American Express is always testing, but tried and true voucher packages still pull best in their acquisition efforts.
Chief Marketer recently talked with Tom Mastrocola, director of subscription acquisition for American Express Publishing Corp., about trends in mail package design, postal concerns and list/database use.
Mastrocola is one of this year's Direct Marketing Club of New York Silver Apple Award winners. He is responsible for several properties, including Travel + Leisure and Food & Wine. Mastrocola previously worked for AOL Time Warner Inc. as vice president of marketing where he was responsible for memberships, subscriptions and registrations across the channels of all AOL Time Warner divisions.
Chief Marketer: What types of direct mail formats are working today?
Mastrocola: What continues to work well for us, much to our dismay, is the voucher package. We'd like to have something new, but we have success with that format. We'd like to differentiate ourselves. We do have plans to try double postcard just to see whether we can make it work for us.
For the most part we are similar to a lot of the other direct mail companies. We have the simple #10 envelope, with an order form, pricing information and [a description of the] value and benefits of subscribing.
We have experimented with tokens and stickers with limited success. Action devices will periodically work for us, depending on creative execution, but for the most part the simplest package seems best. We do offer incentives, [such as an] additional three issues if you give us your credit card for auto-renew. We get a pretty good percentage of people who take us up on that offer.
CM: What makes mail formats go in and out of fashion?
Mastrocola: It's a matter of familiarity. Things that used to work in the past fall out of favor. The old dinosaurs like myself have some value because we remember the ideas that used to work. People get used to [current fashions] and they become expected. You can come back to those ideas because people haven't seen them in a while. There are always new people coming into the marketplace. Maybe they haven't seen them before.
We always test. Every campaign has a number of tests just because we always have to be looking for new, different ideas. It's interesting to see what younger people come up with. We did an invitation package. My experience has been that invitation packages just don't work. We tested and it did pretty well. It's going to be one of our controls. Basically it's an outer envelope with "You are invited" on it. Inside, it talks about an offer.
We use different controls. [Chances are] names we have gotten we will have mailed multiple times. There should always be a new, different look consumers see, so the same people don’t see the same offer.
CM: What impact does the calendar have on what and how you mail?
Mastrocola: The traditional times to mail, especially for especially for magazines, are December/January, or September, for the start of the school year. We have found lately that the months don't have as much differentiation as they have in the past.
American Express sends a lot of mail. Tests tend to work when there is less mail. A lot of mail goes out in the fourth quarter. The fourth quarter hasn't done as well during the past few years.
CM: Subscription lists are drying up. How are you finding adequate sources of valid names?
Mastrocola: When there used to be a lot of sweeps lists available, they worked pretty well for a lot of companies. Now that that particular area has moved on, we're less involved in sweeps than we were. Back then, a lot of magazines lived off [subscription] agents. Now they have fallen by the wayside. We have been able to wean ourselves off the agent businesses, and we generate a lot of our own sources of subscribers. We have not had to go to lists that don't perform for us [to meet rate bases].
The number of new lists available isn't as robust as it used to be, but they are still out there. You just have to find them.
We have had limited success with [cooperative databases]. A couple of them have been somewhat marginal. It depends on demographics – mail-order buyer, high income and food and wine interest. Basically, the coop databases have people who have responded to direct marketing offers. They tend to have responders with longer periods of time [since their responses]. Six months, a year. The old factors we used to use, recency, frequency and monetary attributes, still exist. People who have responded most recently, spent the most money, tend to perform best for us. It's hard for a coop database, with all those different files, to get that same kind of impact that an individual list owner would have.
CM: What role do conversion and renewal likelihood play in choosing lists?
Mastrocola: It is probably one of the most important pieces of information [we use] to make sure that the business we are putting on the file is positive business. I don't know that we have any lists that provide us with positive value in year one. We do make an investment in our business. It is a long-term investment.
People who tend to buy our magazines have a consistent renewal pattern. It doesn't vary by list. Groups of names perform at a certain level and continue to perform.
CM: What role do list brokers play in your current operations?
Mastrocola: I find brokers to be still very valuable, and I have high expectations. My expectation is they are the ones who will have find new lists, segments. There aren't as many [industry] functions as there used to be, such as List Council [events] and others, with the tightening of the economy. The brokers are extremely valuable for having those connections, keeping in touch and providing us with insights.
CM: What trends or new initiatives are you exploring?
Mastrocola: We have been exploring building models for identifying responders and building models for people who tend to opt out. Our statistician has looked at our previous campaigns, identified people who have opted out, and has found they have particular characteristics. This is something new we are testing, and it looks like it might be pretty impactful. We've identified people who would be more inclined to opt out than others. They would get certain products and not others.
This keeps our email file a little more robust for us. Attrition rates tend to be a bit faster than for paper mail. People find it much easier to click and opt out.
CM: What would you look for in a circulation executive today?
Mastrocola: The training that goes into knowing how to go into a direct mail campaign, those basics are translatable. I think all the tenets of how to create and measure the effectiveness of a direct mail plan in terms of expenses, profitability, long-term value are all going to the same kinds of basic pieces of information that person would need to have and know and understand for any of the other sources.
I always value someone who feels comfortable around numbers and can analyze them. I would be looking for someone more creative and forward thinking but who still has that background. I'd look for someone who is more creative in terms of the Internet. Young DMers coming into the business are aware, and are on top of that information. They will help identify the ways to market better to get people to respond to our offers.
CM: What are your thoughts about the threats of U.S. Postal Service defaults?
Mastrocola: I've only been following the issue on the periphery. I'm not sure what we are going to be able to do about it. I've read articles [suggesting] stopping mail on Saturdays. If Saturday stops, it doesn’t concern me at all. But if there is a complete stop, a lot of businesses are going to default. I think politicians are going to discuss this, but not let that happen. [Consumers will] get their mail eventually. If there is no Saturday delivery…they have their patterns on how they look at mail, and will adjust accordingly.
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