Magazine article Folio: the Magazine for Magazine Management

Source Evaluation Software

Magazine article Folio: the Magazine for Magazine Management

Source Evaluation Software

Article excerpt

* Recently, I received my completed version of a new source evaluation model developed by Lighthouse Software. It appears to be an extremely useful tool as well as another good example of the value of the personal computer in circulation applications. Experimenting with the source evaluator gave me several ideas for maximizing profits through source evaluation techniques. This article will introduce you to the source evaluator, and subsequent articles will develop specific applications.

Before I describe in detail how the source evaluator works, I want to review the reasons why we do source evaluation. I've recently heard some experienced publishing people question the practicality of source evaluaton for magazines that are using every available source. This criticism is obviously based on the false assumption that source evaluation is used exclusively to determine whether to use a source. This is not the only reason to do source evaluation, but it is one of the many.

Over and over again, I have pointed out that if you want to be good at circulation marketing, you have to have a good understanding of your magazine's economics and of the economics of the marketing methods you are using. One of the major reasons for doing source evaluation is to gain insight into the economics of your own particular magazine. The more you know about the economics of the source you're using, the more likely you are to come up with creative marketing ideas regarding pricing, offers, renewal strategies, credit policies and cost cutting.

We also use source evaluation to evaluate the results of direct mail tests (or tests on other sources) to determine which package, offer and price is best for the next campaign. A magazine that doesn't carry very much advertising and must make circulation sources carry the cost of the issues can use source evaluation on every mailing list to determine which lists are profitable.

One of the uses of computer models is to play "what if" games and study the impact of alternative strategies on profits. Sometimes, it's extremely difficult to see how the various economic factors interact, and it's usually quite time-consuming (and very expensive if you're modeling on time share) to model a lot of "what ifs." With a source evaluator, you can study a source's economic dynamics in isolation.

For example, I was recently interested in looking at the impact of PCH pricing and renewal strategies on profits and rate base. As you can see from looking at Table 1, I can continue ad infinitum with various alternative pricing strategies. By using the source evaluator and playing with the assumptions, I can study the various pricing methods and see which of them looks as if it will work best for a particular magazine's rate base needs profit objectives, and economic characteristics (conversion and renewal rates, cost of product, etc.).

In summary, you can use a source evaluator to analyze sources, to analyze test results, to play "What if" games, to teach yourself, to teach subordinates, and to teach the people for whom you work. Most publishers and magazine owners don't understand circulation, and a source evaluator is a great tool to prove to your boss why such strange things as First Issue Free offers, pure credit, Publishers Clearing House, lower prices, and a bigger promotion budget made sense.

I've worked for a lot of extremely capable and strong-willed people, but seldom have I ever lost an argument when I backed it up with well-thoughtout and careful analysis. And often it was source evaluation that won the argument.

Working with the best

I've used a lot of different source evaluation tools over the years: a pencil and calculator, a time share source evaluator, and source evaluators I created on VisiCalc, Advanced Version VisiCalc, and Lotus 1-2-3. …

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