The economic downturn got you down? Newsletter experts share their experience and advice.

The current economic downturn, or "slump," which shows little sign of letting up in the near future, is giving newsletter and specialized information publishers increasing challenges regarding their promotion, renewal, and launch efforts.

Patricia Wysocki, executive director of the Newsletter & Electronic Publishers Association, says that many members are reporting poor performance for the past two quarters and that many are experiencing "list fatigue." (Some fields, however, are doing quite well--notably higher education and health care.)

NL/NL recently interviewed a number of leading publishers and consultants in the field, asking them what they're doing in response, what they've done in the past, and what advice they may pass along. Some of them preferred anonymity.

But not Marlene Jensen, head of the Newsletter Group, founding editor-publisher of Ancillary Profits, and a contibuting editor of NL/NL. Asked what advice she could offer publishers who might be experiencing declining renewal and DM response rates, she replied, "Just that this is the time for maximum creativity. For b-to-b newsletters, you should test shorter term subscriptions, so subscribers can still buy your newsletter without hitting new spending ceilings.

"It's also a good time to test building subscriptions with other products (conferences, reports, etc.). Even though this adds up to a larger number for the buyer, the 'package' deal can look like substantial savings for the company.

"For example, Subscription to XXX @ $395 (regular price $495), Directory YYY @ $295 (regular price $395), and a booth at ZZZ conference @ $750 (regular price $995). "This "Industry Leader Special" saves your company $445--while delivering you the maximum value in generating new business...'

"It's also time," Jensen continued, "to promote your free e-mail newsletter--at least to non-subscribers to your newsletter. Many of them will be cutting back on the other sources of industry info they buy and may be more open to viewing more free info sources. If you can take advantage of that need, and get them impressed with your email newsletter, you'll have a better chance of switching them to you when their budgets improve. It's a two-step conversion from a competitor instead of a one-step."

Asked if she thought publishers should refer to (and capitalize on) the current economic state in their promotion materials, Jensen warned, "This is risky because 1) the economic climate could turn, and 2) even if it's a big winner, how long will it continue to work? In other words, will your subscription economics allow the creative costs for a package that works for maybe only one year.

"However," Jensen added, "many of the concerns in a downturn are 'normal' concerns--just intensified. I wrote the following envelope copy for Ancillary Profits in a downturn, when magazines were facing cutbacks, an inability to raise prices, and an inability to sell ad pages. But because it spoke to the underlying profits needs, it continued to pull very well for four years--even in the midst of a big upturn: '27 Ways to Boost Magazine Profits--Without cutbacks, price increases, or selling another ad page!'"

Another publisher, asked if he was referring to the state of the economy in his promotions, answered, "We are using the 'economic downturn' language (and that's the term I'm using internally) in some of our promotional efforts, but doing so very carefully. We don't want to be overly negative. But it can be a theme if treated right."

DM response and renewal rates

Here are responses to questions asked of other publishers:

Are you experiencing declining renewals or declining response rates in direct mail campaigns?

* "Our renewal rates seem to be holding up pretty well. I can speculate as to why that is. I'd guess that if the publication is already in the budget that you have a far better chance of getting a subscription payment than if it isn't. Of course, that would mean it's tougher to get new subscriptions. Which, in our case, it is. We saw a definite drop in response rates to our new subscriber acquisition mailings at the end of the first quarter and the beginning of the second quarter

"The problem is that we've been seeing a decline in direct mail for a couple of years. People are not responding like they once did; people mail less; lists available for rental shrink, which means people mail even less. I've seen some of my competitors' files drop by half in the last couple of years. Now add a weak economy to the mix and it really hurts.

"Things we're affected by, outside of newsletters, that would indicate that companies are watching their money include a recent sluggishness in our conferences and slower payments on our consulting business."

* "Response rates have been declining for several years--first DM, then FFTs, so everyone tries to fiddle with their formulas to find variations that work.

"As for renewals, it varies by publication, with, for us, the more mature products seeing the declines, and newsletters in hot areas growing (both renewals and subs). Our business for the first six months was flat against last year, though obviously costs continued to rise--which hurts the bottom line."

Are you changing the way you do business regarding, say, hiring and firing, promotion campaigns, and spending in general?

* "We have changed the way we operate. We're taking a harder look at marginal products and making some decisions that we wouldn't have necessarily made in good times. We've backed off mail quantities, looking for quality instead of quantity.

"Instead of focusing on growth we're focusing on profitability. We have yet to add any staff after a recent acquisition. The acquisition gave us the opportunity to cut some unprofitable products and reassign the employees. We've let some positions go through attrition."

