Information-marketing manager Cherie A. Smith sits in front of a personal computer loaded with Access, an over-the-counter database program. She’s looking for nonreaders who resemble Sunday readers of the Columbus (Ohio) Dispatch for a circulation promotion. She calls some of this work market segmentation.
From her desk in California, Kim Leserman, managing partner of the Gallup Organization in Los Angeles, directs a team that conducts ongoing reader surveys for The Washington Post. She analyzes the results and uses findings to measure the effectiveness of complex circulation campaigns that include changes in content, promotion and special offers. Leserman calls part of her work market segmentation.
Somewhere
in the middle in terms of sophistication and cost sits Catherine T. Fleming,
circulation sales and marketing director at the Herald & Review in Decatur,
Ill. This paper is among the many Lee Enterprises Inc. properties developing
Falcon, a homegrown database. Fleming starts with intimate knowledge of Herald
& Review readers from surveys, then sorts data about readers and nonreaders
in ways that have begun to help editors shape content and circulation folks
promote subscription and single-copy sales. She calls part of her work market
segmentation.
All three researchers are feeling their way through this territory, admitting that most publishers still find themselves in a discovery phase when it comes to realizing the promise of segmentation—grouping people according to key characteristics and behaviors (see sidebar).
While strategic planners in countless other industries have relied on this tool since the 1970s, publishers continue to debate “mass vs. class” strategies and cautiously weigh claims that segmentation helps them understand audiences; improve customer service; create, deliver and measure the effectiveness of marketing messages; and aid long-term strategic planning.
Advertising reps actively promote segmentation as a way to help advertisers understand consumers. But when applied on the editorial and circulation sides, publishers worry that readership studies, including market segmentation, don’t yield enough specifics to act on, Leserman explains. Even when research does provide a clear course, publishers say, plans often fail for many reasons: Surveys aren’t large or frequent enough; business systems don’t provide useful subscriber files for research; marketing materials “stink;” results remain unmeasured; managers don’t support consistent retention plans and customer service, and so forth.
Even the most carefully designed experiments don’t always yield expected results, warns Shaun O’L. Higgins. The Spokesman Review’s savvy director of marketing and sales in Spokane has been sorting readers since 1989. He divides his audience in terms of their desirability as subscribers and how much money he’s willing to pay to sign them up.
For one group of seven highly desirable households, he was willing to pay $150 each; nationally, newspaper marketers pay an average $30 for new starts. The Spokesman Review’s carefully planned campaign began by sending each household a Starbucks gift basket, followed by valuable coupons and attractive promotions. Eventually, one couple signed up. Higgins called the others to find out why the campaign failed and discovered that the Review already had these people as readers through office subscriptions.
Still, Higgins continues to use diverse segmentation tools throughout his work. He and others emphasize that rewards require long-term strategy and investment.
Other publishers have recently begun that strategizing and investing, yielding incremental rewards. While several publishers report modest success controlling costs and identifying like-minded readers, few show strong, measurable circulation growth based on comprehensive segmentation strategies. But some clearly see the promise.
FIRST,
THE NUMBERS
Relatively
few newspapers have conducted large enough readership studies to yield the data
necessary to conduct meaningful segmentation analyses, says Leserman. Even fewer
share their research for fear of losing competitive advantage. The Arizona Republic
in Phoenix, Chicago Tribune, Houston Chronicle, Los Angeles Times, The New York
Times, The Seattle Times, USA Today in Arlington, Va., and The Washington Post
number among the known or rumored leaders.
Sharon P. Warden, director of marketing research, vividly describes The Washington Post’s first round of segmentation studies in the ’90s. Eight segments based on degrees of loyalty to the paper were identified and subdivided into categories with colorful titles. “Compacts and Metaphysics,” for example, identified those sharing characteristics with professors who drove small cars. These formed the basis for circulation campaigns that “seemed to work pretty well for a number of years.” Now she’s developing a segmentation plan based on Gallup research.
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Segmentation is a long-term process, she warns. “It takes commitment to see results. Our 1990 segmentation [effort] was useful for finding out who the readers were and keeping an eye on them and how [loyalty] changed over time.”
Every month, researchers asked 500 Washington, D.C., area adults some questions from the original study. Over time, enough information was collected to verify the original findings and determine whether marketing campaigns directed at particular segments were effective.
But researchers never could show movement from one segment to another, such as potential readers becoming occasional readers, Warden points out. “Such change would have to be dramatic because [loyalty] segments are supposed to be relatively stable.”
