12 Critical Marketing Considerations
for Newsletter Launches
A Special Report by Craig Huey
A great newsletter concept isn’t always the most marketable product. So many times excitement about the idea is smashed by the marketing reality.
Here are some hints for newsletter launches that can help a new idea succeed:
1. First, is anyone else doing it? If no one else is, it’s a much higher risk than if others are. If other publishers have been successful, then you know there’s a market demand for that particular newsletter product. If not, there might not be a market demand for the product. Otherwise, someone else would have probably discovered it.
The exception, of course, would be a gold mine that has been overlooked, or a new emerging market that has not yet been approached. These kinds of opportunities are there, but be careful and be aware that they are a higher risk than newsletters in an established market.
2. Direct mail is the primary way to launch a newsletter, so you need to determine what mailing lists are available. The quality of the mailing list is at least 40% of the success or failure of a campaign.
What mailing lists exist for your prospects? Can you obtain names of information buyers, such as prospects who buy other newsletters? Are there available lists of subscribers to competitive newsletters similar to what you’re starting? Expensive book buyers? The more prospects that are information buyers, the less risky the new launch is.
If it’s a small business-to-business or professional publication, can the audience be identified even if it’s a compiled list? If not, how difficult is it to compile the list? (Note: A “direct response” list is comprised of individuals who have responded through a direct response ad or a direct mail piece. A “compiled” list is taken from a directory, public listing or controlled circulation magazine.)
3. Avoid testing too small. Make sure that the direct mail test is adequate and reliable. For small-circulation publications, this is much more difficult because the universe is small. You should be using the entire prospect file if it’s under 15,000. For larger universes (such as 100,000 or more), a larger test is required. I recommend a test of 25,000 to a maximum of 60,000, from 5 to 10 different lists.
The offer can increase or depress response.
Remember, your potential subscriber must feel he’s getting a better deal than you are.
Although there’s controversy about what a reliable test quantity is, a test mailing of less than 5,000 names concerns me. The potential for an unreliable reading is just too great.
4. Your launch campaign must have an offer. And don’t confuse this with the newsletter product you are offering. Your offer is an incentive you are providing to help close the sale.
Does the prospect feel that you are offering him a generous deal? Is it a limited-time offer? Is payment up front? Does he get premiums?
The offer can increase or depress response. A big mistake is to not create a generous enough offer. Remember, your potential subscriber must feel he’s getting a better deal than you are.
And don’t forget to create the strongest possible guarantee. It tells the prospect what you really think about your newsletter. And yes, it does affect your return.
In new launches, it’s important to take a look at what the competition’s doing.
5. Pricing for most paid circulation newsletters varies from $19 to over $10,000. So where do you set your price? In new launches, it’s important to take a look at what the competition’s doing. I always recommend as low a price as possible for a new launch, unless there’s a strong reason not to do so. Why let price alone kill a new launch by pricing yourself too high?
If there’s no competition in the field, the potential subscriber base needs to be examined. How many potential subscribers are there? If it is a small number, use a high price. If it is a large number, use a lower price. What price do you need to make good profits if you convert only 5%–10% of your universe?
Remember, you can test your true market price with direct mail. Here is how you do it. Simply create a test group for each price point you want to test. (Make sure your test groups are large enough to get an accurate reading—I usually recommend testing no less than 5,000 names per group.) The response you get will tell you what your market is willing to pay. If you feel can’t test price as part of your launch, start with a low price and test it later.
6. Consider testing before you start the newsletter. It is possible to create a mailing package before the newsletter is even done. In fact, some of our best new launches have been dry runs. We mail, see what the results are, then we decide to either kill the project or move on. In the past 20 years, I’ve been involved in more than 42 dry runs. 4 have been killed; the rest have been successful.
There is a controversy as to whether or not doing dry runs is ethical. If you decide to kill the newsletter, are you harming the public’s feelings toward newsletters? Possibly. On the other hand, it’s defensible if you’re honest in the return of the money. Naturally, as a publisher, you want to avoid the expense of the actual creation of the newsletter itself if it’s not a viable concept.
Incidentally, with new launches, one of the most exciting things is to be creative in the development of the mailing package without being restricted by an existing structure. When a newsletter hasn’t been written yet, it enables me to help mold that newsletter to make it the most marketable.
7. Is your market overcrowded? Where on the “life cycle” is your publication? Each industry’s life cycle is different. Some are in the beginning stage, some are in a mature market. If you are nearing the middle or end of the product cycle, the market is crowded. Profit margins are slipping, response rates are becoming flat or depressed, and price competition is becoming intense.
Should you try a launch in this type of market? Yes. If you have a good idea, you can individually position yourself from the competition.
The investment newsletter market is a mature market. But despite this, I’m helping launch new products successfully every year. It’s more challenging and riskier, but it can be very profitable.
8. Are there alternative marketing methods available, such as email, radio, pay-per-click, cable TV and space in magazines? How about third-party marketing? These other sources probably won’t replace direct mail, but they can augment your campaign and help you grow.
I’ve used every media to market newsletters. Direct mail is consistently the most cost effective. The cost per sale is lower and the speed of profitable growth is greater.
Today it is imperative to also create a microwebsite or direct marketing website that is compatible with your direct mail. Sending a prospect to a corporate website or nonmarketing site will decrease response to your campaign, possibly killing the launch.
In addition to using direct response copy and graphics on your special direct marketing site, be sure to use search engine optimization (SEO) techniques to help ensure prospects find your site.
9. Should you have a large circulation with a lower price, or a small circulation with a higher price? This question goes beyond simple price testing. It involves the very goals and objectives of your newsletter.
Do you, or can you, offer additional goods and services to your subscribers? For example, can you sell reports, books, videos, tapes, seminars and many other products and services?
If you have the desire and the capability, then good database marketing says, “get the subscriber in at a low cost.” Then sell him more products and services. Start expensive spin-off newsletters. Grow and multiply your profits through database marketing.
If you are not interested in upselling your subscribers, then charge a higher price up front. You may ultimately get a lower circulation, but you’ll most likely have a more interested and qualified audience.
10. Few publishers, and even fewer editors, can write direct mail sales copy. Ideally, let a professional do it. At a minimum, let a professional give you a critique.
The successful publisher uses professionals because he or she is often too close to the product, unfamiliar with all the proper direct response advertising techniques and unfamiliar with the unique direct response copy approaches.
Twenty-five years ago, direct mail and your prospect were less sophisticated. There was less competition and “mail clutter.”
Today, a wrong word, an incorrect color, failure to turn features into benefits, an ill-conceived format or violation of hundreds of tested techniques and strategies can cripple, or even kill, a campaign.
The newsletter field is full of great newsletters that have failed because of poor marketing.
Direct mail works—don’t believe otherwise. It should not only generate new subscribers for you, but the return should pay all your production costs and, hopefully, you should enjoy direct mail profits.
11. One of the tragedies of a new launch is undercapitalization. Depending on the universe of the newsletter, the initial marketing costs could range from $40,000–$70,000. A new launch can be done for less, but its chances of success are proportionally smaller.
On a new launch, what if your return on investment is only 70% or 80% of breakeven? Do you fold the idea, or readjust your direct marketing approach to make your return 150% or 200% over your cost?
12. Finally, those on a shoestring budget may need to make contingency plans. Sources of additional capital could be developed from the new subscribers, a magazine publisher in the field, an existing newsletter publisher, venture capital, friends or investors.
New publishers are often surprised to learn that the largest publishers started and obtained their marketing funds from these sources.
In conclusion, starting a newsletter should be carefully planned out. Offer to pay a consultant for advice. As with all products, you get what you pay for.