(Profiting from the New Europe international conference, sponsored by DM News and Worldpost, New York, August 31, 1993)

By William Dunkerley

Most of us in direct marketing have made frequent use of magazine lists. In fact, for many applications, magazine lists can be a really good bet: qualified buyers, highly responsive buyers — lists with lots of demographics and psychographics. What then are the prospects for getting good magazine lists for direct marketing activities in the former Soviet Union?

To answer that, let’s look at this day in the life of Ivan Denisevich...

Ivan picks up his phone in Moscow to order a new magazine subscription. He dials the Russian equivalent of a 1-800 number. You see, recently he received a direct mail promo from the publishers of “Yuppsky,” a new magazine for the Russian newly rich (Russian yuppies). His call is answered by a polite voice, saying, “Yuppsky magazine, how may I help you?” Ivan indicates he’d like to order a subscription. “How would you like to pay for this?” he’s asked. Ivan gives instructions to charge the order to his Russian Express card, gives the name and the address to which he’d like the subscription sent. He also answers a few demographic/psychographic questions that will guide the publisher regarding which special sections will be bound into the copies he receives. Ivan reminds the customer service representative that he’s entitled to the subscription premium mentioned in the D/M package. “Thank you, we’ll start your subscription and send your gift right away,” he’s told.

Really?

As the saying goes, “what’s wrong with this picture?”

Only one thing. The action is taking place in Russia. Had the venue been the U.S., or many other Western nations, the interchange would make perfect sense and would be commonplace. But since this is supposed to be taking place in Russia today — a book containing this story would be sold in the bookstore section called “fantasy and science fiction.” It simply couldn’t happen.

Some Background

To put this into perspective, let’s for a moment look at the history of direct marketing in the United States. And if we could compress time so that decades would be minutes and hours, we could track our progress by the movement of the hands of a clock.

At 1 AM we would see Ben Franklin in 1744 producing the first mail order catalog. As 3 AM rolls around, National Cash Register is already mailing six million pieces annually. The year: 1901. Shortly after 5, ATT introduces the 800 number. And now at 6 AM we can see the dawning of a new era in effec- tiveness through the use of data based marketing concepts and modern computer power.

On the other hand, if we were measuring progress in Russia, we’d see the clock stopped at half past midnight, where it died, a spring having sprung from its movement.

What’s to Come?

Is this the fate of direct marketing in Russia? Is it stalled forever in the dead of night? In my opinion, no, it is not. Indeed, there are many of us who are working to install a new, modern quartz movement into the housing of the old clock. And soon we will have the hands of progress moving quickly toward a new dawn. Unfortunately, this will not happen overnight, though.

To reinforce this point, former U.S. ambassador to Russia Robert Straus said recently that in his opinion, if by the turn of the century the Russian economy reaches the level of development of ours in the 1930s, he’d feel that great strides had been made!

And so these markets should not be entered with a sense of naivete. Don’t expect to be able to use unadapted Western direct marketing techniques. And don’t expect to achieve a Western level of results. I don’t believe this is the time for making a killing in the Russian or Eastern European direct mail market.

However, this is a time when you can profit by gaining experience in how to address this market. Without question there is an enormous consumer and business market out there. Surely, there will come a time when a savvy marketer will be able to enjoy considerable success in it.

Tough Sledding

As you can imagine, magazine and newspaper publishers in Russia are having a really tough time right now. Many, if not most, find their publications in a virtual state of bankruptcy.

Russian publishers are finding that it was easier to break free from Communism than it is to break even in a business sense.

It’s no surprise, though, when you consider some of the obstacles they face. For example, did you know that most Russian publishers do not know who their subscribers are?! For Westerners, this seems inherently impossible. But it is indeed the case today, a sorry holdover from the Communist past.

Antiquated Methods

For Ivan Denisevich to subscribe to a new magazine, he can’t just pick up the phone. Instead, he must go in person to his local post office. There he will fill out a two-part government subscription form. He’ll keep half as his receipt. The local post office will keep the other half. They’ll also notify a central subscription/distribution monopoly of their need for one more copy each time Ivan’s magazine comes out.

The publisher of the magazine to which Ivan just subscribed will never know his name. Instead, the government monopoly will tell the publisher how many subscribers they have — but not who they are, where they live, what they do, or anything!

When an issue comes out, the publisher will turn over to the monopoly an appropriate number of unaddressed copies. The monopoly knows how many copies to send to each local post office. And when copies arrive at the post office, that card Ivan filled out a while back will be their way of knowing that Ivan is to get one of the copies. His name will then be marked on his copy, and it will be sent out on his postal route.

I think you can see what this system does to the ready availability of subscriber lists. The publishers don’t have them. And the government monopoly that does, won’t share them. This antiquated system puts a stranglehold on the publisher and on the prospective direct marketer, as well. It’s hardly a situation conducive to promoting business.

Pity the poor publisher, though. He can’t even take steps to improve his renewal rate — he doesn’t even know to whom he should send the renewal notices!

Another Approach

Some publishers have been experimenting with their own systems of alternate delivery. Also, just recently, we’ve heard that there have been some changes in the state system. We were hoping that this would mean the publishers could finally have their own subscriber lists. Finally people could order their subscriptions from the publisher. And finally the economy was advancing from its largely cash-only basis.

