Seems, lately, every time I turn around there’s someone excited about the role data could play in newspapers future. This brings a smile to my face, partly because it’s about time and partly from over two decades of experience with the combination of newspapers and data.
Twenty years ago this October, I was hired by The Arizona Republic to launch their database marketing efforts. It was quite a ride, surrounded by mostly wonderful people and unlimited resources. (My boss once told me, “ I gave you an unlimited budget and you exceeded it.”) We ultimately had not only the most robust database I’ve seen to this day, we had very powerful tools, a team of amazing analysts, a half dozen specially trained sales reps and, just to top things off, we bought an established mail house. (Keep in mind this was 20 years ago.) Within a year, we were generating several million in revenue.
From there, I went to Astech-Intermedia, working with dozens of the largest papers in the country to monetize data. On to The Dallas Morning News to run a subsidiary that pioneered the household level data-driven production of inserts in mailed products. In one production run of The Arizona Republic’s TMC program, we had 355 different preprint combinations in one Zip code. Over 9,000 combinations in the production run that week. Then I went out on my own and implemented these processes at more than 20 newspapers.
Last year, my son and I opened a digital agency, working with and learning from a tight network of over 100 such agencies from around the world. Digital has profoundly changed the intersection of data and marketing and will be the principal driver going forward.
I’m not telling you this to try to impress you in any way. Just to create a context for what I’m going to share. I’ve been personally involved with the generation of well over $100 million in revenue in this space and have seen papers spend tens of millions. I wish I could say the papers spending the money and those bringing it in overlapped nicely. There have been way too many instances of newspapers spending a lot of money with little to show for it. I’m going to share the top things I’ve seen that contributed to either success or failure.
Begin with the end in mind. A huge amount of the money I saw wasted was the result of lemmings getting into the data business because so many people were doing it and it purported to give you access to the huge pile of money being spent on direct mail at the time. (Now this would apply to digital.)
Turned out that producing solo direct mail was a commodity business with very small margins. Customers were not as impressed as we’d hoped that we had huge amounts of data and superior analytical capabilities. Similar commercial data was easily available for pennies. Newspapers mostly wound up with one of two types of projects: Very small ones that other providers wouldn’t take or huge jobs at virtually zero margin. The lesson: Know very clearly how you intend to monetize this investment.
While a project like this is steeped in data and technology, it is NOT an IT project. Just like the internet, this has to be a marketing driven effort, supported, but not run, by IT. It has to be about the why I mentioned in the first bullet, and only then about the how and the what.
If you’re not using data to help yourselves and advertisers now, without the big investment, the likelihood of success is nearly zero. Do you currently help small businesses build an email list of their customers and prospects? This is by far the most valuable data they could hope to have and few know how to make it happen. If your reaction to this is, “how would I make money from that?” then you are still a mass marketer. This “mass marketing mindset” has crippled us with digital and it will make it nearly impossible to succeed with data initiatives. One clue that you’re a mass marketer: You’re still using the phrase “email blast.”
Using commercially available data to send outbound marketing messages is not a thriving or growing business. It’s far from dead, but spending a bunch of money to get into it is not where I’d invest. Being a commodity business, it also has razor-thin margins.
Here’s a checklist of things you can and should be doing with data you can generate to begin to build a direct marketing culture. Then, and only then, you can expand that into commercially available efforts that complement these efforts.
In closing, I’m more excited than ever about newspapers ability to leverage data to create value and revenue. It’s the mass marketing mindset and culture that continues to scare the heck out of me.
Newspaper direct marketing strategist Jim Hart is a partner in Phoenix-based DM for Newspapers (dmfornewspapers.com) and a partner at Integrated Advertising Solutions. He can be reached at email@example.com.