Thinking Outside of the “Book”

May 02, 2006 10:07 PM  By

As integration of multiple channels has become the norm rather than the exception, prospecting for customers has become more challenging. Today’s dynamic marketplace means you have more access to more potential buyers via the Web and stores and print—but so do your competitors.

For that reason, you may want to think outside of the “book” as a prospecting tool and reconsider three proven channels that have been steady workhorses for other types of marketers for well over 50 years: insert media, television, and radio.

Insert media
The vast majority of catalogers do not use insert media as a viable channel for customer acquisition. Yet insert media represents a very cost-effective way to reach proven mail order buyers at a fraction of the cost of printing and mailing a full-size catalog.

Think about the economics: Between printing, postage, list rental, and lettershop costs, a typical catalog will run at least $0.50 per piece to get into the mail. With insert media, the media and printing costs will run you $0.03-$0.10 per piece to get into most programs, depending on how elaborate a piece you decide to print and which type insert channel you go into.

So it’s possible to reduce your cost per contact by as much as 90%. Yes, there will be a decline in response compared with that of a catalog mailing, but the drop in response will not be as significant as the drop in costs. The result: a much lower cost per order. You should expect a lower order size on the initial order, but once they become a customer, they are now part of your house file.

There are a variety of insert programs to choose from, including:

* Package inserts: included in the shipping package of a responsive mail order buyer

* Catalog blow-ins: physically blown into a catalog mailing to a cataloger’s own customer base .

* Ride-alongs: similar to blow-ins, but in the mailing envelope of a promotion to a company’s own customer base (often a book or music club)

* Co-op mailings: a group of noncompetitive advertisers sharing an envelope to mail to a common market * Card decks: a group of advertisers promoting via same-size cards, mailing to a common market.

* Statement stuffers: invoices sent with invoices generated by utilities, credit cards, cable companies, oil companies, retailers, etc.

* FSIs: freestanding inserts typically included in Sunday newspapers.

Prices are about $0.02-$0.07 per insert, plus printing, which can vary greatly depending on whether you print a basic single-panel two-sided insert (which can cost as little as a half-cent) all the way up to a 16-page minicatalog (which is likely to push the weight of your piece high enough to cause a surcharge for the media expense and can cost up to $0.05 each depending on your volume). Rollout pricing for the media is clearly negotiable based on your response. Generally the more expensive the program, the higher the response.

As with catalogs, insert media programs need to be tested. The key is to test a variety of programs with small quantities (typically 50,000-100,000 pieces). If your budget allows, you should test at least 15 programs. If you test 15 programs, expect to find five to seven “winners” worthy of a significant rollout—say, 1 million inserts annually. Plan on testing costs of about $2,500-$5,000 per program.

Developing creative for an insert should be easy for a cataloger. Just work within the look, feel, and branding of your existing catalog. All the creative elements (photos, copy) already exist, so you really just need to adapt them to the format of the promotional vehicle that you chose.

As for the offer, it’s best to chose your hottest-selling items, as you’ll only have a limited amount of space available. Make sure that they are representative of your overall merchandise mix, since the goal is to bring in a customer who will purchase in the future as well.

Direct response television (DRTV)
If a typical catalog has 150-200 products, there are usually one or two “hit” products that may be worthy of elevated promotional efforts. Perhaps the most famous example is Sharper Image’s Ionic Breeze Air Purifier. This product started out strong in the print catalog, but product sales exploded after the item was promoted via an infomercial. Not only has the airing of the infomercial helped product sales, it’s been an excellent resource for building Sharper Image’s brand as well as its customer file.

A catalog can be an excellent tool for finding products that are DRTV “worthy”. After all, it’s your customers who are telling you which products they are most interested in. If one product leaps out of the pack, has broad enough appeal, is unique, and has a five-times mark-up or better, a DRTV test may be worth considering.

The first thing to determine is how much time you will you need to effectively sell your product. If it’s a fairly straightforward item, then short-form (typically a 60- or 120-second spot) will be most appropriate. Two-minute spots are often more cost-effective from a media efficiency standpoint, but they are also harder to come by.

If the product lends itself well to telling a story, then a full-length 28.5-minute infomercial (also know as long-form) may be a better approach. Sometimes a product will start out with an infomercial, then as it builds in popularity, a short-form spot is developed.

The price of the product is another key determinant in choosing between short-form and long-form spots. A product price of $19.95 is typical for short-form ads, with the price rarely going above $29.95 (unless it’s also on long-form). Higher-priced products and continuities are better candidates for infomercials.

In the short run, production costs will account for the bulk of your expenses. If you have a successful DRTV campaign and are in rollout mode, media costs will then be the lion’s share of your expense.

A short-form spot can be produced as little as $30,000, but $50,000-$150,000 is more typical. To produce an effective infomercial, a budget of $150,000-$250,000 would be appropriate. Add in a well-know celebrity endorsemen,t and these figures can go up.

Then there are your media costs. A test of $15,000-$30,000 is enough to buy enough airtime to provide you with an initial read on whether a given product has potential for success in the DRTV medium.

Nobody said that venturing into DRTV would be cheap, but if you are successful, it can be a very profitable medium for catalogers and the foundation of moving your brand and business to the next level. It’s not uncommon for some of the top DRTV marketers to spend upward of $40 million annually to promote a single product or service. Just remember, as with all new media channels, to work with experienced production and media experts who can help guide you through the process.

Radio
One last frontier to consider when thinking “outside of the book” is radio. While this channel is not right for many catalogers, radio can be quite effective for products where the visuals aren’t important. Catalogs focused on gift-giving (such as those selling flowers or food baskets, for instance) would be logical candidates for radio.

The only decisions you have to make regarding the format of your radio spots are whether you want a 30- or 60-second ad and whether you plan to have a prerecorded commercial or a “live read” from a radio personality. More often than not, direct response radio marketers will have a prerecorded spot to use as the base promotion so that they have control over the message, but they will also use live reads wherever possible to capitalize on the implied endorsement from the radio personality.

You should be able to produce a radio spot for around $5,000 and test the channel with another $15,000-$20,000 to get a read on whether radio has any promise for your catalog.

Dave Smith is founder/president of Incremental Media, a Bellmore, NY-based media brokerage firm. He can be reached at dsmith@incrementalmedia.com.