How to Reward Readers and Make Money

Something is in the air – it’s called change and everyone is talking about it.

Earlier in the year, the regional newspaper industry suffered its worst ABC figures for many a decade, with double digit sales declines more prevalent than was good for the soul.

There is a general feeling there’s been a paradigm shift in people’s media consumption, as the penetration of broadband fast approaches 10 million users. More people spending more time on the internet is not just affecting newspapers but other media too, particularly TV.

Most newspaper groups are now talking about "product portfolios" and "brand extensions" and "multi-media" as they look to grow their total "audience" across a range of media platforms – newspapers, magazines, TV, radio and the web.

Even traditional newspaper models are being challenged. To date, both the Manchester Evening News and Liverpool Post have started giving their paper away free in the city centre to boost circulation, and as sure as eggs is eggs there will be more to follow.

All this is designed at least to maintain the newspaper brand’s share of local and national advertising.

How much is a reader worth?

But where does this leave the consumer who is becoming used to not having to pay for news? Inevitably circulation revenues will come under attack, so how can newspaper companies make up the shortfall, apart from simply racking up cover prices?

Actually, most regional newspapers already generate significant additional revenue from their readers. At Archant Norfolk, our reader travel operation has an annual gross turnover of over £3.2 million, generating commission income well over £300,000. After allowing for all direct costs, this represents a return on sale of 68%.

Recently we launched a Reader Shop selling goods off-the-page, and we receive 25% of the transaction value as a commission. On a good week we can generate £1,000 net income and we expect this activity to deliver at least £40,000 next year. Photo sales are equally lucrative, generating over £60,000 without really breaking into a sweat.

So, on these three activities alone we are generating £300,000 profit per year and this is growing steadily.

How much is an advertiser worth?

It’s also possible to generate additional non-advertising revenue streams from advertisers. We have our own direct marketing team that not only runs our newspaper canvassing, magazine subscription and other direct marketing programmes but also creates commercial income from a number of clients. By offering database bureau services, campaign planning, list broking and campaign management we generate over £200,000 of business each year. This has grown too as marketing directors at some of our bigger advertising clients continue to spend more of their marketing budgets on direct mail, websites and email campaigns.

Email in particular is becoming a hot topic. The trouble is there is a shortage of good quality, permission based email address data in large enough quantities for local campaigns. Hang onto this thought for later.

Job prospects

Back in the summer of 2006, I gathered up the Archant Norfolk marketing team and we headed off to a secret location in Norwich city centre (commonly known as the pub) to spend a day brainstorming ways in which we could keep our jobs.

The marketing team is already responsible for newspaper sales, readership and circulation revenue (all under pressure), as well as the revenue we generate from reader services and direct marketing (both growing steadily).

After a few hours "yes butting", plenty of luke-warm coffee and a beer or three we agreed we should own digital marketing too – and take responsibility for both online audience growth and any new revenue opportunities this presents.

So we booked the entire team on an in-house digital marketing crash course provided by the Institute of Direct Marketing. After the first day of our intensive three-day programme we were screaming to know more.

As well as deciding to hone our digital marketing skills, we also came up with the idea for Reader Rewards.

Reader Rewards Rewards Readers

Reader Rewards is an online promotional programme for readers of the Eastern Daily Press and Norwich Evening News and visitors to our branded websites www.edp24.co.uk and www.eveningnews24.co.uk.

Reader Rewards has two objectives. The first, you’ll be surprised to hear, is to reward readers (and visitors). The second objective is to make money.

Visitors to the Reader Rewards website can access five different functional areas of the site:

1. Exclusive free-to-enter prize draws.
2. Online discount vouchers that can be downloaded and printed. These can then be redeemed in store at the point of purchase.
3. Browse and buy reader travel products online.
4. Home shopping offering some great online deals.
5. Games, puzzles, Sudoku and crosswords.

To access these benefits, readers have to register and in doing so opt-in to receive email communications from Reader Rewards. The only mandatory data required is name, email address and password. However, we also try to gather the postal address and telephone number, some basic demographic data and newspaper purchasing behaviour. Finally, members can opt-in to a number of monthly email newsletters promoting the latest deals and offers.

