Magazine Subscription by Telemarketing Case of Korea (By Kim - PDF document

Magazine Subscription by Telemarketing – Case of Korea (By Kim Yong-Kook for Session IV: Breakout B, April 18, FIPP Seoul 2002) I. An Overview of Korean Magazine Market (1) Number of magazines: 2,463 (Source: Korea Magazine Association). (2) Annual Sales Volume: KW1 trillion ($770 million). (3) Magazine Sales by type: Subscriptions 35.2% (Asia-Pacific subscription/retail ratio 55%/45%, Source: Distripress Gazette, March 2002); national wholesalers 30.2%, Bookstores 15.4%, Telemarketing 8.3%, Door to Door 3.6%, Street Kiosks 3.3%. (Source: Korea Magazine Association) (4) Current Trend: Increase in women’s magazines (specialized); Low sales of men’s and specialized magazines; Growth of online sales; More culture- oriented (general interest) magazines; International licensing – high quality magazines; computer magazines and CD-Rom magazines. II. Korean Telemarketing Industry at a Glance (1) Telemarketing business volume is on the rise. (2) At least 1,500 firms are currently selling “anything.” (3) Market size is estimated KW5 trillion ($3,850 million). (4) Some 200,000 salespeople work in the industry. (5) Korea Telemarketing Association: Established in 1998, member companies are 69 (December 2001). (www.telemarketing.or.kr) (6) IPS, a member of Distripress since 1987, is also a KTA member. III. Magazine Sales --- Subscriptions via Telemarketing Magazine Telemarketing Research : Conducted (telephone interview) survey of 61 magazine publishers to find out the market size and general situation of sales by telemarketing. (Period: One month -- 26/01/02 through 27/02/02).

Magazine Subscription by Telemarketing – Case of Korea Page 2 Summary of Research Findings A. Major Findings: A. Of the 61 companies, 13 (21%) answered they engage telemarketing sales system for subscriptions. B. Computer/science magazines, newsmagazines, culture & art magazines and education magazines use telemarketing as the main marketing tool. No telemarketing activities by economy magazines. B. Profitable companies use telemarketing: C. In general, telemarketing activities are carried out by relatively large business or for magazines with high brand awareness/high sales volume. D. Small businesses cannot afford telemarketing. E. Newspaper companies (those publishing magazines) utilize outbound branch offices for telemarketing, while magazine publishers operate in- house call centers. F. Women’s magazines, with strong distribution channels, do not operate call centers because of high telemarketing and mailing costs. G. Major businesses (with the telemarketing as their primary sales method) report telemarketing subscriptions account for more than 80% of annual sales. H. The number of telemarketing salespeople at a company ranges from 10 to as many as 500 to 350 (YBM/Sisa MBU and IPS). C. Outlook: I. In selling subscriptions via telemarketing, innovative techniques are employed. (Discount coupons, various gratis services, merchandise

mix). J. Newsmagazine distributors (telemarketing) plan to increase R&D budget and develop further database marketing at modern call centers. K. Small or medium sized business, which are more vulnerable to market/economic fluctuations, expect to maintain current level of telemarketing. Magazine Subscription by Telemarketing – Case of Korea (3) L. Fierce competition among call centers foments a headhunting war to engage professionals – individual or group – to increase effectiveness. M. In building and/or expanding database, telemarketing operators face various legal and social problems. N. Ever-increasing online sales. IV. Major Magazine Telemarketing (Subscription) Operators IPS and YBM/Si -sa MBU are two major magazine telemarketing companies: Combined subscribers total 251,000 (IPS 105,000; MBU 146,000). O. IPS, established in 1983, is exclusive distributor for NEWSWEEK, National Geographic, Reader’s Digest and some 60 U.S. magazines. Annually IPS distributes some 4.5 million subscription copies. P. IPS operates 11 call centers (9 in provincial cities) with a total of 325 salespeople. Q. MBU is the major sales arms for YBM/Si -sa, publisher of the Korean edition of the National Geographic and many other bilingual monthly magazines. R. MBU operates the largest magazine subscription sales center with 450/500 telemarketers. V. Future Challenges and Tasks S. Large market and hot competition T. Trained professionals and high commissions U. Effective Database Marketing System and introduction of working CRM. V. Diminution of social and legal barriers.

To receive a copy of the magazine telemarketing survey results, send an e-mail requesting it to: ykkim@ips-korea.com