the most valuable customer-centric information one could wish for. “Simply” knowing that a customer is reading about a special interest or business segment is a highly valuable piece of information.

How can you size up the feasibility of a marketing database for your organization? Naturally, the first step is to understand all of the possible uses for such a database, and investigate their potential for application in your company. To start you on your way, here’s a brief guide to nearly a dozen powerful, circulation-related applications now being used in consumer and business publishing companies.

TAPPING THE POWER OF THE NET

Small or large, virtually every publisher today is focused on the Internet, with good reason: There are significant advantages to having the flexibility to conduct circulation and advertising business through either traditional channels or the Net.

The Net’s potential has marketing-savvy publishers working like crazy to figure out how to manage this new database source, and how to merge Net-derived data with traditional source data to gain maximum leverage from both. Database builders are wrestling with the challenges of dealing with the many names for which the email address is the only known address. For the most part, data captured from the Net is still being saved on separate databases (often, managed by a publisher’s new media department).

But while the Net/marketing database/circulation juncture is one that’s still very much in the formative stages, it won’t stay that way for long. Companies ranging from Time Inc. and Meredith Corp. to vertical B-to-B publishers are feeding their hungry databases with all kinds of demographic and transactional data on the many new prospects (and existing customers) visiting their Web sites. And even as they busily lay the foundation for tapping the full potential of this data, some are already employing it in concrete ways.

1 & 2. E-commerce: subscriber acquisition and product sales As Web usage grows, all kinds of publishers are seeing increasing success with signing up new subscribers through their sites. In addition, many are using various incentives–contests, relevant content, you name it–to capture demographic and special interest information on site visitors.

Once publishers manage to integrate Web and traditional data into combined customer records that can be electronically accessed through the Web site, they’ll be able to send emails and electronic promotions for magazines and products that are tailored to the interests of specific prospects and customers.

Meanwhile, some major publishers have already launched data and revenue-sharing arrangements with advertisers/manufacturers whose products have synergies with their magazine titles, so that both benefit from product sales generated through linked sites.

Others are developing smaller databases comprised solely of information gathered through their Web sites. In addition to using this data for traditional marketing purposes, Cincinnati-based special interest publisher F&W Publications, for example, is employing it to drive email promotions. “In tests in which we’ve used this internal, Web-based database for marketing our book clubs, we’ve seen a surge in enrollment,” reports VP, corporate marketing David Lee. “Response rates have compared quite favorably with those for direct mall.”

The targeting made possible through databases is also beginning to facilitate new-product development for both consumer and business publishers. With the mother lode of data gathered over the Web, publishers will more easily be able to identify hot topics and unserved niche opportunities (see application #8).

3. Email renewals Where email and USPS addresses are both known, publishers can incorporate Net-gathered information in their traditional databases.

The degree of success in using email for renewals still varies significantly by market. Even in the B-to-B arena, replacing a traditional effort with email is far more common in tech-oriented markets. However, as email saturation increases and publishers find more effective ways to get around the serious obstacle of high email address churn, email-generated renewal and requalification volumes are steadily rising. And that, of course, means very significant promotional savings, as well as convenience for the customer.

Publishers are already seeing some success in reducing the email address churn problem with the help of email list hygiene vendors and emerging software. In addition, some are working on using demographic data already on databases to develop models that predict which customer segments are most likely to change their email addresses frequently. (For instance, there are strong indications that, just as with postal addresses, younger people change email addresses more frequently than older ones.) These models will allow publishers to know which renewal candidates and expires should receive paper efforts and which should get email efforts.

4. Database-driven promotions/advertising Some of the larger online advertising networks, including DoubleClick and 24/7 Media (now 24/7 Real Media), are using databases to target banner ads for all kinds of products, including subscription offers, to Web surfers. For those who haven’t investigated these services yet, here’s how it works: Tracking cookies are attached to each Web browser that enters the networks. The networks then attempt to collect registration information to match USPS names and addresses with the cookie browsers, for use in a parallel database containing name and address, demographics and other customer-specific information. When a cookie is recognized in one of the network sites, an ad customized to the person’s interests pops up. All of this (except for the ad itself, of course) is invisible to the consumer.

As of early 2000, 24/7 had 20 million opt-in email names. Many of these can be targeted by using elements from 24/7’s marketing database. For example, the company can send tailored messages reflecting whether or not a person has clicked on a particular spot on a site.