Warden says that the marketing director at the time used the data to design a plan “that seems to have been successful” in helping the paper maintain a stable circulation. Warden also commissioned a study on section readership that she appended to demographic data from Scarborough Research. The details “brought readers to life” in ways that were useful for editors planning content changes. The study differentiated between readers of the book-review section and of the Style section, for instance.
At the Houston Chronicle, Joycelyn Marek, vice president of marketing, supervises sophisticated circulation campaigns based on years of research. Of these, she is seeing results from an “apartment-amenity program” sponsored by the paper and an apartment-management group to provide the newspaper to tenants who pay for it along with their rent. A new-mover initiative is entering the sampling stage, and a direct-marketing program currently mines nonsubscriber lists for people whose attributes match those of Hispanic subscribers.
THINKING
BIG
Ideally,
solid segmentation research can cross all departmental lines, improving the
product, service and bottom line on many levels.
Christine M. Chin, strategic-development director at the Reno Gazette-Journal, says she received organizationwide support for a 1999 project. It began with researchers coding households in the entire market and respondents to recent readership studies by household-affluence levels. They labeled them with names such as “Platinum” for homes valued at more than $250,000 and “Copper” for homes costing less than $125,000. Through local studies, managers learned about readers’ interests.
“We now understand the effect of families, for instance,” says Chin. “We know that 54 percent of the 25-to-49 year-olds have children, most under age 11. We have a good sense of topics of interest to these folks and therefore can tailor our messages. We integrated and coordinated our entire newspaper strategy around our segmentation plan.” This involved introducing a new product improvement each quarter, along with heavy multimedia promotion and repeated special offers to residents of expensive houses and apartments.
More than 28 percent of area residents ages 25-to-49 live in high-end homes; before the campaign, penetration in that category was 44.3 percent. “Our goal was to increase penetration to 44.9 percent, and we ended the year with 46.7 percent penetration,” Chin says. The papers’ total circulation increased from 67,187 to 67,710 in one year, according to the September 2000 Audit Bureau of Circulations’ Fas-Fax.
Product improvement was significant. Neighboring Carson City and Douglas County was zoned for six days, and a Saturday People section and daily themed feature sections were added, with the last innovation introduced in June 2000.
“By going after groups, we were able to reach over half the market,” she says. “This year, we’re adding slivers to the mix by striving to reach 54 percent of the 25-to-34-year-old and 61 percent of the 35-to-49-year-old households—people we want reading us.”
Retention rates were above average, but “we have to work harder,” she says. “It’s easier to keep a customer than to get a new one. We’ve got retention programs and consumer service in place, but you still see some fall-off.”
Similarly, last month, the Daily Herald in Arlington Heights, Ill., launched a redesign and marketing campaign based on a 1999 readership study and segmentation analysis (see table). A key finding: “Young readers told us we needed to work on usefulness,” explains John L. Graham, manager of marketing and research services. Technologically savvy readers ages 25-to-44 became targets. To that end, editors are looking for ways to list Internet addresses in stories and have overhauled entertainment coverage.
The March redesigns of the Chicago Tribune and The Orange County (Calif.) Register reflect extensive interaction with readers and potential readers, including interviews and qualitative and quantitative research. In California, a Page One news index, front-page coupon, and pages devoted to Mexico, Central America and the Asian Pacific Rim number among the innovations. Tribune editors unveiled a new look and organization.
Some studies have prompted even stronger changes. Back in 1994-97, The Seattle Times did comprehensive marketwide research that helped the publisher decide to convert to an a.m. cycle. Strategic Research Manager Janet K. Farness says the staff later used segmentation to design and implement a successful campaign to retain the Times’ loyal readers during the switch.
“We were able to identify segments that would have trouble with the change,” she says. “Our goal was to pay attention to those segments through direct mail and events—to just love them into the morning.” The campaign included a series of discussions at branches of a regional coffee shop featuring visits by popular columnists and writers.
Farness describes segmentation as a work-in-progress at the Times, with many vendors providing services. “In circulation acquisition, we’re using segmentation to experiment with direct mail, but we haven’t found the formula yet,” she says. “We are also putting in more sophisticated technology to help us telemarket with custom messages. It’s one thing to develop a tool like segmentation; it’s another to have the technology, resources and organization to understand our readers. We are in an analytical phase. But we have used segmentation to address an overwhelming business challenge—retaining loyal readers.”
