Publishers to Increase Investments in Acquiring Customer Data in 2012, Survey Says
By Jeremy Greenfield, Editorial Director, Digital Book World, @JDGsaid
As traditional sales and marketing channels change, diminish or disappear altogether, book publishers plan on investing in new, direct-to-consumer marketing initiatives in 2012, according to a recent survey.
According to a recent Digital Book World survey conducted by Forrester Research, nearly two-thirds of publishers plan on increasing investments in acquiring reader data in 2012 while only 1% of publishers plan on decreasing such investment. This question was not asked in the previous year’s survey.
In late 2011, book publishers representing 74% of U.S. publishing revenues were surveyed on a wide range of topics concerning digital books. The same survey was conducted in 2010.
“Publishers can see into the digital future a bridge that can potentially be built between publisher and customer,” said James L. McQuivey, Ph.D., vice president and principal analyst at Forrester, who conducted the survey. “Knowing who readers are, what they like and what they want next requires building a base of demographic information.”
The disappearance of Borders and decreasing shelf space at Barnes & Noble has challenged publishers to find new routes to the consumer.
“As the channels that publishers have always used to reach consumers atrophy, they have to compensate and be able to reach consumers in other ways,” said Mike Shatzkin, a long-time industry expert who has written about this topic in the past (and, full disclosure, partner with Digital Book World on the Digital Book World Conference). “And direct consumer knowledge is one of the tools they need to put in the toolbox.”
Publishers Realize the Importance of Data
Beyond increasing investment in customer data acquisition, publishers see the need to build databases of customers.
In the same survey referenced above, nearly 71% of publishers agreed with the statement, “To be successful, the publisher of the future must have a database of individual customers it can have a relationship with and even contact directly.”
At the same time, most publishers at this point know very little about their readers.
According to the survey, almost half know nothing about their readers’ Web browsing or social media habits. Two thirds know nothing of their readers’ purchasing habits outside of books. And, perhaps most-telling of all, 42% know nothing of their readers’ reading habits.
In the past, publishing companies competed with other publishing companies who had the same limitations on what they knew about their readers, according to McQuivey. In the future, publishers aren’t just competing with each other in the race to learn more about customers and sell more books – they’re also competing with new players.
“There are companies already out there who are smarter about the customer who will become publishers, like Amazon or NBC,” said McQuivey. “The landscape has changed and there are a lot of companies out there who know a lot more about readers than publishers, Facebook being the best example of this.”
To make matters worse, companies like Amazon or NBC may not need to look at their publishing operations as profit centers and so may sell books at much lower margins than traditional publishers, according to McQuivey.
Building Publisher Databases; Will They Help Sell More Books?
Many publishers already have customer information. Only 13% of those surveyed said they had not collected any customer emails and only a quarter had no idea where their readers lived.
But, according to McQuivey, what most publishers consider to be a valuable customer database is just a starting point.
“Most publishers don’t have one single place where all the customer data lives. They have a little email database in one place, some data from a contest they ran last year elsewhere and they think that’s a customer database. But it’s not,” he said.
In his practice, McQuivey is aware of publishers who are currently increasing their investment in building customer databases but cannot give specific information because of confidentiality agreements.
The first thing publishers need to do, he said, is build capabilities to safely collect, store and interface with customer data. Once a sufficient database is in place, publishers can begin building fully fleshed out demographic profiles.
But will it help them sell more books?
“One result that is sure is that they will sell books that they wouldn’t have otherwise sold because they have that data,” said Shatzkin. “Whether or not those sales will compensate adequately for the reduction in sales in the established channels is not a question I have any way to answer.”
Write to Jeremy Greenfield