Gone are the days when a newspaper’s income was limited to the cover price and advertising revenue.
Publishers are being forced to look for new ways to increase revenue in the face of an overall decline in newspaper circulations and periodic price wars.
One alternative revenue stream is exploiting a database of readers – something that has already been earmarked by several newspaper publishers, most notably Associated Newspapers and the Telegraph Group.
Database information can also be sold to third parties wishing to target groups of readers. When such a third party teams up with a newspaper, the mailing carries even more weight, which is what The Daily Telegraph has just undertaken with Capital Bank.
Len Sanderson, managing director of Telegraph Sales, says: “It’s an initiative to add more strings to our bow. And, other than cover price and ad revenue, the most obvious is the database.”
In the Telegraph’s latest agreement with Capital Bank, more than 100,000 subscribers to the newspaper’s Premier Football League competetion may be targeted with several financial product offers.
Those who have registered for the competition will not only receive regular updates on their fantasy team, but also offers of personal loans from Capital Bank – one of the competition’s sponsors.
Tim Coxall, Capital Bank business manager, says: “The Premier Football League provides a target market of 25- to 45-year-old males, which is exactly what we want.”
Martin Bartle, PR and communications manager at the Direct
Marketing Association (DMA), comments: “It’s very obvious that the newspapers are building their databases.” He points to an increase in reader offers, competitions and subscriptions that require the provision of personal details.
Meanwhile, Damian Blackden, press director at Zenith Media, says: “Advertisers can make a genuine use of titles’ subscription databases provided they can be well segmented.
“The advantage is that the newspapers have had the opportunity to build up a meaningful dialogue with their readers. Communications that have a title’s endorsement are therefore much more likely to work effectively.”
Blackden sees database marketing as an opportunity for newspapers to cover the cost of expensive subscription projects designed to retain readers.
Databases are not confined to the obvious demographic/geographic facts. Readership, shopping, banking and travel habits all play a role. But the real crux of the matter is how the data is processed and used.
Stephen Palmer, marketing director at The Guardian and Observer, says: “It’s not just about collecting names and addresses. It is a question of putting in new data, customer profiling and cleaning data.”
Although Palmer’s newspapers have a database that is in the process of being refined, he is cautious about offering it to third-party mailing companies.
Ken Mansfield, chairman of Mansfield Lang Direct Media, does not see any conflict between the use of databases by third parties and advertising revenue generated for the newspaper. “Direct mail through databases is used by clients as one part of their media schedules, and is yet another way of targeting a group of people,” he says.
Sanderson is more concerned about a possible conflict of interest with advertisers, especially when it comes to products that appear to have the newspaper’s backing. The products being offered to Premier Football League subscribers are not advertised in the pages of the newspaper. “We have to be careful on financial advertising as we don’t want conflict with our advertising markets,” he says.
That is something the Telegraph discovered two years ago, when the newspaper tried to extend its brand by offering readers Tessas and Peps. The move sparked a backlash from existing advertisers. The newspaper is also conscious of getting the right product for a piggyback type mailing. “The Telegraph brand does mean something to readers – they trust it,” says Sanderson.
The newspaper has also teamed up with Northern Electric to offer all readers a discount on their gas and electricity bills. The Telegraph logo even appears in newspaper ads for the power provider.
Bartle says: “The dual branding means a bit more – it’s almost like pledging allegiance.”
Meanwhile, Palmer says: “The last thing you want to do is upset readers by allowing them to be bombarded with direct mail.”
Where the newspaper has linked up with a brand, Palmer argues: “You have to make sure the reader sees some value in appearing as a party to the relationship.”
A newspaper that ties its brand to the mailing may be more interested in a share of the profits than a set fee per 1,000 individuals mailed.
Bartle says: “If they can take control of the response, then they take control of the medium again, and are not cut out of the chain.”
According to the latest figures from the DMA, 90 per cent of press advertising carries a response mechanism which cuts out any relationship with the newspaper.
Agencies specialising in direct marketing have cut back on the amount they spend on press ads for a number of reasons, including a general decline in newspaper circulations and the availability of alternative direct marketing mechanisms.
When digital TV comes on-stream later this year, agencies will have even more distribution options at their disposal.
If the database is to continue to play an important role in newspaper revenue, then creative and effective methods of its use must be employed. Tying in a newspaper brand with a mailing can offer greater response rates and increase revenue. But papers must avoid conflict with advertisers and making any tie-ups that could damage their brand.