Strong Partnerships Can Drive Sales

by Susan Zweibaum on January 11, 2012

Yesterday, while reading my New York Times I came across an offer that just blew my socks off and made me wonder if it wasn’t almost too extreme.  However, upon further thought I realized that this promotion was perfect for a few reasons that I will get to shortly.

So, what is this amazing offer?  How about a free Nook?  Seriously.  It was a full-page ad offering a free Nook Simple Touch (the basic, not color) with a full-year Nook subscription to the New York Times.   The offer also showed up in an email offer from Barnes & Noble.   And for those wanting the more tablet style product, you could also get $99 off a Nook Color instead.   What made this offer so interesting was the partnership between the New York Times and Barnes & Noble and the way that the New York Times was leveraging their digital assets, something that has been key to their recent success in the marketplace. 

Truthfully, this isn’t anything new.  Think of getting discounted or free phones when you sign up for mobile phone service.  However, this is the first time an e-reader and a digital content provider have linked together to create such an offer.

Let’s take a closer look at the offer and why it makes sense from both the Barnes & Noble and the New York Times standpoints.

ROI

This is the key to the whole story, and while I still want to talk about the marketing side, none of that matters if the ROI isn’t there.  A Nook Simple Touch costs $99.  A one-year Nook subscription to the NY Times is $239.88.  It is likely that the cost of the Nook is being funded by the New York Times and likely at a discounted rate, but I don’t know this for a fact.  I can also tell you that People Magazine is doing a similar offer, but their subscription is only $119.88 and I read that People and B&N are sharing the cost.  This makes sense as the ROI wouldn’t be there for People if it hadn’t shared the expense of the e-readers.   No matter how you slice it, this becomes a win-win for both parties, although an expensive initial outlay for the New York Times.  While not knowing the costs associated with the digital subscription, I am venturing that the New York Times is still making money.  Additionally, most people will likely renew their subscription once they have it, leading to a more long-term proposition and repeat sales (the key to any promotion).  From the B&N standpoint, a person who has an e-reader is going to continue to buy books and other subscriptions, which in turn drives their revenue up as well.

 The Buzz

Somewhat surprisingly, B&N beat Amazon to this kind of offer.  The reason I see this as surprising is that Amazon has historically been the innovator in this market and has the greater marketshare.  How likely do you think Amazon will construct a copycat deal?  Fairly likely, especially if they see it working in terms of an increase in Nook sales.  They will do anything to make sure they continue to be the leader.  Nook is behind in overall e-reader sales, but the kind of buzz this offer generates can only help them grow sales and market share.  Combine that with the good reviews the Nook has gotten and you have a winning formula.   Let me state, however, that there are some blog posts and news items taking a slightly cynical approach to the offer.  For instance, they suggest you would only take advantage of this offer if you were already thinking about a New York Times e-reader subscription.  Others have pointed to the fact that B&N has hinted of spinning off the Nook to a separate group citing lower than expected sales.  They all may have a point, but the partnership is the key here and it is a good strategy for both to attempt this kind of promotion.  Brands in second place often need to step out of the box to generate attention and sales when they are competing with such a behemoth as Amazon.

Let’s not forget the buzz this offer is creating for the New York TimesThis offer is another example of how they are utilizing their digital content to reach more customers and in a different way.  What’s more, there are a myriad number of stories on the Net talking about this offer.  It is all positive buzz for B&N and the New York Times.

 Partnership

Good partnerships drive good promotions.  Why do you think companies sponsor events and teams and have endorsement deals?  In this case, the New York Times is looking to grow their digital subscribership and need a partner to deliver it.  You can get the NYTimes.com on any computer, but an e-reader is different; you need a subscription.  Giving the consumer the reader if they get a subscription is a great way to drive subscriptions.  Sort of like when razor companies give away the razor handle in order to drive razor blade sales (which is where they make all their money anyway).    

Only time will tell if this is successful and if Amazon will follow suit.  In the meantime, I hope the winning formula proves itself to be a way to drive long-term sales for both B&N and the New York Times.

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