High flyers

An awareness of what’s gone before makes for better planning and decision making. In direct marketing this is achieved through a culture of testing and documentation. James Evelegh talks to Natmag’s Karen Louth about her knowledge based approach to marketing and how it consistently delivers a good return on investment.

By James Evelegh

The National Magazine Company (Natmag) publishes nineteen of the UK’s leading consumer magazines. Titles such as Cosmopolitan, Good Housekeeping, Prima and Men’s Health leap out of every newsstand in the country. Now this newsstrade stalwart is investing heavily in subscriptions and its md, Duncan Edwards has set a target of one million subscribers across its stable of titles. A central figure in achieving this target is Karen Louth, head of direct marketing & commercial development. According to Karen, "the strategic focus for Natmag is very much ‘direct to consumer’ marketing with subs being the pivotal platform from which to achieve that goal. We strive to ensure that our promotional programme facilitates our objective of multi-platform marketing to ensure as wide a consumer reach as possible."

Two things have been central to this increased activity; a new company-wide marketing database and the placing of testing at the heart of everything they do.

Primacy of data

For Natmag, the primary component of any direct marketing activity is data. Get the audience (ie. the list) right and then tempt them with the right offer. They do everything (copywriting, design etc) in-house and the core Natmag fundamental promotional guidelines rarely change. It was this increased data focus which lead to the development of Aquila (Latin for eagle) – its new marketing database. Natmag spent some two years evaluating their internal data function before taking the decision to re-build their consumer base, using systems provider CCB. One of the integral functions of the new base is the ability to look at the true value of a customer through their own unique transactional history.

The "single customer view" has been used very successfully by large retailers (eg. Tesco / Boots) for some time and is considered the holy grail of marketing databases. Aquila is one of the few publishing databases to have achieved a fully integrated transactional consumer file. The impetus behind the development of Aquila came not only from a desire to have greater control of marketing efforts but, to also reduce the promotional cost base. The cost of using (better performing) in-house names, generated at 50% of the cost of an external (poorer performing and single usage to boot) third party name made perfect economic sense.

The results have been well worth the effort with current campaigns using approximately 70% in-house names compared to 50% in 2002. Given the increased responsiveness of in-house names, this means better results at lower costs - an ROI dream. The goal is 100% reliance on in-house names, as long as, says Karen, the in-house database continues to provide a test pool of sufficient size and conforming to whatever target demographics they deem appropriate. Given Karen’s emphasis on testing, I imagine that the door will always be open for third party data, provided it is of sufficient quality.

As is so often the case with major development projects like Aquila, many of the resulting benefits were not necessarily those pencilled in at the start. Natmag has started to work the database hard. By proactively seeking extra, commercially valuable data from responders, new revenue streams are opening up. For instance, on one form, they have started asking responders about the cars they drive. This information has been fed through, as ammunition, to their ad sales teams – "excuse me Mr Car Manufacturer, did you know that X% of our readership buy such and such a vehicle so shouldn’t you be advertising?" etc, etc. Natmag has also started to offer direct marketing services to some of its key clients – offering a database and creative ‘one stop shop’ solution that allows the partner to effectively target their core audience with little wastage. Not only does this generate an incremental source of revenue, it also serves to deepen the relationship with some key advertising clients.

Direct mail mechanics

Typically, Natmag promotes with four major campaigns over the year (new year, spring, autumn and Christmas). In addition there is an almost ceaseless amount of activity running in the background throughout the year – on-line, inserts, house ads, affinity marketing deals. With the emphasis on list selection, the mechanics and creative of the mailing pack do not change greatly year to year as historical testing has shown the controls still to be the most effective. The typical Natmag mailer will include: standard letter with coupon, buck slip (a flyer emphasising the main offer) and a standard Natmag reply paid envelope. The outer envelope is magazine branded and will also trail the offer. Everything is bar coded so as to maximise Royal Mail sortation discounts and ensure cost efficiences across the campaign.

Natmag, in the main, operates a Direct Debit marketing programme – indeed the majority of offers now only offer this method of payment - which has done wonders for retention rates. Just under 55% of the entire subscription base is now managed through direct debit, with them pushing toward a goal of around 70%. However, it should be highlighted that some titles are more receptive to this type of marketing and it’s vital to ensure you find the right balance of promotional activity to ensure you fully meet your audience’s needs.

Knowledge bank

What is the secret of a successful direct marketing campaign? What is the perfect marriage of list, offer, price, payment method, timing, creative and pack mechanics which is guaranteed to bring home the bacon? If only I knew. The fact is that, without testing, no one knows. It will differ from market to market. For many subscription marketers the start point for a campaign is a blank sheet of paper. On to this they create a campaign based on a combination of their gut feel, own particular strengths, a rather blurry recollection of the last campaign they did and a chin wag in the pub. In other words it’s a complete lottery. Who knows – they might get lucky.

Luck plays a more limited role at Natmag. Every single marketing decision is based on knowledge – specifically the accumulated knowledge built up over the past five years. Every single aspect of a campaign is documented – and there are two main tools. In the first instance a campaign briefing document will be created which will detail the background, objectives, strategy, scheduling, sources, quantities, code structures, pack details etc of every single marketing activity whether it is a house-ad or a multi-cell direct mail campaign. The second tool is the response spreadsheet that is completed for every campaign. Tower Publishing Services will process the response in the normal way and then feed the data back to Natmag. From there, every aspect of the response is recorded and analysed.

The theory is simple – on the basis of this information Natmag can predict, with a high degree of certainty, what will and what won’t work at any given time. Only the newest and most innovative and never-been-tried-before (and let’s face it, there aren’t too many of those) ideas would result in anything resembling a shot in the dark. But even with those, exposure to risk will be limited by their approach to testing. Test in a controlled way – if it bombs, then the damage is contained. Furthermore that exposure will be once-only, because as soon as its been tested then the knowledge bank is seamlessly updated and an informed opinion can then be offered next time that technique rears its head.

Approach to testing

The depth and breadth of the knowledge bank will only be as good as your approach to testing. After all, if you’re a one-trick pony, then you will build up a lot of knowledge about that one trick but not about much else.

Typically, each of Natmag’s major campaigns will contain between ten and twenty different cells. Each one will vary in one or more of the key variables (list, offer etc). About half of them will use tried and tested variables – cells that have been proven response generators in the past. The remaining cells will contain new variables and represent the testing. The response to all cells is recorded and analysed because today’s tried and tested might be tomorrow’s thing of the past. Testing is not an occasional activity but is hard coded into every campaign. Continual testing and the application of learning is key, because marketing techniques are prone to go stale over time leading to diminishing results. Only by documenting results and constantly testing new initiatives can you spot fading techniques and replace them with up and coming ones. By building on the knowledge bank you avoid knee jerk reactions because new variables are only introduced on the basis of knowledge.

This allows Natmag to make more informed decisions and to capitalise when good luck does come calling. A couple of years ago, one of their new year campaigns was accidentally released late and thus hit doormats in the first week of January as opposed to in the week between Christmas and new year as was intended. They got their best ever results; – they know that because they simply compared it to the new year campaigns for the last four years. Consequently, and as you would expect, the drop timing was amended on the following year’s campaign to stagger the roll out and thereby take advantage of this new-found reader characteristic.

So what, then, is the difference between good and bad direct marketing? Having met Karen I would say: a culture of permanent testing, the creation of knowledge (through documentation) and the application of learning through constant review and planning. Phew! Good marketers know, they don’t guess. Talent is important but methodology is king and "hunch" is a dirty word. And Karen Louth and her Natmag team have more than their fair share of PPA awards to prove it.