When a Subscriber Pays $5 for a Year's Subscription to "Good Housekeeping" is that Good Value for the Advertiser or Hearst? - Steve Blacker

1. When a subscriber reacts to a give-away sub price offer how much real interest can that subscriber have in the editorial product? For example, when a subscriber to Woman's Day pays an additional $5 they get a year's subscription to Good Housekeeping. How profitable can this be for Hearst? And the Woman's Day sub offer is at a bargain price too. A two year sub to Woman's Day is $14.99 while one year is a paltry $7. That's less than a quarter an issue.

2. Obviously, Hearst's business model is totally ad sales driven. But aren't most artificial rate bases now heavily discounted to advertisers by anywhere from 50-80%? If a sub price offer costs little more than buying the issue twice at newsstand the level of commitment to reading each issue will drop off dramatically. Reader involvement regardless of MRI data is price driven. If the lowest sub price offer for The New Yorker is $69.99 a year, a potential subscriber has placed a much greater value on receiving The New Yorker then say Esquire Magazine. A one year subscription to Esquire goes for the bargain basement rate of $8. Sign a three year deal to receive Esquire and the total cost is $18 or about 60 cents to have an issue of Esquire mailed to you. Aside from showing product weakness, the 60 cents Esquire sub offer has to reflect a poor renewal rate as well.

3. With the exception of O the Oprah magazine most all of Hearst's sub offers seem to be bargain basement priced. O the Oprah magazine charges $19 for a one year subscription. By comparison, Bazaar's one year sub offer is $10 while its 3 year sub price is an incredibly low $20. Perhaps one reason for Vogue's brand superiority when it comes to attracting advertisers is the fact that Vogue's one year sub offer is virtually double Bazaars. Vogue's is $20 for a year's sub. The low priced discounting by Hearst further weakens their brands identity and value to the consumer by stating that for $5 more you can get 12 issues of Elle Magazine. If a consumer is paying 400% more for a subscription to Vogue versus Ellewhich magazine does that person value and rely upon more?

4. Conde Nast while offering favorable subscription pricing does not offer the extremely low, heavily discounted sub prices that Hearst does. Conde also smartly packages print and tablet subs together. Glamour offers an attractively priced print and tablet sub priced at $19 versus Cosmo's print only offer of $15 for a yearly subscription. GQ's print and tablet one year sub offer is $17. The most heavily discounted Conde Nast title seems to be Conde Nast Traveler with a 12 issues for $12 sub offer. Vanity Fair, which reeks of class and prestigious authors and advertisers charges just $15 for a one year sub and even less for two years ($25).

5. By not asking the consumer to pay enough for a subscription many magazine companies have made their brands nothing more than low priced commodities. If a subscriber feels they have nothing to lose by trying a $5 yearly sub offer; the same cannot be said for a potential advertiser. The advertiser has a great deal to lose as the likelihood of the subscriber to read or look at every issue diminishes a great deal when the cost is so heavily discounted.

6. Just as using premiums to sell subs made it more difficult to renew a subscription without offering another premium, these low ball sub offers not only cheapen a brand but make it virtually impossible to take sub offers to profitable levels again in the future. There is a solution to all this. Magazines need to have realistic rate bases that reflect true consumer demand. While an Esquiremagazine might only have 50 or 60% of its current rate base willing to pay $20 or $24 a year for a yearly subscription. These subscribers would be much more valuable to advertisers. Esquireor other give away magazines priced as loss leaders are unlikely to change their business model. It's a game of charades. Advertisers know that magazines that sell cut rate subs have artificial rate bases. Thus, they get magazines to heavily discount their ad rates. In the end magazines are the biggest losers. Their valued brands become more and more devalued with lower and yet lower sub price offers. And magazine advertising rate cards are nothing more than a starting to negotiate from.

Steve's most recent book You Can't Fall Off The Floor - The Insiders' Guide to Re-Inventing Yourself and Your Career chronicles his 50 year career working for over 25 different companies with 189 lessons learned and insider tips from Gayle King, Cathie Black, Chuck Townsend and 28 others; Blacker is still going strong today as a partner in Frankfurt & Blacker Solutions, LLC. His web site is blacker-reinventions.com and e-mail address is blackersolutions@aol.com

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