Have our hopes materialized? Alas, no. We understand that part of the state monopoly has been privatized. Details are sketchy coming out of Moscow. And not everyone fully understands the consequences of the change. At first glance, however, it appears that the change will make little practical difference to the publishers.

Not Just Russia

This awful state system of subscription and distribution exists not only in Russia, but also in the other Newly Independent States. Many other countries in Eastern Europe share the same legacy, as well. Indeed, in some places — believe it or not the situation is even worse.

How can it be worse than that? I found out last May, when I was called to Zagreb, Croatia to address a conference on “The Role of Media in a Democracy.” It was sponsored by the U.S. Information Agency and the International Media fund.

What I found is that in Croatia, there are virtually no periodical subscriptions at all! The reason is not because the country is at war, nor that it is being flooded by refugees and displaced persons. Inflation is the villain. With inflation running at one percent per day, it just isn’t practical for publishers to collect money at today’s value and then fulfill subscriptions into the future as that subscription money melts away.

The Ubiquitous Kiosk

How then do Croatian publishers distribute their magazines and newspapers? It’s done almost exclusively through government kiosks throughout the country. But once again, the poor publisher doesn’t know who his or her readers are.

The Croatian publishers at my workshop vehemently denounced the kiosk system. They believe it to be one of their greatest problems. The kiosks do little to merchandise their publications effectively. And they pay late. It is usually one month or more after a publication has gone off sale that the government pays the publisher for the copies sold. Meanwhile, the inflation has been taking its toll on the money due.

Problem or Opportunity?

But while the publishers characterized the situation as a problem, I asserted that it seemed to me like an opportunity. After all, they had told me that they were dissatisfied with their present vendor (the government kiosks). They could profit by utilizing a better system. And they would be willing to spend good money, if only they could get better service.

Voila! In the capitalist world that is indeed an opportunity. A chance for a competing service to move in and capture the market. There are no federal laws to compel the publishers to use the government system. I confirmed that fact in a later private meeting with the Croatian Minister of Communication. Similarly in Russia, their laws do not compel the Russian publishers to use their government system of subscription and distribution, either.

One publisher argued the necessity for dealing with the kiosks since that’s where consumers go to buy publications. I told him the Willie Sutton story. You know — when asked why he robbed banks, Sutton replied, “Because that’s where the money is.” And if the publishers would only sell their publications at a different kind of retail establishment (a drug store, shoe store, etc.), the buyers would go there. That’s where the newspapers and magazines would be.

So if you know anyone who’s interested in a new business venture, see if he or she will want to play a role in creating a new subscription and distribution system in Eastern Europe and the former Soviet Union. I’d like to hear from him or her! There’s an interesting opportunity there awaiting the right collection of entrepreneurs who are bold enough to seize it.

So Where’s the Hope?

Now, aside from the non-existent publishers’ lists, are there any other lists that can be used by direct marketers? After all wasn’t the Soviet Union notorious for keeping lists of people? Certainly, the government collected a lot of data.

But the lists were not available to the general public. Remember, we’re talking about the country where even a telephone book was a rarity. And perhaps there’s a clue to the quality of the government lists in the line from Dr. Zhivago, referring to a main character’s fate as becoming “a nameless number on a list that afterwards got mislaid.”

Business-to-business lists were another story, though. Numerous institutes compiled reams of data on the industries about which they were concerned. The data included names and addresses of key personnel. Even telephone numbers. Sounds ideal for direct marketing, doesn’t it?

But with the fall of Communism and the elimination of Gosplan, the government planning agency, the compulsiveness in compiling all that data has become a thing of the past. You can still get lists from the institutes. Much work has even been done by third parties in compiling these names, addresses and even phone numbers. Some purveyors have set their sights on becoming the D&B of the East!

I’d hate to hazard a guess at the state of decay present in all the lists, however. These lists are likely to be based on old data, compiled on a population with, shall we say, unusually high personnel turnover and rapidly changing responsibilities. Recently, an Eastern European list provider, after handing me a list, mentioned in passing that, by the way, some of the names might be up to fifteen years old! Caveat emptor.

Recommendations

Here’s my advice to you: If you are ever tempted to use existing business-to-business lists from this part of the world, take a sample of names and try to verify them before you invest heavily in a mailing.

How else can you get a list? What’s a mailer to do? Is it not possible to get really good lists for Eastern Europe and the former Soviet Union?

I’ll answer those questions with another recommendation: Use advertising to get the names you want. Viewers, listeners, and readers in this part of the world can be good responders. I’ve heard from one list manager who has over 30,000 names of people who have responded by letter to a short-wave radio broadcast.

If you are looking for a general consumer list, use radio, TV, or mass appeal consumer magazines and newspapers. Offer some free information and see what kind of response you get.

For a more targeted list, use special interest consumer magazines and newspapers, or trade and professional journals. Pick the publication based on the subject matter covered and the kind of readers it is likely to attract.

In Eastern Europe and the former Soviet Union, there is a growing group of people who are successfully profiting from the new economic freedoms. I’ve counseled several people in various stages of starting publications aimed at these new, upscale consumers and business people. Seeking names by advertising in such publications could net a very desirable list.

Not only will the lists you acquire in these ways be your best bets for your own mailings — they’ll also have value for rental to others! But when you go to buy space for your ad — don’t expect the publication’s sales person to give you much in the way of demographics. (Forget asking for the Russian equivalent of a BPA statement.)

Remember, you’ll be dealing with a publisher who likely doesn’t even know exactly who his or her readers are!