Speaking for her peers, Farness says, “There has been some resistance in our organization to believe in segmentation. People aren’t going to get on the segmentation train and say, ‘This is the way we market.’ People have a gut feeling about who the audience is. But the process of proving [the facts] makes sense. It’s a matter of organizational communication.”
DRIVING
EDITORIAL INNOVATION
In 2000, Mary P.
Stier, Gannett Co.’s publisher of The Des Moines Register, led a task force
that studied ways to attract 25-to-34-years-old readers . “Many of the
Gen-Xers’ content needs were like those of older readers, but they wanted
more lively presentation and attitude. So we created prototypes: one that incorporated
attitude and presentation in a traditional paper, and one for an alternative
paper.” Editors at the Rockford (Ill.) Register Star brought some of these
innovations into their features section, and editors at the Lansing (Mich.)
State Journal adopted elements in an interactive, fun-inspiring classified section
with attitude (see related story). Stier
says early research suggests that young people respond to these classified ads.
Meanwhile, Gannett executives weigh the feasibility of starting alternative
weeklies to capture this audience.
In recent years, David Stoeffler, editor of The Journal Star in Lincoln, Neb., used readership data in combination with demographics to change newsroom beats and story emphasis. As examples, he carved out time for a reporter to cover the “home-and-garden” beat and increased the proportion of consumer information in the paper to interest loyal readers among the “Home Sweet Home” set.
At the Connecticut Post in Bridgeport, editors made similar changes following readership studies conducted two years ago. To spur interest among women and younger readers, they developed a Thursday home section and a more complete Friday entertainment package.
“It used to be that Friday was our largest single-copy day. Thursday became the largest single-copy day, and Friday did not lose,” says Editor Rick Sayers.
He also credits new features including a Thursday pro-football supplement and more emphasis on recreational and high-school sports as contributing to circulation growth of 5 percent daily and stability on Sunday over eight years, according to ABC. The entertainment guide “hits the right market—younger readers,” while its Internet-like format and comics spur interest.
In Fort Myers, Fla., The News Press’ editors sought younger readers among families with children following studies suggesting that the newspaper was overlooking their needs. Lifestyle issues such as solutions to babysitting problems, workplace coverage, recreational sports, education and technology stories, and consumer tips were introduced. Focus groups tested the innovations. Every beat was changed in ways that “added value to the newspaper in evolutionary steps,” says former News Press Editor Terry R. Eberle, now editor of The Indianapolis Star.
After one year, research showed increased satisfaction among young readers, although later findings showed it going back down. Eberle suspects the later results were in part caused by coverage of conflicts between teachers and the board of education that aroused considerable community controversy.
DRIVING
MARKETING
Consultant
Ed Baron of Oakton, Va., concisely describes why more circulation executives
don’t buy into long-term market-segmentation plans: “Circulation managers
must almost always be geared to keeping volume numbers up. It’s hard to
be really focused on growing a particular segment. The temptation is to go off
strategy just to get the numbers. The pressure is so strong to make sure numbers
don’t fall that you wind up making any damn sale you want. Most circulation
initiatives are expensive. It’s natural that it will eventually take resources
away from core growth to take care of targeted growth.”
Harry C. Davis, vice president of circulation at the Austin American-Statesman, wants to offset this problem by housing database marketing in a department separate from other circulation-sales staff. He sits on a Cox Newspapers committee with managers from the Dayton (Ohio) Daily News who are planning a complex series of experiments to grow readership.
“We as an industry are results-oriented,” he argues, “and this is a long-term strategy. We must look at the future and learn to gain readers in ways that are different than in the past. Yet we don’t want to lose sight of current goals.”
Davis is excited about the prospects. “We just did our first sample of household data. For instance, we looked up one subscriber named Micah, a 26-year-old professional technician. He’s been a seven-day subscriber for five years. He is engaged to Brandi. The household makes $75,000 to $99,000. His car is valued at $42,000, and he uses credit cards. Recently, he purchased travel and cooking books. He likes sports and watches tennis. He runs, mountain bikes, plays tennis and golf.”
Using this information, Davis will search for lookalike customers likely to become loyal subscribers.
Like the American-Statesman, the Dayton Daily News is serving as a proving ground for IQube Select, database-marketing software developed by The Barry Group of Bethesda, Md. Integral to its operation: readership surveys of about 2,400 Dayton adults, the ability to update from subscriber files daily, and lots of secondary data. “When we broke out the segments, we came up with 15 clusters of people and now have a database that we will use to analyze any group,” explains Kathryn A. Kralovic, Daily News’ research director.
