Insert Media: Extracting Profit from Inserts

In economic times like these, few marketers can afford to snub the chance to reap extra revenue. For FranklinCovey, that means accepting package inserts and blow-ins for the first time. “With a lot of the cost-cutting we’ve been going through with the economy the way it is, we didn’t want to cut our circulation. So this is one of the easier ways to find some additional money,” says Eric Bright, director of catalog marketing at the Salt Lake City-based direct marketer of day planners and other productivity tools. FranklinCovey plans to accept 900,000 package inserts this year, having started in July, as well as roughly 10 million blow-in inserts beginning in August.

FranklinCovey is just one in a growing stream of direct marketers who are bucking tradition and placing inserts in their catalogs and packages for the first time. “We’ve seen a lot of interest in opening up programs that previously had not even been thought about,” says Jim Lynch, vice president of AM/Direct, the alternate media division of Peterborough, NH-based list firm Millard Group. “Now that insert media are becoming so much more mainstream, catalogers are looking at them in a different light.”

They’re also looking at the effect on the bottom line. Package inserts can be “a big profit center for companies,” says Leon Henry, founder of the Scarsdale, NY-based insert media firm that bears his name. “If they’re putting out 1 million packages and can take five inserts, they can generate $200,000.”

The going rate for catalog blow-ins is less than for package inserts — sometimes as much as 50% less, says Dean Barile, vice president of insert media management at Hackensack, NJ-based list firm Mokrynski & Associates. Nonetheless, one blow-in can net a cataloger $14,000 for every 1 million catalogs mailed, Barile says.

But as enticing as the extra revenue may be, most marketers won’t put just any insert in their outgoing packages or catalogs. “We want to believe it would appeal to our customers,” says Maggie Kessler, director of circulation and advertising for San Francisco-based Sharper Image. The cataloger/retailer of high-tech gifts has accepted package inserts for three years, “but they have to be upscale and have a nice look.” What’s more, to make sure customers aren’t inundated, Sharper Image won’t take more than six offers in a package insert envelope.

“We’re really, really selective. We’re very careful about the tradeoffs,” says Terri Alpert, founder/CEO of Professional Cutlery Direct (PCD), a North Branford, CT-based cataloger of kitchen tools. Alpert doesn’t want to trade her upscale image for the ancillary revenue that PCD would gain by accepting an insert from an incompatible company. To make it in PCD’s package, she says, the prospecting marketer has to have something that will add value to the customer experience. For example, PCD has accepted inserts from Cook’s Illustrated magazine because Alpert regards that as a complementary offering with a comparable brand image. “It’s something very synergistic. We sell cooking products, and they’re a cooking magazine. Clearly, it’s not competitive, and it could be of interest to our customers,” she explains.

“If it’s not sufficiently upscale and seeming to be of interest to our customers, we’re very concerned it may downgrade the customers’ reaction when they’re opening the package,” Alpert continues. “That’s when they’re potentially at their hottest, and we want them to respond to our bounce-back. Your package is a touch point. How professional it seems is all part of marketing.” To avoid overpromoting, PCD doesn’t accept inserts touting free gifts, discount offers, or questionable cure-all health products.

Sometimes, if the affiliation is good, it can rub off in a positive way for the cataloger, suggests Ann Taylor, chief operating officer of Gold Violin, a Charlottesville, VA-based catalog of gifts for older adults. Gold Violin placed inserts for the large-print version of Reader’s Digest in its outgoing packages last year as “a revenue enhancer,” she says. “Reader’s Digest is a trusted name brand. We’re a newer company and not as much a household name. For us it was a positive, to be presenting Reader’s Digest to our customers.”

Selectivity is even more of an issue for blow-ins, which sit within the catalog itself. And catalogers are right to be wary about accepting too many blow-ins or the wrong kind, Barile says: “You don’t want to clutter up the book.” What’s more, some catalogers have found through testing that blow-ins can dampen potential sales more than package inserts do.

While most managers do the initial screening and flatly reject competitive offers, the approval process is not always that cut-and-dried. Whether the revenue is worthwhile is often a case-by-case decision for many catalogers, Henry notes. “They have to project out, ‘Can I accept the insert for chocolate if I’m selling chocolate cake?’”

Some catalogers say that conflict-of-interest concerns are overblown. Personal Creations, a Burr Ridge, IL-based cataloger of personalized items, rarely turns away marketers that want place an insert in its packages. Nor has the company suffered ill effects from the practice. “I’ve not heard any negative feedback,” says director of marketing Judy Nelson, who notes that the company booked 2 million inserts in 2001 and 2002. “It’s part of our budget every year now. We’re counting on it.” The package insert program has worked so well, the company plans to begin accepting blow-ins this fall.

Dos and Don’ts for Accepting Inserts

  • Do keep the interests of your customer in mind. By choosing carefully which inserts to accept, you can turn a moneymaker into a value-added proposition for customers as well, says Marge Fernbach, senior account executive at Danbury, CT-based list firm Statlistics. For instance, if you sell hockey equipment, including an insert for a hockey collectible is akin to providing the customer an extra service.

  • Don’t get greedy. Accepting too many inserts will dilute the effectiveness of each while also distracting customers. For package inserts that are bundled in an envelope, six to eight is a good number, Fernbach says. But if the inserts are going to be loose in the package, accept maybe half as many.

  • Do consider designing your own package insert envelope. “You can design your envelope carrier to fit along with your brand image without necessarily endorsing it,” says Marie Buzzeo, vice president at Greenwich, CT-based list firm Direct Media.

  • Do ease the insert approval process by designating a go-to person within your firm who will be in charge of clearance and pricing approval, suggests Jeff Malc, senior marketing services director for ClientLogic’s alternative media division in Weehawken, NJ.

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