Out of Time

If price discounting is your brand strategy think again. Any monkey can cut the price! Brand building is a tough business. It takes time and discipline and yet a good brand can quickly be destroyed by what may seem at the time to be good business decision to making. Specifically we are referring to boosting sales by overusing short term discounting

Anyone who’s ever had to sit in a waiting room will remember TimeMagazine.By 1988, the iconic brand had a magazine circulation ofover 4.6 million copies and was the ‘go to’ magazine to read in-depth stories from the news. Fast forward to 2014 when a most plummeting circulationled the brand to be spun off by Time Warner. There are many plausible causes for the demise of Time – the proliferation of cable newschannels, the internet, smartphones etc. will all have played a part in thedownfall – but we also know that weaker brands have survived the sametest. What happened to Time Magazine is a great study in how not tomanage a brand especially a stellar brand like this one.

Circulationof newspapers and magazines started to drag as news cycles started to gainspeed in the late 1980’s. Led by Cable TV news shows and later theinternet, print media looked to be out of touch and out of date the minute ithit the news stand. Time Magazine was no exception. When the subscriptions sagged further Time launched a “Hail Mary” advertising campaign in an effort to replace lost magazine subscribers but by doing soinadvertently managed to destroy their own brand. Here’s what happened…

Time magazine has ran a series of TV advertisements offering deep discounts off the cover price if viewers called within the next so many minutes. Of course operators were standing by and there were always other gifts loaded in to sweeten the deal. Trouble was the advertisements worked! Subscription rates rose fueling the sales department’s the argument to continue discounting. All the other advertisements for Time that emphasized the same quality of journalism were scrapped in favor of deep discounts and limited time offers.

Unfortunately, the continuous discounting undermined Time Magazine’s image of quality, integrity and in-depth news reporting that had taken decades to build. As new, price conscious, gimmick happy subscribers signed up long term loyal customers became turned off.

Time was so focused on maintaining their subscriber levels they forgot who was actually paying the bills. It’s not the average subscriber - it’s the loyal customer who keeps the money coming in! Typically in any industry the top 15% -20% of customers will account for 50% - 70% of a company’s revenue and 90% of the profits. Not only do they buy more – in the Time’s case book collections and records, they also encourage their friends to engage with the company.

Time was so focused on maintaining overall subscription volumes that they forgot about the loyal customer base upon which they may likely have built a strong complimentary on line news brand.By continuing to the discount, Time Magazine broke their implicit promise to loyal customers because brands with high integrity don’t engage in long term discounting and gimmicky advertising! As Time drove their high value subscribers away and replaced them with “other subscribers”, advertisers also saw a sharp decline in the response to their advertisements and also started to abandon the brand. What can we learn from Time:

1.    Data analysis can lead you astray: Data analysis told Time that discounting drove subscriptions – it did but with the wrong crowd.

2.    Use discounting judiciously: Discount too often and your brand has no value.

3.    Loyal customers pay the bills not average customers: Loyal customers drive up to 90% of a company’s profits. Recruit them and coddle them.

Time likely won’t recover and, in fact, the brand may disappear in the future.Other print news media like the Wall Street Journaland New York Times have managed to make the leap offering both on line news andin-depth story coverage in print and electronically on e-readers andtablets. Unfortunately for Time, their focus on sales promotions may have stopped the clock!