Issue 27

Magazine super store gets busy with direct mail

Published Date: October, 2004

Australia’s iSUBSCRiBE was the first company in the world to sell a range of magazine subscriptions under one brand over the Internet. Three years on, it now has more than 120,000 subscribers, overall sales of $8 million and an owner who has a mountain of

iSUBSCRiBE was started by a former advertising executive, Andrew Burge, who decided it was time to make a break from his company Extreme Outdoor. Extreme Outdoor was an advertising brokering agency that specialised in large-scale outdoor and aerial promotions, such as helicopter banners and skywriting. In the lead-up to the Sydney Olympics, the business enjoyed sudden growth but Andrew knew that its future would be limited after the Games.

“When I ran Extreme Outdoor I became fascinated with all of the hype around the Internet and started investigating opportunities for on-line businesses,” says Andrew. With no Internet experience, he decided to focus his attention on setting up a mail-order business, which would not have the cost burdens of warehousing and stock fulfilment. He also wanted something that would harness e-commerce technology and would be the first to market in Australia.

Using money made from Extreme Outdoor, Andrew spent the initial months researching and developing the iSUBSCRiBE business. Thanks to a background in advertising, he knew the importance of carrying out research and analysis. “I began surfing the Internet and decided that the sale of magazine subscriptions on-line was significantly under-represented in Australia,” he says. “It was also a business that wouldn’t need a warehouse.”

The next step was to talk to potential customers and other businesses in the field to get a true assessment of the market potential. “I was lucky because people were happy to share their experience and knowledge,” he says.

The magazine business in Australia is worth over $1 billion a year, with the magazine subscription market accounting for around $100 million. ”Subscription rates in Australia account for around 12 per cent of total magazine sales.” But this pales in significance when compared with the subscription rates of the USA and various European countries, where the rate is as high as 80 to 90 per cent,” he says.

Another important fact unearthed during his research is that heavy magazine readers are younger and more affluent than the population in general.

The findings of much research, as well as ongoing analysis of subscribers through direct mail and on-line promotions and surveys, have helped Andrew plan the type of direct marketing to undertake.

While setting up the business, Andrew refined his idea and started cold-calling the circulation directors of the top 12 publishers in Australia. “After many phone calls I arranged meetings and explained the concept and why I thought it would work. Most of them thought it was a good idea but didn’t think I could pull it off,” he says.

After working long and hard perfecting the design and functionality of the site with web development company Psionic Creative, iSUBSCRiBE went live in December 2000 – eight months after the dot com crash.

Today, the business employs seven full-time staff who operate in three countries (Australia, New Zealand and the United Kingdom). Subscriptions to more than 1,500 different magazines and newspapers are available and the iSUBSCRiBE site is ranked by Australian on-line ranking service Hitwise as one of the top three book sites in Australia, along with Angus & Robertson and Dymocks.

“We’re currently talking with a couple of leading websites in the USA to form strategic alliances, with a view to launch iSUBSCRiBE.com selling USA titles in the next few months,” says Andrew.

CLEVER DIRECT MAIL PAYS OFF

“From day one we have heavily promoted iSUBSCRiBE,” says Andrew, who believes that the promotion of the website is absolutely essential given that the business has no bricks-and-mortar retail presence. Investing in search engine optimisation programs and establishing a number of affiliate and loyalty partners to deliver traffic to the site have been key activities.

“Once we had money to advertise, we set limitations on what mainstream media we could afford. We produced postcards and put them into letterboxes and did a little radio. We also produced a low-budget 15-second television advertisement that was aired off-peak,” he says. Although the advertisement didn’t drive a huge number of sales it made iSUBSCRiBE appear bigger than it was.

Direct mail was introduced into the marketing mix in December 2002 and has played a pivotal role in iSUBSCRiBE’s marketing strategy ever since.

“Our major direct mail campaigns are based on the two biggest gift giving periods – Christmas and Mother’s Day,” says Andrew. The gift market currently accounts for half of all purchases on iSUBSCRiBE and is a market that Andrew predicts will keep growing.

In three years the company has sent out close to 1.5 million addressed and unaddressed catalogues. In the Christmas 2003 mailing of 687,200 catalogues a total of 20,542 subscriptions were generated. For the Mother’s Day mailing this year iSUBSCRiBE netted nearly 8,000 subscriptions from a mail-out of 250,000 catalogues.

The catalogues have often included major promotional or charity-related incentives such as winning a $25,000 car or donations from sales going towards the SAD (stress, anxiety, depression) children’s charity.

“The response rate to campaigns (detailed in the table below) continues to increase and is a good reflection of the development and maturity of our relationship with our customers,” says Andrew. He believes that the increased conversion is a reflection of increased trust and desirability. “The frequency of our campaigns is a major contributor to this growth. It’s important to keep your brand in front of a consumer and maintain a market presence.”

iSUBSCRiBE maintains its own database of over 120,000 customers and has used this data for various promotions. Australia Post’s list profiling and database service SelectaMAX provided additional prospects by matching the names and addresses of people who matched the iSUBSCRiBE’s customer profile.

“The prospects provided by SelectaMAX really helped us carry out a targeted direct mail campaign,” says Andrew. The unaddressed component of the campaign was targeted to suburbs identified as most likely fitting within the iSUBSCRiBE demographic.

SelectaMAX, through the Australian Lifestyle Survey, had answers to specific questions relating to the habits of reading and subscribing to magazines. “So, between our existing database and the profiling, we have an excellent profile of readers, subscribers and gift givers,” he says.

According to Andrew the unaddressed component worked well, with a high response rate for a low-cost output. The direct mail portion of the campaign targeted iSUBSCRiBE’s customers who had previously visited the website and new prospects.

“I’ve always been responsive to direct mail that has something relevant to me, so I didn’t hesitate in committing resources to these large campaigns,” he says. ”We were pleased with the performance of both the unaddressed and addressed campaigns.”

Knowing who your customers are likely to be and making the offer relevant and timely is critical in the catalogue direct mail game, according to Andrew. “It’s also important to track the results of the campaign so you know where you got the best results and why.”

And with good results in hand, iSUBSCRiBE is planning more direct mail campaigns and using other mainstream media to support and reinforce these campaigns.

“Our business is about customer acquisition and we know that direct mail is a great help.”

Published Date: October, 2004