Given the dismal state of the U.S. economy, the timing may be right to consider marketing into Canada.
Although Canada’s economy has been lagging for several years, statistics from the Canadian Department of Finance indicate that things are turning around. Canada’s gross domestic product increased a solid 3.1% during the third quarter of 2002, while unemployment dropped from 8.0% in December 2001 to 7.5% in November 2002, though this is still higher than the U.S. rate. And while the Canadian dollar was worth just $0.66 U.S. at press time, economists expect its value to rise in the near future.
This favorable exchange rate makes Canadian lists a bit of a bargain. Whereas U.S. catalog lists have typical base prices of $80/M-$100/M, base prices for Canadian catalog lists are generally $80/M-$83/M ($125/M-$130/M Canadian).
Perhaps the most compelling reason to enter the Canadian market, though, is that considerably fewer other catalogers are doing so, making for less competition in the mailbox than is the case here in the States. Tony Gilroy, general manager for Toronto-based list firm Direct Media Canada, a division of Greenwich, CT-based Direct Media, estimates that there are fewer than 300 catalogers based in Canada. By comparison, the Direct Marketing Association estimates that more than 10,000 U.S. companies market by catalog.
Then again, fewer catalogers means there are fewer lists of catalog buyers available for rent. Although the total number of lists on the market in Canada is near 2,000, the number of actual direct response files is only about 500, according to Hackensack, NJ-based list firm Mokrynski & Associates. The U.S., on the other hand, boasts about 2,000 consumer catalog lists. And with fewer than 32 million residents, compared with more than 285 million in the States, the Canadian market is smaller overall.
It’s also more difficult to find enhanced files in Canada. “You don’t have suppliers who put together household data appended to other files,” Gilroy says, “and that’s a big problem, because you can’t get the overlay household data needed to make the names targetable.
“Just looking for lists is easy to do,” Gilroy continues. “But no U.S. cataloger should ever mail into Canada until doing a list universe analysis,” or forecasting the maximum number of pertinent rental names available. This helps determine if the rental list market is large enough to warrant the marketing investment.
What with Canada’s smaller population and its relative paucity of catalog lists, “Canada isn’t an opportunity for vertical-specific catalog offers,” Gilroy cautions. Marketers in more general or broader categories, such as apparel and home goods, would likely perform better in Canada than highly niche mailers.
A local example
Several upscale U.S. consumer catalogers, such as gifts marketer Hammacher-Schlemmer and reading tools mailer Levenger, have introduced lists of Canadian buyers during the past few years. But for every new list to the market, Gilroy says, another list — generally more downmarket files such as Rockwood Gardens (Michigan Bulb’s Canadian subsidiary) and gifts marketer Carol Wright — have dropped off.
Veseys, a seed and bulb mailer based in York, Prince Edward Island, that mails catalogs to Canadian and U.S. consumers and businesses, abandoned cold prospecting in Canada two years ago, after three years of on-again, off-again efforts. “The number and value of orders received didn’t justify the cost of mailing the catalogs,” says John Barrett, director of sales, marketing, and development.
Just as it doesn’t rent lists, Veseys doesn’t rent out its names. “I don’t see the benefit of trading our customers’ names with competitors,” Barrett says. “In the gardening industry, almost everybody swaps lists back and forth, but we don’t. In that situation, I believe that neither party can win — but both can lose.”
Instead, the company relies on space advertising in several magazines to bring in 30,000-50,000 prospects a year. Veseys advertises in Canadian Gardening, Gardening Life, Gardenwise, Gardens West, Harrowsmith, and Fleurs Plantes Jardins, running one- or two-page ads each issue. “Space ads are our single largest source of new names,” Barrett says.
Because he runs the full-page magazine ads regularly, Barrett is able to negotiate discounted rates (about half off), paying $4,000, on average per publication, per issue. The magazines’ circulations range from 40,000 to 175,000.
Veseys also gains additional names from the send-a-friend cards it blows in to its catalogs as well as from editorial mentions in magazines, Barrett says.
Better for b-to-b?
While consumer catalogers may need to consider supplementary methods of prospecting in Canada, business catalogers might find mailing into Canada not much different from prospecting in the States.
NEBS Canada, the Midland, Ontario, division of New England Business Service (NEBS) of Groton, MA, obtains names of new businesses from the Canadian Yellow Pages and the Business Welcome Wagon files available from list compilers Info Canada and Dun & Bradstreet Canada, both based in Mississauga, Ontario. “You can get a host of information from these sources depending on whether you want name and address or more detail, such as employee head count, line of business, and other details,” says NEBS Canada contact planning manager Diane Camin. “It depends on the kind of monthly contract you have with the compilers.”
