Try fishing in a controlled-circ stream - Circulation

A controlled-circulation segment can boost your rate base, help advertisers and keep your promotion costs down.

As the costs of acquiring and maintaining paid subscribers continue to escalate, publishers of consumer magazines are turning to nonpaid controlled-circulation segments as a way to build circulation. Special-interest magazines, in particular, can often successfully position a controlled-circulation segment as a benefit to advertisers, while enjoying the reduced circulation promotion costs associated with this source.

If you can identify a distinct group of readers who are not regularly promoted for paid subscriptions, but who are in some way affiliated with your paid reader base (and are therefore acceptable as a target for your current advertisers), you are in an ideal position to develop a controlled segment.

One of the clearest examples of the use of this strategy is Parenting, which sends 70,000 copies every issue to a controlled base of pediatricians, obstetricians and family practitioners. These copies, which are placed in doctors' waiting rooms, are read by pregnant women and new parents--key targets of many of the magazines' advertisers.

Eating Well sends a controlled stream of approximately 30,000 copies to physicians, dentists and dietitians. Bicycling sends nearly 8,000 copies every month on a controlled basis to owners and managers of bicycle shops. Southern Accents mails 18,000 copies per issue to members of the American Society of Interior Designers. And--the winner of the most precise use of the controlled-supplement strategy--Sport Fishing, which sends 9,000 copies to owners of power boats 40 to 70 feet in length.

The key to the successful use of the controlled-supplement strategy is advertiser acceptance. Because controlled copies generate no subscription income, you should not use controlled circulation unless advertisers will buy the idea of those copies being included in your rate base. Most consumer advertisers are very wary of controlled circulation, however. Many consider "nonpaid" copies to be "unread" copies, and therefore of no value to them. Advertiser wariness, by the way, will usually be mirrored by your ad sales staff--so don't expect to be a hero when you bring up the subject of controlled in your next staff meeting.

It will be a lot easier to convince your sales staff that controlled circulation is a good idea if one or more of your direct competitors use it. But if that is not the case, you can build support for controlled through research. Look at the media-buying habits of your key advertisers and their agencies. If you can identify consumer magazines that have controlled segments in which your advertisers have already bought space, it will bolster your sales staff's confidence in the idea, and will provide them with sales ammunition to respond to potential advertiser objections.

A final step before you consider a controlled segment is to run the numbers to see if the increased advertising revenue attributable to the rate base impact will pay for the marginal service costs of these copies.

There are clear advantages to developing a controlled segment, depending on your particular needs. There are disadvantages as well, which I will address. On the positive side, many consumer magazines use controlled streams as part of a strategy to build public-place circulation--e.g., distribution to waiting rooms, hotels, lobbies and other places where readers congregate. Copies distributed to public places tend to have many more readers per copy than do copies received at the home or the office, or those purchased at the newsstand.

Controlled streams to public places are also an excellent way to build total readership figures for magazines measured by Simmons or MRI. What's more, public-place subscriptions have the added benefit of generating much higher response rates from insert cards--two to three times the single-copy response rate would not be unusual. In fact, most circulation directors place additional insert cards in controlled copies of their magazines or use insert-card wrappers to take advantage of the high "velocity" of these particular copies.

ABC makes it easier with a rule change

For years, an obstacle to the use of controlled circulation was that the Audit Bureau of Circulations would not audit it or let publishers report it within the traditional Pink Sheet framework. A policy shift by ABC in 1990 changed the ground rules. Now, Pink Sheet consumer publishers can retain their Pink Sheet status by filing a Supplemental Data Report for the controlled portion of their distribution. The rules for what counts as qualified controlled are clearly laid out in the ABC rule book. The important features to know are these:

1. Publishers who claim a rate base must make separate claims for the paid and controlled portions of the circulation.

2. Qualified recipients must be tightly defined by specific class (for example, occupation, industry, geography).

3. The source of the controlled circulation (e.g., lists, direct request, telemarketing) must be specified, and the age of the source document (one, two or three years) must be indicated.

4. Direct-request circulation must be requalified at least once every three years.

5. There are minimum issue service requirements, depending on the magazine's frequency. Monthly magazines, for instance, must serve at least six consecutive issues to controlled subscribers.

The economics of controlled circulation almost always compare favorably with the costs of acquiring paid circulation through marginal direct-mail lists or other high-cost sources. Response rates to requester mailings are much higher than responses to paid mailings; package CPMs are generally lower for controlled versus paid efforts; and many publishers circumvent third-class mail altogether by using wrappers attached to free copies to generate direct requests. Of course, controlled copies themselves never generate renewal income, so use source-evaluation techniques to rank the long-term profitability of controlled before going forward with this source.

What about the downside? Besides the obvious problem of winning the support of advertisers and your sales staff, you will find that waiting-room circulation--a frequently used channel of controlled circulation for paid magazines--is becoming much more competitive. Doctors' offices are under media assault, and not just from magazines vying for limited display space. Cable TV, bulletin board programs and take-ones all compete for the precious waiting time of readers.

How to do it

Most publishers use two sources for developing qualified controlled subscriptions: direct-request promotions, and lists or directories. Many advertisers tend to judge the quality of the controlled circulation based on the proportion that is direct request, so you will usually start with this source when building your controlled file. The least expensive way to obtain requests is to use the wrappers attached to copies of the magazine that you send free to qualified recipients. This technique is almost identical to the renewal wrapper effort you probably already know. Consult the ABC rules for the specific format differences for the order form, since the requirements are quite strict.

Telemarketing is another method used to generate direct requests. Despite telemarketing's high upfront costs, you can qualify more than one name per call at a particular address--for example, a group medical or legal practice.

Lists and recognized directories are means also acceptable to ABC, provided they stand up to the bureau's audit standards. (For physicians, for example, try to find a list certified by the American Medical Association.)

Once you have obtained a legitimate list, you can begin sending magazines to individual recipients--and building your rate base by counting them as qualified controlled subscriptions.

Robert Cohen is president of New York City-based Robert Cohen Associates, Inc., specialists in start-ups and creating strategies and business plans for existing titles.

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