“We prefer to use local research that includes questions about reading habits to develop a segmentation system that works for the market and data-fusion techniques to tie it back to the household level,” says Barry Group Senior Vice President Miles E. Groves. “Most newspapers don’t have research of the quality that we can use. So we also use NAA’s national readership data and apply it to local markets. But if you have good-quality local studies to develop segmentation, it adds power. The research becomes more of an investment than an expense.”
At the San Francisco Chronicle, Evan Mecak, database-marketing manager in the circulation department, voices high praise for AsTech Intermedia of Denver’s telemarketing database that permits construction of lists based on the success of previous telemarketing in various geographic areas.
AsTech starts with subscriber and nonsubscriber files and provides software packages that help managers describe their markets household by household. These systems marry names and addresses with demographic data from other sources to reveal lists with denominators such as subscription tenure and frequency, reasons for stopping, best prospects, or likelihood of retention.
“It’s been wildly successful for us,” Mecak says of the telemarketing application. “New subscription sales were up 40 percent year-over-year in the last six months of 2000.” A full-time manager has been hired to help hike retention. To aid in that work, other AsTech software programs identify people most likely to drop their subscriptions so the paper can offer them incentives to keep subscribing.
After two years of collecting data, The Boston Globe is pursuing a similar route to direct its telemarketing by having the salesforce focus on ZIP codes where they have been successful. “It yields higher productivity, leading to lower cost. Retention is the next step,” says Jason N. Harris, former circulation-marketing manager.
In Decatur, Fleming’s 34,066-circulation morning paper regularly conducts 600-person readership studies. This permits her, first, to understand readers’ motives. She then uses Falcon software from Lee Enterprises in Davenport, Iowa, to download the subscriber lists and attach loyalty codes. Adding demographic profiles to those studies creates a clear outline of her market.
“If you want to look at attributes not based on loyalty, certain demographics account for a high percent of the subscriber base,” Fleming says. “Here, ‘Home Sweet Home,’ ‘Family Ties’ and ‘Settled in Country Home’ families show up in the profiled subscriber base. They represent a third of the total market area and also show a relatively high propensity to be subscribers.” Fleming also demonstrates equally strong mastery of the role of niche groups, such as “Urban Singles” and “Rustic Homesteaders,” in supporting the paper.
Nevertheless, she warns that such lifestyle segmentation schemes have limits. “Just because people live in a certain geographic area no longer means that they fit into a single group. Some residents find that offensive. You have to be careful in understanding that the classifications mean that a single household may have the propensity toward that behavior.” Falcon’s built-in retention program “allows us to systematically track and send reminders to customers,” she says. ”We have reduced sales costs by targeting and using this research to better track our cost per order.”
The
San Diego Union-Tribune and the Tribune-Review in Greensburg, Pa., are clients
of Innovative Media Solutions, a division of Newspaper Services of America in
Downers Grove, Ill. It provides SmartCirc!, a database that describes and lists
subscribers and single-copy buyers geographically and demographically by household,
loyalty, the rate they pay for the newspaper and other attributes so that circulation
directors can plan campaigns to attract lookalikes.
Database Marketing Manager Albert B. Frowiss juggles readership studies, subscriber files and purchased data to segment The San Diego Union-Tribune’s readers and nonreaders. Editors pore over his data until the reports grow dog-eared. Circulation managers now understand where discounts most drive sales, fashion different messages for various readers, and identify prime neighborhoods for sales. But Frowiss, speaking for Columbus’ Smith, Gallup’s Leserman, Decatur’s Fleming and managers at hundreds of newspapers who have seen the promise of segmentation, says, “We’re using different tools in different departments. The opportunity exists to clean up some of that and have a common view of the market, one that the whole organization can buy into.”
Ron Mulder, executive vice president of MORI Research in Minneapolis, warns that getting buy-in won’t be easy. “As long as publishers put out one single product, it’s difficult to talk about segmentation in the classic sense,” he says. “We’re living in a society with more diversity. But when we survey a market and find a group that’s not well-served, the solution is typically to produce an additional section for people whose number-one complaint is, ‘I don’t have time to read.’ We get all dressed up with nowhere to go. We conduct market-segmentation studies, but publishers don’t go far enough with them.”
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