The ability to target prospects with a proven interest or transactional history should make Net promotion campaigns much more cost-effective. An automotive title, for example, could target online promotions to individuals who’ve visited automotive Web sites, own a specific model of car, or even live in a certain area.

ENHANCING TRADITIONAL CIRC AND ANCILLARY PRODUCT MARKETING Over the past decade, magazine publishers have made major strides in using databases to hone traditional circulation marketing efforts.

In the early years of the database, most of the customer contact was through the mail, and databases were used almost exclusively to help determine who should and shouldn’t be mailed. Now, databases include information drawn from a broader range of sources, including telemarketing and, in the case of B-to-B titles, broadcast fax efforts. The range of ways in which a database can be employed to enhance traditional subscription and product marketing methods has also continued to expand.

5. Expire resuscitation Expires are usually a publishers’ most productive names, but even these names become more difficult to mail profitably after they’ve been mailed once or twice during a year. Consumer publishing database marketers now routinely use regression modeling to penetrate those older expires at a much deeper level. Being able to identify that an expire once bought a related book or product (a variable that’s used extensively by Rodale and others), or that the original source was an insert card, can often provide enough of a lift in response to make the name mailable.

Conversely, the database can be used to identify expire names with the least potential for responding, for suppression from subsequent mailings. These names might, for instance, be expires who have a history of cancelling or having their service stopped for late payment.

For example, publishing database pioneer Reader’s Digest Association determined at one point that expires who had originally signed on for multiyear terms were superior prospects for mailings, while those who came in through some agent sources could support only one profitable mailing.

6. Segmentation for targeted promotions, offers Rodale and a growing number of other consumer publishers are successfully using modeling to tailor price offers, particularly for renewals.

In addition to source, which tends to be the most influential variable, factors such as conversion and payment behavior, as well as demographics such as age, income and interests, are used to determine which customer segments are most likely to respond to specific price offers.

Taking segmentation to the next level, Time Inc. has set up data-rich, cross-title and cross-product hub databases that allow for identifying and better targeting new business, renewal and ancillary product offers to customers with shared interests or characteristics. Data is gathered through customer surveys, overlays and various other methods.

The range of applications enabled by these databases is enormous. Time, for instance, has been able to build multi-faceted, tailored marketing programs for four subscriber segments (age 25 and under, age 50 and older, professionals, and households with children). New-business direct mail modeling and targeted creative and offers have increased circulation revenue by $3 to $4 million per year for this title alone, according to Ken Godshall, senior VP, partnership marketing and new business development for Time Consumer Marketing Inc.

Tailoring approaches to various segments has also proved somewhat valuable in renewals (allowing for suppression of telemarketing efforts to customers who don’t respond to this source, for instance), and very effective in increasing pay-up in segments such as sweepstakes (through adjusting pricing and payment cycle in offers), Godshall reports. (For more on Time Inc. corporate-wide database applications, see ‘Database Marketing Innovation at Time Inc.,” February 1999.)

Business publishers are also employing segmentation for a growing number of purposes. At Cahners Business Information, segmentation capabilities are used to customize circulation efforts by demographic criteria or by source–tailoring direct mail packages to appeal to professionals working in larger or smaller companies, for example.

7. Maximizing gift subscriptions Segmentation capabilities are also helping some consumer publishers build their gift businesses. Although many publishers use insert cards and other inexpensive cold-donor vehicles for selling gift subs during the holiday season, few found it cost-effective to do major cold donor mailings, until databases allowed for identifying the most promising donor prospects. One publisher, for instance, can now cost-effectively mail these best new donor prospects twice during the fall.

8. Prospecting to outside lists Using modeling to profile a title’s best subscribers, then identify prospects on outside lists that share similar characteristics, is a common and extremely useful application. Most publishers discover that age, income or other demographic variables are key predictors of buying behavior for a given title. One large, general interest title developed a geographic profile of its customers and significantly improved new business response by doing geographic selects on list rentals and promoting in these “hot spots.”

9. Developing and marketing brand extensions Reader’s Digest Association and at least a few other publishers that launched their brand extension divisions years ago now derive more revenue from these streams than from the magazines themselves. And at this point, quite a few consumer publishers, including Time Inc., Meredith and Rodale, are using database capabilities both to cross-sell existing titles and products and to develop and market new products.

