Circulation Speculation

For months economic indicators have been teasing businesses and consumers with hints of a turnaround. Even most pessimists believe that the worst of the economic slowdown is behind us, while optimists are looking forward to solid growth in 2004.

On that basis alone, you’d expect catalogers to be boosting circulation and page counts this year. But the overall state of the economy is of course just one factor in determining mailing plans for the coming year. Paper and postage prices are arguably an even more critical issue — and happily, both appear to be holding steady for a while. (For more on paper pricing trends, see “A Rebounding Economy May Boost Paper Prices,” page 11.)

Mitigating those factors, however, is that the past two years of weak sales and narrow profits have left many catalogers with less money to invest in heavily increasing circulation. What’s more, many mailers are complaining of a decline in the number of names available for rent.

Jack Rosenfeld, president of multititle gifts and needlecrafts cataloger Potpourri Collection, is one such mailer. “Rental list sizes are down in general,” he says. “If you’re used to renting a list with 100,000 names, that list may have 90,000 this year.”

Ed Mallin, president of Pearl River, NY-based list firm Walter Karl, echoes Rosenfeld’s claim: “Counts are down. No question.” Catalogers, in general, mailed less in 2002 and the first half of 2003, Mallin explains, “and that’s reflected in the shrinking of monthly and quarterly hotline names,” mostly on the consumer side. Lower list counts put more pressure on mailers to find segments of lists that they didn’t test in the past or to expand their use of compiled data sources.

For his part, Mallin says that his clients — primarily lower-end consumer catalogers — are increasing overall circulation 10%-15%. But Ben Perez, president of Peterborough, NH-based list firm Millard Group, doesn’t expect to see significant growth in circulation during the next three to six months, because “companies have had less success with holiday than they were expecting.” Amid the improving economic conditions, Perez says, “results haven’t been terrible, just not great.”

Potpourri, whose 10 titles include The Stitchery, Expressions, and In the Company of Dogs, is nonetheless planning on mailing about 7% more catalogs overall this year than in 2003. But not all of the company’s titles are revving up circ. Rosenfeld says that circulation at one title is up 20%, while at another Potpourri catalog circ is down 5%. He expects winter/spring sales to rise about 7%.

Calling all co-ops

More of Potpourri’s prospect names will be coming from cooperative databases this year than in the past. “We’re being aggressive with co-ops,” says Rosenfeld, though co-ops still account for less than 50% of the Medfield, MA-based mailer’s prospecting.

Southwestern gifts, apparel, and home decor cataloger Sundance is also relying more on co-op databases — Prefer Network, NextAction, and Abacus — for most of its prospecting. “You end up with better response rates,” says David Brown, director of marketing and circulation for the Salt Lake City-based mailer.

Not that Sundance is prospecting all that much this year. Its winter/spring circulation will be only 1%-2% higher than last year’s. While the cataloger enjoyed a 12% jump in sales last spring, it found that customers, rather than prospects, accounted for most of the increase. So rather than make prospecting a priority, “we’re doing page-count increases in some key spring mailings,” Brown says. The core spring catalog will be 72 pages, up from last spring’s 64 pages; circ for the specialty jewelry book will remain flat. All told, Sundance expects winter/spring sales to increase 5% from last year.

Co-op databases will account for about 30% of the new names that Manchester, VT-based Orvis Co. plans to mail during the 2004 winter/spring season. The outdoor gear, apparel, and home decor cataloger/retailer plans to increase prospecting 15% this year, says director of catalog marketing Eric Johnson. About 40% of the catalogs will go to prospects; Orvis expects to obtain most of the new names from list rentals and exchanges with like catalogers.

Overall, though, Orvis is increasing circulation just 1% this winter/spring. What’s more, total page count for the men’s, women’s, gifts, and fishing catalogs will be down 2% from last year. But due to improved house file modeling, the cataloger is nonetheless projecting a 5% sales increase.

Growth without prospect mailings

Hearthside Quilts, a Hinesburg, VT-based cataloger of quilt kits and accessories, expects to increase its customer file 10% this year. But it’s not renting names or otherwise mailing extensively to prospects. Instead, says president George Wachob, the cataloger will rely on ads in rural newspapers and in magazines such as Woman’s Day and Family Circle. Wachob estimates response rates to space ads to be at least twice as high response to rented names.

Wachob attributes his lack of success with rented lists in part to the specialized nature of his product offering. That’s a problem Herschel Strauss, president of gifts catalog The Source for Everything Jewish, can relate to. “We’ve rented almost every kind of Jewish list and done all the ethnic overlays we could find,” he says. “It’s not like we have so many people we can mail to. It’s like drilling for oil — we have to dig deeper and deeper.”

The Niles, IL-based mailer’s last major prospecting effort was during the 2002 fall/holiday season. “We decided to try to find customers at a time when others were cutting back,” Strauss says. Having mailed to 100,000-150,000 rented names, The Source for Everything Jewish gained “a few thousand new customers,” Strauss says, enough so that the cataloger doesn’t feel it needs to prospect this year.