Every time a member visits the Reader Rewards site and does something – buy a holiday, shop, download a voucher, enter a prize draw – data is captured on the membership database, either in real time or offline via a regular data exchange with our partners’ white label sites.

Wait a minute, this all sounds like a ruse to build a good quality, high volume, data rich, permission based database of local email addresses! Looks like we’ve just unearthed a third objective.

Show me the money

Both online reader travel and home shopping simply compliment what we are doing in-paper. In essence, we are linking third-party white label sites to our Reader Rewards site. All white label sites are displayed within a Reader Rewards frame, which effectively endorses the offer.

The home shopping facility is open to anyone with an e-commerce site, including local independent retailers; of course many of these are already advertising clients.

As with off-the-page sales we receive a commission for every holiday or item bought online.

There’s nothing particularly ground-breaking in any of this so far; it’s no more than pretty bog standard affiliate marketing which has been around for donkeys’ years.

We think the clever bit relates to prize draws and discount vouchers. Both incorporate targeted email marketing which offer local advertisers opportunities to communicate directly with potential customers at a time when they are showing a clear interest in their product or service.

It works like this. Let’s say a local retail department store signs up to supply a fashion makeover as a prize. When a Reader Rewards member enters this prize draw online, he or she will receive a confirmation email from Reader Rewards which not only thanks him or her for taking part but also contains a message from the prize sponsor which may include an offer or a link to the store’s website.

Incidentally, to enter the draw, members must answer a question or two – possibly an additional piece of demographic data or even an "intention to purchase" question – which will be added to that member’s profile.

In a similar fashion, the store may offer 10% off a range of cosmetics for a limited period and this offer is promoted on the Reader Rewards website. Members can go to the voucher area of the site, view details of the offer and, within two clicks, have printed off a personalised coupon that can be redeemed in the store.

Because the voucher is printed on an A4 sheet, this provides space for an advertising message from the store, either text or graphical. Also, as each voucher carries the member’s name and personal ID we can track both the identity and number of redemptions – although this relies on the retailer returning coupons to us.

As with prize draws, when a voucher is downloaded, the member will receive an email conformation, which includes not only a link back to the voucher but also a sponsor’s message with embedded hyperlinks.

Permission equals response

So already we have two highly targeted emails being delivered to the inbox of members who are likely to be receptive to other offers from the prize draw or voucher sponsor.

The monthly email newsletters, which members subscribe to, are another targeted opportunity for advertisers to promote the latest deal and offers to a receptive online audience.

We will also offer clients an opportunity to solus email the Reader Rewards membership database with specific offers, using demographic, behavioural and transaction data to select the best prospects.

We will not rent the list, however, as any email communication with members will always come from Reader Rewards. This endorses the client’s offer and, more importantly, ensures we do not over email the database as the frequency of contact is under our control.

Members at anytime can unsubscribe to either the monthly newsletters or the service completely by logging on to the site and amending their permission status. Of course, every time they receive an email from Reader Rewards there is an unsubscribe hyperlink included in the text.

Show me the money, part II

The way we will make money out of prize draws and vouchers is to charge the client a combination of a set up fee, a weekly fee for promoting the offer on the site and a cost per response. Clients will share the cost of broadcasting the monthly email newsletter and pay a premium for any solus emails.

Of course, there are opportunities to place banner ads on the site and we will sell sponsorship of the games section.

Reader Rewards launches in February 2007. It will be promoted heavily in-paper and on our branded websites. Several years ago, we launched a similar in-paper loyalty scheme called the Big News that attracted over 30,000 members – at the time we were gobsmacked at the response. We don’t expect the same level of response this time, but a membership database of 5,000 to 10,000 would be good.

We currently have an email database of just over 2,000 reader travel customers who have expressed an interest in receiving information on travel deals by email. They will receive details of Reader Rewards, as will readers who have provided their email details to us during the past twelve months through other marketing campaigns such as in-paper competitions and magazine subscriptions.

If it works, it will unlock some of the digital marketing spend that is currently passing us by and further strengthen the relationship we have with local advertisers. And, from the readers’ perspective, they will get a little extra something back from their favourite brands. After all, we all like to be rewarded now and then.