* "Re: hiring and firing--we're pretty lean to begin with. I suspect some staff who might have started looking for something new after a year or two are sticking around longer (that's a definite plus for us). We're being more cautious about biz travel, which has also always been pretty limited. But overall, we're trying to be more aggressive.

"We're developing more new products at one time than we have in the past (mostly ancillanes, though we are looking at both launches and several possible acquisitions on the NL side as well)--new research studies, conferences (not the best time to launch, but we're doing so anyway), and online-specific services.

"By the latter I mean database products that are specifically valuable because the internet allows for continuous updating. I am NOT talking about electronic delivery of our publications, for which there has been precious little demand.

"We are also mailing more (USPS, fax, and e-mail), trying to be sure every piece has something to stand out from the crowd."

Focus on retention

* "We're focusing right now on retention like never before. How can we keep the customers we already have? For us the answer is product quality, making sure we deliver on what we promise. Providing subscribers with the resources they need to be successful. It varies by publication, but it could be free e-zine updates, discounts on other products they need to do their jobs, special reports, web links, etc.

"We're trying to ensure that our newsletters are so valuable that our subscribers are unwilling to give them up. It sounds simple, but I think it's easy to get distracted from that when times are good. We may take our customers for granted. We certainly have been more focused on bringing in new subscribers in the past than we have in keeping them. Everyone in the industry knows that the profits are in renewals; yet, when you go to conferences and talk to people everyone wants to hear about marketing.

What's the good news?

* "I think there is some. If you can survive you should see some shake-out in competition. I know that we have much more competition on the web. As newsletter companies have grown they've added titles and suddenly many markets are quite crowded. Remember the day when many publishers had the only title in an industry? I'm hoping we can hold out longer than some of our competitors."

* "It's a great time to buy or pick up unfulfilled liability from some competitors who are closing their doors. Multiples are dropping. Case in point: Eco Press. We got a good deal on what we bought from them--far better than we would have gotten a year or two ago. In fact, I think it's fair to say that we wouldn't have made the acquisition a couple of years ago. The price would have been too high."

* "People will not be able to afford to give away the vast amounts of free online content that they have in the past. We can tell ourselves that we're recycling content, etc. and it's free, but there is always a cost. So if people can't afford to give away as much online content, can we begin to get people to pay for it? I hope so. We haven't had much luck to date."

* "We're looking for ways to replace direct mail with an increased sense of urgency. We're looking harder at site licenses, bulk sales and the like. We need to find something more than direct mail and do it fast! If we were paying lip service to these things two years ago, we aren't now. What's the saying? Desperation breeds innovation."

Emphasize renewals and look for emerging areas

Frank Joseph, head of Key Communications Group Inc. and a newsletter consultant, offered these observations:

"Successful newsletter publishers these days often are the ones who serve successful businesses. For the rest of us, it's tough getting blood from a turnip, but there are ways:

* "Emphasize renewals. Send your best customers love gifts and other extras [see following article] to make them appreciate you more. And hit those expire lists hard.

* "Pull in your horns. You can't stop taking risks, but choose your risks very carefully.

* "Look for emerging areas. Don't forget that ours is a business built on change, and change occurs exponentially in 21st-century America. New businesses, industries and endeavors are springing up daily, even in this time of cutbacks.

"That's where I'd spend my research budget--trying to spot one of these new areas, and identify the new information audience for it."

"Stay lean and mean--but nicely"

We asked a publisher whose newsletters focus on market trends if he could offer any advice for his fellow publishers.

"Stay lean and mean--but nicely. Seriously, everyone has to decide, based on their resources, which projects and promotions have the best prospects. In better times, we all get lulled into thinking anything we put in the mail will be better than nothing put in the mail. But sometimes nothing has its advantages (especially if you risk alienating your best customers by sending them things you should know they don't want).

"I am on a tear these days about watching what we mail to whom. We have a limited number of customers, most of whom are very loyal and ten percent of whom we could, in the past, count on to sample anything new. Today, I don't know what that percentage will be."

Are you changing the way you do business?

One publisher answered, "Yes, I'm actually working harder. No kidding. And I'm trying to be as creative as I can with marketing.

I feel burned out about e-marketing and I'm not planning to do much of it. (I bet I'm the only person who says this!) Here's why: Two years ago I did some e-mail marketing and it worked like gangbusters; then last year I did virtually the identical thing and it bombed big-time. I figured it took 12 months for my world to become utterly calloused and spam-resistant to e-mail marketing. If I do it again, I'm going to be real cautious about it.

However, the fax (to existing customers) always seems to work and I may do more of that.