What mailers can’t get from such compiled lists, however, is catalog buying history. So NEBS employs five staffers to create predictive models from its customer file.
NEBS, which sells primarily office stationery and uniforms, also rents subscriber files of trade magazines covering the contracting, electricity, and manufacturing industries as well as compilation files of seminar attendees. It picks up additional prospects through send-a-friend promotions in its catalogs.
The mailer has placed some ads in business magazines for name generation in the past. But Camin says that while the ads can be effective, they’re also cost-prohibitive. As an alternative to space ads, NEBS inserts blow-in cards in magazines.
Another U.S. b-to-b marketer, Aurora, IL-based motivational tools mailer Successories, has found Canadian names from U.S.-based marketers such as Nightingale Conant, Briefings Publishing, and Day-Timers to work best, says John Halpin, senior vice president of direct marketing. It also rents lists of seminar attendees and subscriber files from Fortune Canada, Forbes Canada, Harvard Business Review, and Sales & Marketing magazines.
And like NEBS Canada, Successories rents compiled files as well. “We’ll clean some things off the compiled files, such as company employee size and SIC code,” Halpin says.
What About Quebec?
Unlike the more dispersed population of the U.S., the provinces of Ontario and Quebec combined make up nearly two-thirds of Canada’s population. While Ontario, with more than 38% of the population, may be the best opportunity for geographically targeted mailings, marketing into Quebec, which accounts for nearly 25% of Canada’s population, is more challenging.
Some catalogers — both U.S.-based and Canadian — that mail in Canada avoid Quebec altogether, since more than 80% of the Quebec population speaks French (three-quarters of the Quebec citizens are bilingual, however). Other mailers target only Quebec residents who cite English as their preferred language. Nonresident catalogers aren’t subject to provincial legislation or rules requiring them to get approval from the Canadian government to mail English-language catalogs to Quebec citizens. But there are direct marketing industry guidelines in Quebec that suggest nonresident companies communicate to Quebec residents in the language of consumers’ choice.
If, for example, a Quebec consumer has requested a mailer’s English-language catalog or has previously made a purchase though it, “then it’s presumed that they want to be communicated to in English and then you are communicating to them in the language of their choice,” says Tony Gilroy, general manager for Toronto-based list firm Direct Media Canada.
Aurora, IL-based motivational materials cataloger Successories mails an English-language catalog with Canadian pricing to customers throughout the country, including Quebec. But John Halpin, senior vice president of direct marketing, says that “we make sure we have only English lists in Quebec, so that the prospects are all English-speaking.”
Veseys, a York, Prince Edward Island-based cataloger of seeds and bulbs, has a primarily English-speaking customer base in Quebec. Says director of sales, marketing and development John Barrett, “We also advertise in French-language magazines, but the ads say that our catalogs are printed in English.”
Some mailers — such as recent Canadian entrant School Specialty, a Greenville, WI-based cataloger of educational supplies — are avoiding Quebec altogether for now. But others, such as East Texas, PA-based hybrid cataloger Day-Timers, prefer to treat all of Canada just like the U.S.
“I don’t break it down by province,” says Day-Timers direct sales and marketing director Tom Tweedie, who notes that most of the mailer’s Canadian sales come from customers in Montreal and Toronto. “I’ll mail a Canadian catalog with different prices and shipping charges, but I don’t make a distinction between someone in one province or another.”
Day-Timers’ also employs two field sales reps in Quebec. Another office supplies mailer, NEBS Canada, also uses field sales staff to support its mailings into the province. “It makes us seem more like a local company, less like an English-language company,” says president Greg Neath. “We’ve done better with the same catalog circulation in Quebec.”
— PM
Are These Provinces Worth Pursuing?
| Ontario | 12,068 |
| Quebec | 7,455 |
| British Columbia | 4,141 |
| Alberta | 3,114 |
| Manitoba | 1,151 |
| Saskatchewan | 1,012 |
| Nova Scotia | 945 |
| New Brunswick | 757 |
| Newfoundland/Labrador | 532 |
| Prince Edward Island | 140 |
| Northwest Territories | 41 |
| Yukon | 30 |
| Nunavut | 29 |
| Source: Statistics Canada | |