Reading into a big captive audience

By DITA DE BONI

It seems an anomaly that in today's sophisticated media milieu, the most widely read magazine in the world is a slim booklet filled with family values, inspirational feel-goodism and humorous anecdotes even your grandmother might occasionally find lame.

That same magazine has been one of the most successful direct marketing tools of the last 100 years.

Reader's Digest, founded by wounded First World War veteran DeWitt Wallace and his wife, Lila, in 1922, is read by 100 million hope-seekers in 48 countries every month.

Those whose memories of the Digest are dusty copies in grandparents' bookshelves might be surprised to learn that it is New Zealand's second largest monthly magazine, and the publication's Kiwi edition will this year celebrate its 50th anniversary.

The company has enjoyed profit growth of 113 per cent in New Zealand over the last two years, mainly coming from a raft of products offered to subscribers alongside their monthly motivational fix.

Many consider the Digest's universal reach into global letter-boxes something of a nuisance. Especially vexing for many are its sweepstakes mail-outs, promising a host of fabulous prizes and contingent on the consumer's inclusion on the vast Digest database.

But the sweepstakes are popular, with response rates of over 200 per cent. By most standards, its direct marketing initiatives have above-average response rates working off thorough relationships with established readers and meticulous product targeting.

It was not always like that. After a dip in fortunes three years ago, the Digest drilled into its big subscriber base and expanded by selling a slew of complementary products including books, videos, CDs, and in some cases, "gardening tools and fertiliser."

New Zealand and Australian managing director Nick McRae, in Auckland for Digest's 50th local birthday, says the magazine is not ashamed to be a direct marketing instrument.

The 64-year-old is a veteran of direct marketing. He was seconded to Australia from South Africa in 1998 after many years with the company in the republic.

"We are quite proud of being direct marketers. We don't do anything sinister or immoral and we are very conscious of privacy issues.

"We are able to focus our offer to appropriate customers - customers that we already know would be interested in what we have to offer. Every envelope costs us around $1.50 to $2, and so to be cost-effective we use all our accumulated expertise to evaluate all our customer data very thoroughly."

Digest does have non-targeted mail-outs for some offers, but is adamant that once a customer says they do not want anything else, "they won't get anything else."

The corporation, which considers itself the "university of direct marketing" belongs to direct marketing associations in most markets. Despite some unfavourable lingering perceptions, the magazine's investment in adding value to existing relationships has proved the seemingly limitless possibilities of mining loyal subscribers.

Reader's Digest Association is now a publicly listed corporation with yearly revenues of $2.5 billion, profits of over $170 million a year and operating margins of 7 per cent per annum. The bulk of turnover comes from global books and home entertainment products including illustrated reference books, music, children's products and music compilations.

An experiment in Australia saw the corporation successfully sell insurance to subscribers - a move that may be further exploited to Digest's captive audience of 50 plus middle-society consumers with compelling needs for both inspiration and security.

One-off publications have also proved popular. The company's Motoring Guide to New Zealand sold 150,000 copies and 55,000 collections for music and 100,000 videos are off-loaded in this market every year.

Digest is also looking at establishing personal finance and DIY magazines in the Australian and New Zealand markets.

The magazine itself is sent out to 115,000 Kiwis each month (although readership is estimated at 500,000).

It carries up to 40 per cent worth of carefully vetted advertising.

Mr McRae says the corporation is unable to control the product's "general appeal to the broad public. The advertising proposition is uniquely valuable to mostly generic product makers. Companies that make headache medicine, for example, find it very valuable."

Digest has also hauled itself into cyberspace, and Mr McRae says the US parent has spent millions in creating the perfect e-marketing tool/website. In Australia, the company is experimenting with e-mail marketing.

"E-mails have a function of driving people to the website. When they get there, they see some editorial, some corporate information and the like, but mostly they go there for promotional offers and incentives."

One might think the demographic most interested in Digest would be the least likely to take to cyber-surfing. But Mr McRae says the older demographic sports the fastest-growing interest in internet use, saying the company has sold 50,000 computer books to subscribers in Australia and New Zealand.

"But clearly trying to get people to subscribe through the internet has not succeeded," he says.

It is, in some ways, hard to believe a company that trumpets the cause of family values and is unafraid to use the word God in copy would continue to have wide-ranging allegiance from modern readers.

Mr McRae says Digest's reputation as a front for religion is false, although "we are not afraid to talk about faith." He says the magazine seeks only to bring "extraordinary things down to the level of ordinary people, and give them something inspiring to read."

Family values are stressed as a compromise to modernity.

Mr McRae seems almost tickled that the magazine would not be considered entirely "fashionable." He recounts a humorous tale from the "funnies" page intended to show an edgy foray into dark humour. Unfortunately, jokes about snail pellets do not necessarily signal a step into sophistication. Mr McRae laughs and patently cannot fathom this reporter's lack of mirth.

"There may be a perception that we are a bit naff, but essentially we can't be too fashionable without losing touch with our 100 million readers. We do take a moral stand. But we would have to conclude from several years of experience that people respond to our image which also helps our marketing efforts, in that we are perceived as being reliable and honest."

Mr McRae says despite the increasing popularity of direct marketing, consumers will never get sick of the method if it is done properly.

"The art is to send out as little as possible.

"Focusing on certain needs will become more important and volume will probably become less and less."