Generating cost-effective subscriptions through outside sites is tough. Here's some tips to give you an edge.

Virtually (pun intended) every subscription marketer out there is working overtime to try to maximize the Internet as a source. Doing this within the context of a magazine's own site is challenging enough, but using banner ads on outside sites has proved even more problematic. That's why I thought I'd use this first installment of CM's new bimonthly column devoted to Web marketing, cmsubmarketing.com, to offer some tips on making banner ads work.

It's not hard to understand why it's tough to make banners generate economical subscriptions. Marketers who use banner ads are competing in an environment that becomes more crowded and saturated every day. Banner ad click-through rates are dropping dramatically, even as Internet use continues to soar. According to The Industry Standard, the number of Internet users jumped from 147 million to 196 million between 1998 and 1999. Yet, the average click-through rate plummeted from 10 percent to less than 1 percent between 1994 and 1999.

Out-of-pocket costs have remained relatively stable because of increased inventory According to AdKnowledge eAnalytics, a Palo Alto, CA-based strategic analysis service, the number of Web sites that seek advertising jumped from 2.1 million to 2.6 million between June and September of last year, but the average CPM (cost per thousand) declined only a tad, staying in the vicinity of $34.

CPM DEALS DON'T CUT IT While CPM deals remain by far the most common in the Internet world, these rarely work for subscription marketing purposes. "In general, CPM deals don't produce cost-effective circulation orders, unless you can get an unusually low CPM, or you can come up with breakthrough creative," notes Steve Sutton, circulation director, Interactive Media Group, Ziff-Davis, Inc.

"We could not get CPM's to work for us," concurs Tom Slater, director, circulation, ESPN The Magazine. "Even if CPM is very low, the low response creates a very high cost-per-order. Sites that want to deal only on CPM are quick to get you up and running and will try to give you the world. After all, they only care about driving eyeballs to your banner. However, I care about driving subscriptions. I could get millions of eyeballs on my ad, but if they don't order anything, I've spent a lot of money for nothing."

WHAT ARE THE ALTERNATIVES?

Even circulators for large-circulation magazines with strong brands try to steer clear of straight CPM buys. But some are getting banner ads placed in powerful sites, or even search engines, through ad page trade-outs. At Conde Nast, for instance, banner ads for Mademoiselle, Vogue, GQ or The New Yorker may show up on search engines such as Lycos. "We may contract for 10,000 or 100,000 impressions, depending on the size of the site and the value of the deal," reports Rebecca Petruck, associate manager, online marketing. "In most cases, these are barter arrangements."

Niche publishers may have better luck with CPM's by getting help on the buying end. For example, Flycast, a San Francisco-based Web media buyer, offers a program for targeting a magazine's potential audience on affinity sites. The firm works with 1,775 Web sites, placing ads for a number of national brands (including several magazines) at banner-served CPM costs ranging from $4 to $6.

Executive VP and chief revenue officer Jeff Lehman claims that Flycast's optimization model can double response rates. After a test period that usually last about four days, Flycast determines which creative runs best for a client on selected, appropriate sites. After the test results are run through the optimization model, a roll-out plan is prepared and implemented. The proof of the effectiveness of this approach, Lehman says, is in the results: Whereas only about 20 percent of all available banners on the Web are sold out, Flycast's inventory is 85 percent sold-out.

The firm recently announced new programs that may broaden its magazine base. One is a CPC (that is, cost-per-click) program to complement the core CPM offerings.

Of course, publishers can also take the approach of trying to negotiate for CPO (cost per order) deals. A lot of legwork and an aggressive approach can sometimes pay off.

"We've found that the CPO does better for us," notes June Sargent, VP, circulation for Red Herring Communications, Inc. "It gives us more negotiating room up front, and if we promote a soft offer and only pay $1 per gross order, it doesn't cost us much out of pocket if the subscriber doesn't pay."

"On a straight CPO, you're paying for what you're really getting, response-wise, which gives the campaign a chance for a reasonable P&L," says Slater. On a CPO basis, some sites may not be so aggressive in getting eyeballs to your banner ad, but they're generally willing to work more diligently at targeting your offer, so that it's viewed by the desired audience, he says.

"However, the bigger and better the site, the less inclined they are to offer CPO deals, because they can sell their banner inventory outright," he adds.

The most logical places to look for CPO deals are sites close to your own business. Sponsorships of email newsletters that serve audiences related to the interests of your magazine readers are likely to be the most productive avenues. And establishing and building relationships with affinity sites by offering editorial material is a natural in cases where the partner is a product manufacturer. In such cases, the deal should include a line in the email newsletter directing the reader to a sign-up URL.

Not surprisingly, "Meshing ads with the editorial works best," confirms Brad Aronson, president of i-frontier, a Philadelphia-based Internet marketer that serves several magazine clients. Tests have demonstrated that ads that are integrated into editorial work much better than ads that stand apart from editorial (even brightly colored ones), Aronson reports. Also, sending readers to a unique URL that features direct sign-up will yield significantly higher numbers of orders than sending potential customers to home pages requiring additional clicks to pull up registration or ordering pages.

Most CPO ads are run-of-site, which means you may not have a lot to say about where the ads appear, or when. However, depending on the strength of the relationship with your partner, you can request banner positions that don't look like they're a part of the infrastructure on top, and aren't at the very bottom, where few scrollers reach, according to Aronson. After all, a CPO arrangement needs to pay off for the carrier, as well as for you. (By the way, if you're a total novice to Web marketing, you'll quickly find that using soft offers-- free issues or risk-free trials--works much better than hard offers.)

DOING THE DEAL Subscription marketers can also turn to outside agents to arrange banner deals. Most direct response agencies offer such services, as do Internet specialists. As with any discipline, placing banner advertising is a speciality with its own dynamics.

"A third-party vendor can help magazines find the related sites, traffic the campaigns, service the ads and provide a tremendous amount of information about who saw the ads, what kind of actions they took and, over time, how to find more of the best kinds of prospects, in addition to what it cost to get that new customer," says Michele Schott, director of marketing communications for Adknowledge, which, in addition to eAnalytics, offers a Web ad campaign management system that provides these kinds of services.

At ESPN, Slater recently hired San Francisco- and New York-based i-Traffic last October to do its banner buying and trafficking. "I liken it to hiring a media buyer for television," he says. "We don't have the staff or the clout to go from television station to television station to work a deal. The Internet is no different. There are tens of thousands of sport sites out there. I don't have the ability to meet and bargain with them all." Within a month of signing i-Traffic, Slater says, "Our ads appeared on 30 new sites."

Outside vendors may be too expensive for many magazines' budgets, however. Players in arranging Net ad buys generally don't specialize in magazines, so publications that want to use their services for subscription marketing might find it more economically advantageous to tag along on an existing contract for the marketing and advertising departments. This allows the circulation department to slide in under minimum-fee requirements which, if assumed by the circ department alone, would be prohibitive for most magazines. The going minimum billings are generally north of six figures in annual billings, with $300,000 to $500,000 a medium range. And business is so good for Net specialists at this point that they can afford to be selective about which clients they take on.