Reader-Loyalty Program Pays for Itself

By: Lucia Moses Roughly one-fifth of all newspapers offer subscriber loyalty programs as a retention tool. The problem is, papers often pay a lot for reader perks -- and get only a small retention boost in return. "Generally they have been expensive for newspapers to maintain," said John Murray, vice president of circulation marketing for the Newspaper Association of America.

Over time, newspapers have built relationships with advertisers to help offset the cost. The Virginian-Pilot in Norfolk, Va., is one of the better examples.

Its 6-month-old Reader Rewards program will reap a 30%-plus profit margin on revenue of $1 million in 2003, said Dale Bowen, market development director for the 201,041-circulation daily.

Here's how: The Pilot got four corporations to pay $200,000 apiece to cover the program's promotional expenses, including numbered key cards for subscribers and welcome bags filled with coupons, offers, and promotional gifts for newcomers. (Sponsorships from smaller, local advertisers made up the balance of the $1 million.)

In exchange, the sponsors get plenty of publicity, ranging from their company logo printed on the welcome tote bags and space on a daily Reader Rewards page in the paper to advertise offers and discounts to cardholders.

The Pilot also puts on events designed to drive customers to its sponsors. In one case, the paper invited cardholders to a movie premiere and gave a realtor the exclusive sponsorship of the premiere. For that, in addition to daily Reader Rewards page exposure, the realtor agreed to up its newspaper ad budget by 20%.

In the case of the largest sponsors, Bowen said, "we probably give them a program worth a million dollars."

The revenue payoff is easier to track than the circulation benefits. The paper is surveying subscribers about their awareness of the program, but won't set retention goals until it is at least a year old, said Amy Bull, subscriber acquisition manager.

But she and Bowen sees its potential to entice infrequent readers and reward frequent ones. "It is a readership and a circulation tool, because you don't get Reader Rewards unless you subscribe to the paper," Bowen said.

Next year, the paper plans to extend the program to in-column classified ads. An advertiser who offers something extra to cardholders can add the Reader Rewards logo to their ad, which will make it stand out.