We remember back in 1994 when the eNews biz dev team was going around cap in hand, trying to convince publishers that a Web-based virtual newsstand could amount to something. Many scoffed then, but these days eNews rules its niche of the Web. Every single major US magazine publisher sells subscriptions online through eNews, which carries over 100,000 titles.
MarketingSherpa spoke with CEO Brian Hecht to find out what's next in this post-bubble Web world.
Q: Who are your biggest sales partners?
Hecht: BarnesandNoble.com. They are also one of our owners, although it's worth noting they bought in after we'd been working for over a year and a half. The BN.com account receives senior management time -- our Chief Marketing Officer and other marketers work on special programs and promotions.
We actually maintain their magazine site on our servers, although it looks like theirs, and have one and half designers just doing Web design and maintenance on it. Plus there are technical and transactional people on the back end. So there's the equivalent of five-six people just working on that relationship. These are fixed costs that don't have to go up as sales go up.
Since BN.com added the magazine section in late '98, my gut is that the one trend on the BN site is people search a lot. It's caused us to make sure our search capability is really intuitive. If they do a common typo, for example if they spell Playboy, "Playbyo", we don't both showing them the search result page with "Playbyo" we just take them there.
Q: How's your relationship working with business publication newsstand, Rowe.com?
Hecht: Our integration with Rowe.com is still a little awkward. Our logic for the starting the relationship was to provide our users with the broadest choice possible. The first choice would be to do so in a seamless environment, but it's probably not worth the dedicated resources. Sure we could work a year to make a great integrated environment, but it's not a sensible resource allocation. So, in general it bolsters our claim that we have every magazine, but someone looking for a business journal is going to have to click two extra times to find it.
Q: You've been testing carrying non-magazine subscription products such as newspapers and print newsletters. How's that going?
Hecht: It's safe to say we're dabbling. We go through an awful lot of effort and expense to attract targeted users to the site to buy magazines. It only makes good business sense to see what else they might buy from us. We are definitely exploring plans for other thematic items, but we're cautious. Like all other direct marketing companies we like to test before we launch. There will probably be new things in 2001 but we haven't committed yet.
In terms of sales, they are exceeding expectations, but expectations were very low! We're not getting anyone who balks at the concept of our selling them. However, the underlying economics for newspapers and newsletters are that the margins are not as compelling for us. So, we're looking to see if consumers like it. There hasn't been organ rejection, but we're not changing our business model just yet to go for it.
Q: What about the whole free email newsletter marketplace? There are an increasing number of newsletter publishers who are willing to pay for qualified opt-ins.
Hecht: We're interested in it, more in a sense of providing a complete solution to the consumer. We experimented with it a few times. The economics are not as compelling as consumer magazines.
We're also cautious about it because free email newsletters fit into a different slot than paid magazines on paper. I think there's a difference in perceived value by the consumer, and if we've made our niche on $20 paids it confuses the value proposition. If there are some breakout titles consumers think of in the same breath as the best, biggest magazines, we haven't found those yet. And technically it's a little difficult....
Boy! I really sound like a post-bubble dot-com CEO. A year ago I would have said, "Oh we're going whole hog into this." Now you have to focus on what you do best, and be sparing in expanding to concepts a little further away from your core strength.
Q: Are you considering competing with FreeBizMags who put controlled circ trade magazine newsstands on business sites?
Hecht: I don't know if we are going to be. The model is intriguing in paper but real execution might be a difficulty. It's an interesting idea. I'm happy to have them pay to experiment with it -- and if it turns into a profitable business idea, we'll be happy to try our own spin on it.
Q: You guys are famous for the aggressiveness of your affiliate program. How many do you have now and how's it working?
Hecht: 85,000 -- which is a lot for a site that's not Amazon! On any scale, though, it's easy to find affiliates and really hard to find great affiliates.
About 10-20% of our affiliates are active sellers and my guess is that's in line with the industry standard, maybe a little higher. We break up accounts scientifically on a graph and treat it like any other type of account management. One-two people specialize in the top 20 sites, another two people go for 20-120 and two more people for 121 on down. We also have someone whose specialty is taking sites that aren't selling and getting them to sell. Often it's because they haven't built in the newsstand yet.
Q: What types of tactics would you use to help affiliates raise sales?
Hecht: Some affiliate sites have a big opt-in email list they send a newsletter to. They might put magazines in there as a category -- but marketing magazines for circulation is a particular craft. We have people on staff who know how to do it well. An email newsletter about pets might just repeat what's on our site about related magazines. But if it's worth the time and effort, our marketers can actually craft custom offers and work with publishers to get a custom offer that will really fuel sales.
For example, if you say "Subscribe to Dog Fancy" you'll get a very low response. When you say, "Try Dog Fancy free for 90 days money-back-guarantee and get this exclusive free gift: a Dog Fancy dog collar" you'll get much higher response rates.
Q: Aside from your affiliate deals and BN.com partnership, what tactics are you using to drive traffic to your site?
Hecht: We do very little pure advertising now. We rely on our marketing partners with whom we have sensible business relationships. It's almost always a revenue share arrangement with the host property and almost never a paid ad arrangement.
We still work with all the big portals in one way or another. However, the incarnation of the deals in the original press releases have all been terminated or phased out. For example, we prefer to work on a campaign basis with Yahoo. If they see an opportunity, we run the numbers like a direct mail campaign to see if the deal makes financial sense. Sometimes it does and sometimes it doesn't.
Q: What are the demographic differences between people who buy magazine subscriptions online and people who buy offline?
Hecht: The most shocking thing is they're almost the same. Demographics are converging.
Q: Do you revert to snail mail for renewals?
Hecht: When we sell a magazine, the publisher turns off the regular renewal series. You should never receive a piece of paper in the mail. We offer easy continuous renewal service that's very clearly explained online. Almost all our sales are on a 'til forbid basis. We always send an email letter with a link in case they want to cancel 30 days before we recharge a card. Very few people cancel.
Q: How are sales going?
Hecht: Our sales are showing astronomical year-over-year growth. If I can just keep this up, then great!
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