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Take your partners

Many publishers are engaged in ‘partnership marketing’ although most would not know it. Few companies, though, are pushing hard at the boundaries of partnership marketing, exploring all its possibilities. One that is is Dennis Publishing. According to Steve Price, a clear understanding of life time value and an appreciation of your own publishing model are essential.

By Steve Price

‘Partnership marketing.’ It sounds rather grand doesn’t it, conjuring up images of huge FMCG and retail mega brands working together to drive their already enormous sales even higher.

But what has partnership marketing got to do with magazines? We (as in those direct marketers working in publishing) all need to acquire paying, profitable subscribers with lifetime values so long that they will outlive us all. Easier said than done through using our traditional routes of in-magazine promotions, direct mail, inserts, telemarketing and e-marketing. These all cost money upfront; money which is not always available, especially if your senior management doesn’t buy into lifetime values and insists on a return in the first year.

Wouldn’t life be easier if you could work with another company that had bigger budgets and wanted to work with your products to drive their own sales, increase footfall or deepen their relationships with their customers? You would get more reach for your money and (hopefully) better results.

This is what partnership marketing has to do with magazines. However, currently there are only a few of the bigger publishers actively involved in it, such as National Magazines and BBC Worldwide. This shouldn’t be the case as everybody could benefit from getting involved in partnership marketing. Actually, I will take that back, because a lot of you are involved in partnership marketing now with list swaps, inserts into advertiser’s mailings, email swaps, banners on friendly websites – you just haven’t given it a fancy name.

What is partnership marketing?

Definitions help, so let’s use: "partnership marketing is mutually beneficial marketing activities between two or more companies."

Some recent examples you may have seen are:

* Buy a Braun shaver and get Maxim free
* Redeem Tesco Club Card points for subscriptions
* Renew your membership to the Marketing Society and get a free 6 month subscription to the Week
* Save money on magazines because you are a customer

The publishing side of these relationships wants subscriptions and the partner wants one or more of the following, dependent on whether they are retail, financial, FMCG, utility or service based:

* Increased traffic into store
* Increased spend in store
* Increased spend on credit, debit or store cards
* Increased sales of product or service
* Bigger market share
* Increased loyalty which equals higher lifetime values

But how does partnership marketing benefit subscriptions? It can help by generating volume subscriptions, provide incremental sales, build brand awareness, lower your promotional costs and deliver revenue (though not always in the short term) but you must watch the renewal rates which can be good or bad. The real skill involved is to make sure that each promotion fits with each magazine’s publishing model. Does your model require subscriber volumes or revenue - or both?

Offer types

Partnership marketing can deliver against your objectives but make sure that you use the right offer. The most common ones used are:

* BOGOF (Buy one get one free). The partner buys the subs off you at a volume discount and gives them away free. Carphone Warehouse gave away several thousand National Magazine subscriptions to people who bought mobiles from them. Renewal rates were low but there were no promotional costs and the revenue was acceptable.
* Discounted price. The partner’s customer enjoys a preferential or exclusive discount and orders directly through the publisher. Caravan Magazine sent artwork offering a special subscription rate to over one hundred caravan clubs, asking them to run the offer in their newsletters. Many did and the promotion generated over 1,000 subscriptions with a good revenue for very little spend.
* CPA (Cost Per Acquisition) or commission deal. The partner is paid a commission if one of their customers buys a subscription. Dennis run numerous such partnership promotions, working with gambling sites for Inside Edge magazine, mail order nutritional drinks companies for Men’s Fitness and email owners for all our titles. Agents can be included in this offer type. If used properly, agents can become a very important part of your direct marketing plan because they can help you reach audiences that you could not otherwise reach. A few such agencies and what they can help you with are:

ADLP – financial services
iSUBSCRiBE – web marketing
3PM – web marketing through partners such as WHSmith, affiliate schemes and email marketing

* Newsstand discounts. A money off voucher for the newstrade includes data capture that can then be used for direct marketing. National Magazines and BBC Worldwide excel in this area and have run promotions with Alpen, Anchor butter and on over 10 million bars of Cadburys to name but a few.

Response to each of these types of offer will vary greatly, as will revenue and renewal rates. A BOGOF promotion could generate large volumes but at lower revenue and with a poor renewal rate (see table). On the other hand, a discounted offer will get you quality, paid subs at zero promotional cost but will it provide the volume you need?

My own favourite promotion is the CPA deal. Maybe it’s my northern roots, but if Dennis Publishing cannot get a promotion for free then I do not want to gamble our promotional budget on direct mail and inserts unless there is no choice. If standard direct mail has a CPA of £20, why not offer a CPA commission of £10 to a partner for every subscription ordered by their customers – as long as they cover the promotional costs.

What are the renewal rates like?

These can vary greatly and I suggest that you test promotions carefully before you commit to budgeting for huge numbers of subscriptions from partnership marketing. However, as a rough guideline, you should expect to see the following:

Offer TypeExpected Renewal Rate
BOGOFOnly 10-20%
Discounted PriceUp to 20% below standard
CPA/Commission Deal5-10% below standard
Agents5-10% below standard

Some of these may look scary, but if your model asks for volume before revenue then BOGOF can work. However, if volume is not essential then the other three offer renewal rates slightly below your standard ones at a much lower promotional cost. This will make sense on your lifetime value model.

How do you get into partnership marketing?

You can either do it yourself or contact sales promotion agencies. The former is best for smaller brands and it can be done by looking internally. Editorial and advertising teams are talking to your ideal contacts everyday. Make sure that they tell these people that you want to talk to them about "… mutually beneficial marketing activities."

The Auto Express advertising team listened and the result was a whole host of promotions for the Dennis car titles. Our subscription flyers went into mail order catalogues on a commission-only basis, we were given incentives to use in-magazine and the advertising team got some new bookings that they didn’t expect.

The best thing is that, once you have done a few promotions then your phone will start ringing and people will be asking you whether you want to work with them. At National Magazines, 90% of the promotions I worked on came from people calling me.

Selection criteria

Not all promotions will be right for every magazine, so make sure you have a checklist, such as:

* What is the volume potential?
* What are the revenue implications?
* Will this partnership damage the magazine brand?
* Sustainability – if you suddenly generated 5,000 three month subs, what happens to your file in the fourth month?
* Does your magazine have an affinity with the target audience?
* Is there a long term relationship potential?
* Are there any hidden costs? There usually are somewhere!

Potential pitfalls

There are risks in partnership marketing. The main one is the sustainability of your subscriber file if you suddenly generate high volumes of subscriptions, especially at a reduced revenue and if the renewals are low. For most titles this should not be a problem if you start with small scale promotions. However, if you suddenly get the chance to feature your magazine in an on-pack promotion with a major FMCG brand, make sure that it fits with your publishing model.

Ten top tips

It is easy to get carried away with partnership marketing because you could have the chance to be involved in big promotions. Having learned the hard way, I suggest you bear these tips in mind if you do decide to go down what can be an exciting and effective route to market.

* Do not damage the brand
* Is the promotion going to be worth the effort in terms of response?
* What are your publishing model objectives?
* Watch the renewals
* Define your selection criteria
* Stick to your selection criteria
* Beware of hidden costs - this is meant to be a low cost route to market
* Watch the small print
* ABC - watch the rules
* Start small and reduce your risks

Finally, don’t forget to talk to other publishers. Dennis swaps lapsed lists for telemarketing with both VNU and Rodale. It works and both companies benefit from the partnership. On that note, does anybody reading this have any lapsed subscriber lists that they would like to swap with the Week …