Not that Strauss is ruling out any circulation increase entirely. “We typically print 1.5 million catalogs a year,” he explains. “But if I can find 50,000 more good names to prospect to this year, I’ll print 50,000 more catalogs.”

Even with circ and page counts flat, Strauss thinks the $3.5 million catalog can increase sales 5%-10% this year, thanks to the promotional e-mails it sends on a regular basis to 30,000 opt-in names.

Sam Benowitz, founder/president of Morton, WA-based Raintree Nursery, not only plans to do little, if any, prospecting; he is cutting circulation from 270,000 to 245,000. But not because business is bad. Rather, the marketer of fruit and other edible plants is receiving so many orders from its Website, Benowitz sees no need to spend money on printing excess catalogs. He’s reducing the page count as well, from 96 to 88.

Word-of-mouth, rather than rented names or space advertising, has long accounted for most of Raintree Nursery’s new customers. “We’ve been growing organically each year,” Benowitz says. He expects Raintree’s sales to increase about 8% this winter/spring, the same pace they’ve been growing for the past few years.

Less sanguine is Jeff Urbaniak, vice president of marketing for Indiana Botanic Gardens. The Hobart, IN-based cataloger of organic dietary supplements is keeping circ and page counts flat for its three titles, The Herbalist, Botanic Health, and Botanic Choice, following a year of flat sales.

In terms of results, “our prospecting is not where I would like it to be,” Urbaniak says. “We definitely won’t be increasing prospects unless I can find some lists that are significantly better.” Indiana Botanic Gardens rents lists from noncompetitors that have large segments of seniors in their files, because older consumers tend to be more concerned with their health and open to alternatives to expensive medications.

And for the aggressive mailers…

For every bear like Urbaniak, there’s a bull like Arnold Zaslow. The executive vice president of ATD-American Co., a Wyncote, PA-based marketer of furniture and supplies to government institutions, is increasing circulation for the first half of the year by roughly 30%. What’s more, sales were so strong during the second half of 2003, ATD is increasing its page count for the first half of 2004 by 18%, rather than by 10% as originally planned. Zaslow expects first-quarter sales to rise 8%-12% this year.

ATD will build up its circulation in two primary ways, Zaslow says. It will increase the frequency of mailings to its house file, and it will mail to more names from compiled lists of correctional, educational, and other institutional facilities.

Women’s apparel cataloger/retailer Frederick’s of Hollywood is another aggressive optimistic. It plans to mail 18% more catalogs in 2004 than last year, says Danielle Savin, vice president/general manager of the Hollywood, CA-based company’s direct division. In fiscal 2003, Frederick’s of Hollywood mailed 25 million catalogs.

Prospecting usually accounts for 35% of Frederick’s mailings, but this year it will make up about 39%. Co-op databases will account for 20% of new names, with rented catalog lists bringing in the rest. Having emerged from Chapter 11 bankruptcy protection in January 2003, the company is in a heavy growth mode, Savin says. Indeed, she projects a 31% rise in spring sales this year. “We’ve had success in many areas of merchandise, such as ready-to-wear apparel and shoes,” she says, “and we’ve expanded those categories.”

Supreme Audio, a Marlborough, NH-based cataloger of audio equipment for aerobics instructors, is banking on a new wireless waterproof system to help boost its sales 5%-10% this year. The product, tailored for water-aerobics instructors, has already sold well on the company’s Website, says co-owner Bill Heyman. To further promote it, Supreme Audio is increasing circulation 40%. Names exchanged with and rented from trade journals and other catalogers will account for most of the additional circulation.

The 40% circ increase, however, comes a year after Supreme Audio slashed circulation 40%. Sales between 2001 and 2003 had fallen 6%-7%, Heyman says. “I was being very careful with marketing expenditures because I wasn’t getting the normal sales bounce I historically got.”

But this year, Heyman’s “general sense is that the economy is turning around,” which means that the health clubs that are Supreme Audio’s target market may finally be ready to invest in capital expenditures again.

Circulation Plans at a Glance

CATALOGER CIRC CHANGES
ATD-American circ up 30%; page counts up 18%
Frederick’s of Hollywood circ up 18%; total pages circulated up 28%
Garden Botanika flat circ and page counts; frequency increased from every 6-8 weeks to every 4 weeks
Indiana Botanic Gardens flat circ and page counts
Irish Shop of New Orleans circ up 5%; page count flat
Orvis circ up 1%; page count down 2%
Potpourri Collection circ up 7%; page count up “in the single digits”
Raintree Nursery circ down 9% due to strong Web sales; page count down 8%
Sundance circ up 1%-2%; total pages mailed up 12%
Supreme Audio circ up 40%; page count up 12.5%

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