Background

Magazine and newspaper publishers in the UK manage subscriptions in widely different ways.  Some publishers view subscriptions as a marginal activity and, as a consequence, they plan and implement promotion campaigns in an ad-hoc, opportunistic style.  Others regard subscriptions as a significant and important profit centre and, as a consequence, they plan and implement promotion campaigns with the same thoroughness and level of precision that is found in other mainstream business functions such as editorial and advertising sales.

Our management consultancy experience in the last 20 years has shown us that publishers in the second category (ie those having well-established working methods for managing subscriptions) consistently out-perform publishers in the first category (ie those pursuing subscription sales opportunities in ad-hoc, opportunistic, ways).

The problem, of course, is how do publishers establish and maintain effective subscription marketing capabilities?  And how should these capabilities be organised within publishers’ management structures?

The issues

Publishers must tackle a wide range of multi-disciplinary issues in order to establish an effective subscription marketing capability.  These issues include:

• Subscription marketing skills, which are in short supply – in Europe and USA as well as in the UK.  Subscription marketing professionals must be numerate (planning and measuring the financial effectiveness of promotions with multiple price, term length, and payment method offers); literate (creating effective promotion materials); and imaginative (discovering new ways of selling subscriptions).  Many publishers in the UK do not have the range of skills that are needed to maximise their subscriptions revenues.
   

• Subscription marketing processes.  Effective subscription marketing processes need to be automated whenever possible because ad-hoc, unplanned, working methods are labour intensive and therefore time-consuming and expensive.  A structured and more formal marketing process will allow subscription marketing staff to spend their time on high value-added tasks, leaving lower value-added tasks to be computerised and/or sub-contracted to external suppliers.  This subscription marketing process needs to encompass four types of marketing work (campaign planning, implementation, reporting and analysing) across four types of marketing campaigns (acquisition, up-sell, cross-sell and renewals).

• Organisation of subscription marketing work. Publishers can organise subscription marketing staff in one of three ways: centralised (where marketing staff work across all publications); by product group (where marketing staff work across publications within a specific product group); or de-centralised (where marketing staff work for a specific publication).  Although each approach has its advantages and disadvantages many publishers have a common dilemma: skills shortages in subscription marketing staff and the need to develop subscription marketing best practices tends to promote a centralised approach.  Most publishers, on the other hand, prefer a de-centralised approach where subscription marketing staff develop their expertise within a specific market sector and with direct publisher control.
   

• Financial measurement systems. Subscription promotions require a specialised financial measurement system because subscription sales transactions are held in a deferred income account in the balance sheet and are released to the P&L account over the life of each subscription.  In the world of subscriptions, P&L and cash flow are fundamentally different and, as a consequence, both need to be measured separately.  Many publishers measure the success of their subscription promotions in P&L terms but they do not link the cash flow benefits with each promotion.  Furthermore, there is an ongoing debate over the financial relationship between subscription volumes and a publication’s ability to generate advertising sales – the link between subscriptions and advertising sales is well established in mature and sophisticated publishers (such as Time Inc) but is usually not established in publishers managing their subscriptions with an ad-hoc, opportunistic style.
   

• IT systems. Subscription marketing relies on a vast array of data – from subscription fulfilment systems (for managing current subscriptions and maximising up-sell and renewal revenues); marketing databases (for maximising acquisition and cross-sell revenues); Web / email promotion systems; lifetime value spreadsheets (for predicting campaign profitabilities) to circulation modelling systems (for forecasting subscription volumes, revenues, cash flows and marketing promotion budgets).  All these separate systems need to be co-ordinated and accessible by subscription marketing staff.