Successful cross-promoters have learned to use their databases to quickly convert new magazine subscribers into buyers of other products or services, in the knowledge that the sooner a new customer can be sold another product, the greater that customer’s lifetime value is likely to be.

Among other applications, Time Inc. uses its database to drive sales of branded books produced by its Home Entertainment division, and has spun off two profitable controlled publications, Sports Illustrated’s Golf Plus and ON Magazine.

On the B-to-B side, VNU Business Publications, Inc. is a good example of a company that has integrated its data to create relational capabilities, enhance cross-selling and identify niches for new products.

Another example is Springhouse Corp, publisher of Nursing 2001, which has a circulation of over 300,000. Extensive customer surveys have been used to supply advertisers with a great deal of information about these nurse subscribers, as well as assist the book division in developing new products to meet the market’s needs, such as a highly successful drug handbook.

Some publishers can tailor or even personalize product offers and messages to various segments. And at least one has used testing to establish the precise order and timing of product offers sent to new customers. Such capabilities have gone a long way in increasing overall revenue and maximizing profitability.

10. List rental and other revenue sources List rental has become a significant contributor to the bottom lines of most consumer and business publishers. (In fact, I know of at least a handful of consumer publications whose entire net profit is due to list rental revenue.)

Many publishers are now using database capabilities to expand this profit center as much as possible. Hearst Magazines, Time Inc. and Cahners are among those that have identified names with certain factors in common (such as presence of children in households, or buyers of certain types of business products) across their files and created cross-title list selects to expand their rental prospect pools.

Some magazine publishers offer modeling services for list rental clients. And Cahners, working with outside direct marketing firms, offers its enhanced subscriber data to advertisers, who use it to overlay their own customer data.

11. Improving newsstand performance Time Inc. is also a leader in developing this application. Using detailed draw and sale data supplied by major wholesalers and modeling techniques, the company has been able to hone its formula files (the algorithms used by wholesalers to determine retail copy allotments) and its distributions to various wholesalers. This has enabled significant progress in reducing returns and costs while maintaining or improving sales in individual stores.

AND THERE’S MORE…

So there you have it: At least 11 revenue and profit-enhancing marketing database applications in the circulation area alone. In addition, of course, there are many more potential opportunities, not addressed here, in the advertising, marketing and even editorial arenas. (Databases are great for internal editorial research purposes.) And who knows what other new applications will come along over the next several years?

Patrick E Kenny, now senior VP, consumer marketing and publisher services for Qiosk.com, was previously a consumer magazine circulation executive and consultant. CM staff assisted with research for this article, which was originally published in the February 2000 issue.

RELATED ARTICLE: THE BASIC DATA ELEMENTS

Databases derive their power from a variety of sources. Here’s a list of the main publishing data elements, shown in order of their importance in driving the applications outlined in this article.

SUBSCRIPTION AND PRODUCT TRANSACTIONS Actual customer transactions are the most powerful marketing data. Knowing how many times individual customers and segments have renewed, how many dollars they’ve spent on your products and what other interactions they’ve had with the company allows you to differentiate your marketing strategies based on customers’ levels of involvement. Since this data is maintained on publishers’ fulfillment files, most publishers use those files as the foundation for building their marketing databases.

OTHER PRODUCT TRANSACTIONS Companies with brand extensions or ancillaries can overlay this information on magazine data. In most cases, a high percentage of these other products are sold to magazine customers, so having this knowledge combined in one place can be extremely valuable.

CUSTOMER SURVEY INFORMATION Controlled publishers have always relied on customer-supplied data, and many of the major paid consumer publishers have been collecting survey information for years now, using ride-alongs in bills and renewals, cover wraps or free-standing mailers. Publishers are willing to invest in these surveys because they know that self-reported data is more powerful than data bought from third-party compilers. However, critical mass must be achieved before the data becomes useful, so publishers need to get responses from a fairly broad cross-section of their readers/customers.

PARTNERSHIP DATA Some publishers have developed strategic partnerships with advertisers or other synergistic companies to exchange data for mutual benefit For instance, Sports illustrated has exchanged data with the National Football League, allowing SI’s marketing group to use specific customer-matched NFL data in their list selections for the magazine and its extensions.

COMPILED DATA Because having sufficient demographic data is so critical to a marketing database’s effectiveness, most publishers supplement their customer data with overlays from one or more of the major data compilers. This process simply involves matching the publisher’s database against the compiled file and transferring specific pieces of data.

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