Publishers Clearing House, Reader's Digest and the like are constantly giving away millions for free. Why? What do they get out of it? This question is really burning a hole in my brain.
Doug W., Irvine, California
I don’t want to tax your brain unnecessarily, Doug, especially in view of the fact that holes are being burned into it, but surely you remember that the Reader’s Digest Association, Inc., publishes a magazine entitled Reader’s Digest, to which it is anxious to have people subscribe. Similarly, Publishers Clearing House is in the business of drumming up subscriptions for its many publisher clients. Million-dollar sweepstakes giveaways have been shown to be a pretty good way of doing this, and it is not hard to see why. I have here a very impressive letter from Reader’s Digest that is chock-full of fascinating gimmicks, including two “computerized sweepstakes cards,” a personalized computer-printed cover letter, and a “Super-Bonus” card with a gold “bonus box.” I am supposed to scratch the box with a coin to reveal the Super-Bonus prize (a Cadillac Seville, as it turns out) that I could win in addition to the $250,000 Grand Prize. For those too poor to supply their own coin, a shiny new nickel is helpfully provided.
We note that the letter skillfully obeys the Five Golden Laws of Direct-Mail Marketing:
(1) Grab the recipient’s attention with official-looking verbiage. The Reader’s Digest letter is covered with things like “Urgent you reply by Jan. 30” and “Attention Postmaster: Requested delivery date is on or about…” It looks like a subpoena or a tax refund.
(2) Cram the letter full of eye-catching gimmicks. The more items a letter contains (up to a point), the higher the response rate. If I remember correctly, the optimum number of items is five to eight. The Reader’s Digest letter contains seven items.
(3) Get the recipient involved by giving him/her something easy ‘n’ fun to do, in this case using a coin to uncover a secret prize. An alternative tactic is having the recipient paste a sticker on an entry card.
(4) Give the recipient something of value so he/she feels obligated to participate. You don’t think Reader’s Digest really figured nobody could come up with his own nickel, do you? Significantly, the nickel was plainly visible to the recipient through a window in the envelope.
(5) Force the recipient to make a clear choice between subscribing and not subscribing in order to enter the sweepstakes. This is a key point. The Reader’s Digest letter contains two envelopes to return your sweepstakes entry in. One says YES — enter my subscription, and the other says NO — I do not wish to subscribe. Reader’s Digest is legally obligated to treat entries equally whether you subscribe or not, but most people — and let’s face it, the average sweepstakes participant is no Rhodes scholar — do not realize this. “There does seem to be a lurking feeling that if I do order the product I will win,” a Reader’s Digest spokesman was recently quoted as saying. Ergo, lots and lots of subscriptions. You see the beauty of this? As far as Cecil can tell, the whole thing is completely on the up and up; you don’t have to subscribe to win. But people THINK it’s fixed … and so they subscribe.
Devious? You bet. If it’s any comfort to you, though, the publishers often think they’re getting screwed too. A magazine executive who has had dealings with Publishers Clearing House recently told Cecil, “They make themselves a bloody fortune. Literally for every name they supply you, a magazine publisher loses between $1 and $1.50. If we were to go through Publishers Clearing House and offer a six-month subscription for $10, we would get $2.50 out of that $10 — they get the other $7.50. As you can imagine it costs us more than $2.50 to send out six issues.”
So why do it? For starters, you hope your loss-leader subscribers renew at the regular price — although the renewal rate for such readers is notoriously poor. More important, says my informant, “you can hype your circulation,” in hopes that you can increase your ad rates based on higher readership. “Ad agencies [from whom publishers try to extract ad orders] don’t care where you get your circulation numbers from,” he says. In the long run, however, “it just doesn’t pay,” he concludes. Words of wisdom for all you budding magazine entrepreneurs.
Send questions to Cecil via email@example.com.