How to Take Over Your Magazine’s Web Site

B. Baird

Want to build a personal empire and open the door to a promising future as a brilliant audience development star? Here’s how: show your management the impact that increased email newsletter registration rates can have on the bottom line. And then get them to give you the responsibility and authority to build the list.

In addition to showing them the money, what’s your other fundamental rationale? It’s that building, cultivating and harvesting value from a customer list is what circulators do best. Conversely, response-driven marketing is not a core skill for even the most talented editors, Web developers and ad salespeople.

The business case below shows a simple example of an email newsletter producing an incremental 14 percent in revenue for the entire business (at almost no expense, which is why it’s omitted). But more importantly, it provides you with the algorithm to make the same calculation for your website, as well as to quantify the dollar value of an incremental point in registration.

Once you demonstrate your ability to increase registration rates, the doors will open to analyze the site’s activity…and then drive traffic using the more pragmatic approaches that come more naturally to you than to others on your publishing team.

So let’s review how you’re going to demonstrate the value of an incremental point in registration. What you’ll see here is a series of tables. They’ll provide you with an algorithm to calculate the (simplified) value of a registered name based on three revenue sources:

(1) Traffic driven back to your Web site
(2) Newsletter ad revenue
(3) Solo email featuring your advertisers’ offers.

REVENUE SOURCE #1: Driving Traffic Back to Your Web Site

Often the most powerful bottom line impact from an email newsletter is on the eyeballs that you can drive back to your Web site. Figure 1 below shows how to quantify the bottom line impact.

First, to provide a baseline, let’s calculate the existing ad revenue from our Web site in the first column. This will provide a benchmark so that we can show the impact of our efforts within the context of the existing business revenue. To make our calculation easy in the example, let’s assume that we’re working with a Web site that has 100,000 unique monthly visitors, with five average visits per visitor and five average page views per visit.

The total monthly page views are the product of these three figures, producing 2.5 million views. If there are four ads per page at $20 CPM per individual ad, it gives us a baseline revenue of $200k monthly and $2.4mm annually from the site alone.

So this is a benchmark against which we can demonstrate a meaningful improvement in ad sales. (A $100,000 improvement, for example, while it sounds like a lot of money, is not enough to turn someone’s head within the context of this business size.)

Next, we’ll calculate the estimated incremental impact of a free opt-in email newsletter. Let’s assume that 10 percent of these unique monthly visitors can be opted into a free email newsletter over time. This means that 10,000 will be enrolled.

If the email newsletter can drive an average of five additional site visits with a similar number of page views per visit as shown in Figure 1, then using the same calculations means another quarter of a million page views from added return visits.

Those quarter of a million views will then produce $40k in additional monthly revenue and $240k in annual revenue.

There are, however, two additional revenue sources with meaningful revenue: revenue from ads in the newsletter, and revenue from solo offers made by your advertisers to your opted-in list. The revenue from these two sources are much smaller than those for the value of the return traffic shown above, however they can be driven up significantly depending on your choices of frequency and ad sales rates.

REVENUE SOURCE #2: Ad Sales in the eNewsletter Itself

This revenue is produced by the ads within the email newsletter itself. It’s an easy formula, produced by the product of registrants, issues per month and sponsorship/ad sales per thousand. In this example, it adds another $38,400 to the annual impact of registration.

REVENUE SOURCE 3: Ad Sales From Solo Offers to the List

This revenue is coming from emails which you send to your opted-in file which are solo offers for a single advertiser’s product or service. They’re more common in a b-to-b environment than a b-to-c one, but can be a very significant source of revenue depending on your business strategy.

This revenue too is driven primarily by the frequency of these mailings and the CPM you can charge the advertisers. In the case above, the total annual revenue impact is $48,000.

So now we’re ready to pare this down to the dollar impact of a single point in registration. The total revenue impact is the sum of these three revenue numbers ($240,000 + $38,400 + $48,000), producing an annualized impact of $326,400. So if 10 percentage points in registration produced that revenue impact, then a single point increase in registration is worth 10 percent of that figure, i.e. $32,640.

The question that this analysis always raises is, what’s the right registration rate for your own magazine’s Web site? The answer depends on how aggressively you’ve tried to build the list. For some best practices to compare against your own site, read another one of my articles on this site.

B. Baird
Bill Baird is a leading subscription marketing and audience development advisor to publishers on the web. His clients include The Motley Fool, Consumerreports.org, NetDetective.com and EdWeek.org. He is also the creator of SPARKwatch, a best practice research and advisory service for web marketers. He can be reached at (203) 838-5444 or at http://www.bairddirect.com.