Cover Story: Full Sweep
To the casual observer, Publishers Clearing House (PCH) appears to have luck on its side. The nearly 60-year-old company that got its start selling magazine subscriptions has weathered stringent sweepstakes legislation and the accompanying publicity stirred up by Congress; the shrinking of its original customer base; and the not insignificant challenge of duplicating its offline dominance in the online sphere.
But you don't become one of the world's largest direct marketing organizations on chance alone. Instead of playing lucky numbers, PCH crunches the numbers to ensure it makes the right decisions on profitably finding and keeping customers.
This focus has led the firm to expand its business into merchandise (which now accounts for the majority of its $600-plus million in annual sales), embrace new online marketing channels (eight websites drive the brand's online presence), and refine its sweepstakes promotions while staying true to its roots as one of the leading providers of cash and prize promotions (since its first sweepstakes in 1967, PCH has awarded nearly $200 million worth of cash and prizes).
The guiding force through all these calibrations, says PCH CEO Andy Goldberg, has been the iconic PCH brand: "The brand is key in all channels." Josh Glantz, vice president and general manager of PCH Online, adds that the company has tested various types of online campaigns that were not heavy with PCH branding, and these never worked as well as campaigns with a prominent brand message.
With the brand as its beacon, PCH employs its direct marketing know-how to blend all types of offline and online media—not only to achieve relevance to sell more merchandise and magazine subscriptions, but also to generate leads for marketing partners.
In the Beginning, There
Was Direct Mail
PCH has been in the mail with campaigns for 58 years, and is known for not only perfecting the magazine stamp sheet, but also a slew of design techniques meant to captivate and involve recipients with its paper salesmen. These days, it sends upward of 200 million packages annually across the U.S. and Canada. Even as new channels in the digital space call for exploration, PCH never takes its eye off the direct mail ball so it can derive maximized value from this long-term marketing tool.
"It's important to note that while online and mobile are critical to the future of the company, we haven't given up on direct mail. We will continue to grow this channel as fits with customers' preferences," says John Princiotta, senior vice president of marketing. He explains that PCH views direct mail as a strong acquisition and retention tool, as well as a good vehicle for cross-promotion of the company's online and mobile offerings.
Given that its average offline-acquired customer is at least 40 years old, direct mail obviously appeals to a slightly older audience than, say, mobile and social media marketing. "We attract a pretty broad audience," says Princiotta, noting that the online customer tends to be slightly younger, but not greatly.
But PCH doesn't rule out direct mail for a younger audience; its customer-driven strategy looks at various data, including demographics and behavior, to identify profitable multichannel contact paths for respondents. If the findings point to a proclivity for a particular online-acquired 20-something to respond to a direct mail piece, then he'll be queued up, provided he either opted into or didn't opt out of being contacted this way.
The campaigns themselves echo each other from a commercial perspective, with the main difference being that the online offerings can feature more bells and whistles due to the digital world's more interactive nature.
Also on the print front, PCH uses free-standing inserts to drive traffic to its online properties and support awareness of its direct mail campaigns. And it serves as a cost-effective source for testing new offers, creative and media outlets, says Goldberg, because it provides a quick read on performance. In fact, all the different channels employed by PCH serve in some capacity as test facilities for each other. "It's a concentrated multichannel approach that leverages our assets," Goldberg says, such as investments in creative, data, media, etc.
From a customer connection perspective, PCH sees the power of an integrated direct marketing strategy. "Multichannel customers are more loyal and engaged," says Glantz, pointing to the company's ability to more than double its Facebook fans in the month of August alone, as well as industry leading benchmarks for its direct mail and email efforts.
While PCH continues to deal with the random state attorney general's legislative attack, the more pressing threat to its continued success in the mail stream is the future viability of the U.S. Postal Service. The company works closely with postal administrators to provide feedback on proposed changes to delivery operations and to help brainstorm ways to preserve the longevity of the USPS. "We think some good ideas about growth are coming out the USPS right now," says Goldberg. But, he counters, "for the record, PCH is not in favor of five-day delivery."
