From Little Acorn to $11 Million Oak

Just three years since its launch, videos and gifts marketer Acorn Direct is looking to bust loose.

Catalog/online sales for the Silver Spring, MD-based direct division of London-based Acorn Media UK have grown from $2 million in its first year to $9.3 million last year and a projected $11.1 million this year. But Miguel Penella, a former vice president with Time-Life who was named president of Acorn Direct in mid-March, believes the company can grow even faster.

The company launched the catalog not long after Target Corp. began scaling back its Signals and Wireless catalogs, to which Acorn used to supply videos. Last year Acorn Direct posted its first profit last year, coming in just above break-even, Penella says.

When he began negotiating for his position in December, Penella saw two possible directions for Acorn Direct: Prepare the business for a sale by shifting from prospecting mode to primarily house file mailings, or grow the business “as much as we could — which is the tactic we’re taking,” Penella says.

Mailings to customers accounted for only 13% of Acorn’s 5.1 million-catalog circulation last year. This year just 9%-11% of mailings will go to the house file, Penella says. Acorn expects to nearly double circulation this year, to 10 million, with drop sizes being increased rather than the number of mailings, which will remain at nine for the third straight year.

The company has found about two-thirds of its prospects via co-op databases Abacus, Z-24, and Prefer Network. Names rented from upscale catalogs such as Critics Choice, Levenger, and French Country Living account for the rest. This year Acorn will mail to prospects from such catalogers as Art & Artifact and J. Peterman and subscribers of such magazines as British Heritage.

Using the Web and DRTV

Acorn Direct also plans to expand its online marketing efforts; it will use Web affiliate marketing and keyword search marketing, neither of which the company has aggressively pursued in the past, Penella says. Web-based sales currently make up 20% of Acorn Direct’s sales.

“There are a lot of Websites out there that can become affiliates of ours to generate traffic to our site,” Penella says. “We can gain incremental activity on the site — separate from the sales activity generated in our catalog that ends up in Web-based sales.”

Penella also intends to test direct response TV this year. Four or five Acorn-branded videos will be promoted in two-minute spots on cable-TV networks such as the History Channel, the Travel Channel, BBC America, and others popular with Acorn Direct’s typical catalog customers: men and women, 55 years old and older, with household income of more than $75,000.

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