And Then Came the Web
In 1999, PCH rolled out PCH.com, which serves as its corporate site and connection to the offline brand. From there, it has grown to include seven more websites that encompass the PCH Online Network: PCHOnline.com (which is a sort of splash site for the rest of the gaming sites), PCHLotto.com, PCHSearch&Win.com, PCHGames.com, PCHOnlineSurveys.com, PCHCoupons.com and gaming site Candystand.com (through PCH's acquisition of Funtank late last year). Save for the splash site, all the other websites center around getting visitors to register in order to play games, enter prize promotions, access coupons or recipes, and fill out surveys in exchange for rewards.
Altogether, the sites pull in more than 3.5 million new registrants per year, and at least 5 million unique visitors each month. Driving this audience development is a mix of offline and online media selected for their ability to adequately convey the excitement of the brand, reach a broad market, and hit the company's performance and budget targets.
The foremost medium used to support both direct mail and the websites is TV. PCH started broadcasting TV ads in 1974 to hype the sweepstakes component of its direct mail campaigns, and later its email efforts. For the past 12 years, says Goldberg, "TV ads have driven a tremendous amount of traffic and opt-in memberships for PCH business ventures."
PCH complements its TV advertising with a blend of online media, including paid and organic search, email (including third-party list rentals), social media, mobile media, online display ads and even more experimental marketing, such as its AOL takeover this past July.
To promote its prize promotions, particularly a chance to win $5,000 a week for life, the company purchased a significant amount of real estate on the main entry page for the AOL site. For the entire month, a display ad ran on the AOL Mail login page; on July 12, a rich media Prize Patrol van ad unit moved across the login page to further engage AOL customers.
As the company continues to test and learn online, it's looking to hone in on new channels for awareness, engagement, sales and lead generation. One area that is showing early promise is mobile marketing. Says Glantz, "When you think about the time people spend in front of a TV, with direct mail or on a computer, you can put all of that into little buckets. But the mobile channel is something that people have with them all day long."
Princiotta sees the channel shift to mobile happening pretty quickly in the next few years. "We're seeing new audiences engage with PCH," especially those who don't have continuous access to a computer and internet service.
On top of opening up a new layer of the market to PCH, the emergence of mobile marketing has reinforced the company's belief in overall growth for multiple channels, as opposed to cannibalization among them. "We're getting incremental revenue from mobile," says Glantz, "including new customers and more share of wallet from current customers."
Like its industry colleagues, PCH also is trying to determine the role social media will play in its overall marketing plan. Glantz explains that social media offers untapped growth potential, but the company is still looking for the right vehicle within this environment.
"All social media is being tried out, but Facebook is what everyone is watching closely," he says. And, so far, he likes PCH's chances with this online community. "Big companies like Starbucks and Gap have major audiences. But when they [offer a coupon], they get just 1 percent to 2 percent response. PCH gets up to 5 percent response" with the prize promotion offers it has tested.
Integrated Marketing Takes Integrated Teamwork
The cardinal rule of any direct marketing media buy is that it's not the spend but the return that matters. To this end, PCH works diligently to determine ROI against its various marketing goals. Princiotta describes it as an "all-hands effort by the [marketing] team," where it looks at what PCH needs to achieve months in advance; tries to develop unique propositions for each campaign along with the appropriate performance metrics across each channel; and then uses analytics tools and works with PCH's statistics team to project response, as well as measure performance for each campaign. In general, senior management oversees the alignment of offline and online marketing efforts, from campaign development to backend measurement.
Campaign performance is under constant review, so PCH can make "changes during campaigns to leverage when certain offers are performing better at both the merchandise level, offer level and media level," says Princiotta. He emphasizes that a key focus for the company is carefully selecting which PCH properties are being exposed during the acquisition path for new customers.
Glantz adds that, during TV campaigns, the team combines analytics reports with daily meetings to allow for nimble response to opportunities and changes in market conditions.
As PCH marketing efforts incorporate more media, the company is beginning to identify synergies. For example, the July campaign that involved the AOL Web page takeover also received support from FSIs, print space ads, TV, mobile messaging and online display ads. The integration of media, which appeals to a multichannel customer, drove strong response across all channels, Princiotta explains, sharing that consistent branding across channels is another area where they've seen "one plus one equals three."
While PCH works to increase its investment in all media, it's the stake in TV that allows all other media to perform well, Glantz says. And then, because of the extended reach that TV provides, PCH needs to invest properly in the backend of the program to support the volume spikes that flood the system.
Overall, Goldberg finds that the introduction of more media to PCH's integrated campaigns "adds more weight to optimize our efforts to get high-quality opt-in members and better conversion rates." Each additional media dollar spent needs to make a contribution to the result. "Future value is a key driver," says Goldberg, and so PCH projects at least two years out to ensure its initiatives not only protect the brand, but also optimize the value of leads generated for its advertising partners.
Data Is the Grease
With a database of more than 10 million customers, PCH regularly interacts with more than a million people across all of its channels. Making relevant contact with these active consumers is vital to both its lead generation and merchandise businesses.
As mentioned earlier, PCH doesn't try to push its customers at specific channels; rather, says Goldberg, it supports communication choices by being accessible across a variety of channels, tracking contact preferences and offering customers the ability to change their desired contact methods via a preference center.
Tracking is a critical element of the push for relevancy. Rob Befumo, PCH's senior director of e-commerce, notes that the company tracks each online data point from each source connected to customer visits and any offline activity to get the complete picture of each customer's value. "We've been careful to look at a holistic approach [to marketing] based on the customer," he says.
By using the customer ID code from its larger and older offline database as the chief identifier for all channels, PCH is able to integrate the customer activity it tracks across different media and departments and then use the ensuing insights to produce more targeted communications.
For example, this knowledge helps drive triggered and sequenced email messaging that leverages multichannel purchase history, affinity, demographics and credit risk factors, according to a case study on PCH published by its email services provider, e-Dialog.
Of course, none of this effort can be fruitful without reliable data. With respect to both offline and online sources, PCH only works with partners who provide clean and deliverable records. When it comes to processing its own data collected via site registrations, says Sal Tripi, PCH's senior director of operations and compliance, the company works to screen entries against USPS data to ensure complete, mailable addresses. It also employs methods to scrub submitted email addresses for accuracy and deliverability.
Relevance and Transparency Go Hand in Hand
The foundation of PCH's customer- centric approach to integrated direct marketing, as well as its lead- generation and display advertising businesses, is quality data. The company captures a significant amount of first-party information that consumers have shared on an opt-in basis either through surveys, registrations or purchases, says Glantz. "This sets us up well in terms of legislation that could come down the road in the direct marketing arena."
Goldberg adds that throughout the different online landscapes that have come and gone since PCH launched its brand online, "we have passed up short-buck opportunities in lead generation out of concern for managing the PCH brand properly, taking care of customers and protecting PCH for the long haul."
The permission-based data provides deep insights into not just retargeting of registrants and customers, but also the serving of relevant ads on PCH's various sites and targeting of third-party lead-generation offers. And because PCH turns to lead-generation sources to drive business for its own properties, Tripi states, it only works with companies that share its philosophy of rigorous compliance to white-hat practices. He adds that such stringent privacy and transparency policies are the reason for PCH's industry-leading email open rate (roughly 99 percent) and engagement rates (30 to 40 percent).
"We're in favor of ISPs moving to engagement-based delivery," Tripi says.
In another move to make its marketing efforts transparent to consumers, PCH has taken a leadership position in industry initiatives regarding self-regulation of online behavioral advertising. Participating in the Digital Advertising Alliance's program, PCH is tagging its behavior-based online ads with an "Advertising Choices" icon that links to an information page explaining how online behavioral advertising works, which provides consumers with a method for opting out of such targeting if they choose.
No Marketing Strategy
Is an Island
Without the proper corporate infrastructure, integrated direct marketing is just an industry buzzword.
"You've got to be sure the company is thinking multichannel every day … Look around and see that each area contributes to this multichannel environment and determine what impact they can have on the company's goals," says Goldberg.
Glantz agrees, pointing to the example of how important it is to keep even the finance department up to speed on the latest trends affecting the marketing strategy. When PCH wanted to pursue the out-of-the-box advertising campaign on AOL's site, he explains, the finance team was able to more easily evaluate its fiscal potential because they could see how such an idea fit into the overall business picture.
With respect to marketing alone, Goldberg summarizes a few key elements of PCH's success in growing its integrated marketing efforts. First, you need to do an effective job of cross-promoting offers and properties across channels. Second, you must have branding consistency across channels. Next, you have to support the marketing process with tracking, measurement and analytics to give you the insight needed for relevancy, performance and profitability. Finally, you must keep your merchandising attuned to the unique segments of your customer base for both online and offline audiences.
And in PCH's experience, it never hurts to throw a sweepstakes into the mix.