Cross-Selling Helps Big Flower Grow

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Seeking large turnouts for the opening of home-improvement superstores, Lowe's Companies, North Wilkesboro, NC, sought out Big Flower Holdings to handle its marketing campaign.


Drawing on the specialized capabilities of its subsidiaries, the campaign included a series of personalized mail pieces produced by Webcraft Technologies, a 72-page minicatalog produced by TC Advertising and a 12-page broadsheet insert produced by the PrintCo Group. Lowe's had been a client of TC Advertising for its newspaper insert work and was introduced to Big Flower's other competencies through a cross-selling committee.


As consolidation sweeps the direct marketing industry, Big Flower, New York, is distinguishing itself by successfully assimilating its many acquisitions into a seamless marketing and advertising services machine with annual revenues of $1.6 billion and sizable cross-selling potential.


Since being founded in 1993 to buy TC Advertising, Big Flower has made 18 strategic acquisitions that have formed its four core businesses: free-standing inserts, specialty printing, direct marketing services and digital services. While its original business, TC Advertising, controls the largest share of the U.S. insert market, it is the latter two divisions that will spur the company's continued growth.


In the last three months, the direct marketing division added print-on-demand capabilities with the purchase of ColorStream Technologies, while the digital division boosted its premedia and broadcast services offerings by acquiring the Enteron Group, Adtraq Data Systems and KTS Automation.


Premedia supplier Laser Tech Color, which along with Columbine JDS heads up the digital division, has made seven acquisitions alone in the last 18 months.


"Big Flower has done a very good job of shifting its business mix into the higher growth, higher margin segments of the industry,'' said Alexia Quadrani, vice president and direct marketing analyst with Bear Stearns. "It's really moved away from being a traditional printer into a more marketing services company by investing in prepress businesses and direct marketing operations. It's really transforming into a much more profitable, much more higher growth company because of that.''


For the first quarter of 1998, direct marketing sales rose 41.6 percent to $62.8 million and digital services sales jumped 139.5 percent to $47.6 million. The company as a whole saw sales gain 29 percent to $383.9 million and operating income increase 25 percent to $19.5 million.


Big Flower has responded to the trend toward targeted marketing by building a set of services to cover the range of client needs. Using direct mail printing and production as a base, the company has steadily added database management, response management and customization expertise.


Those offerings increase across the company's four divisions. CEO Edward Reilly pointed out that with images at the core of both inserts and direct marketing, Big Flower's digital imaging business, headed by Laser Tech Color, has been successful in selling increasingly sophisticated image management, production and creative services to that group of clients. Through an investment in 24/7 Media, TC Advertising has given current clients the ability to advertise on the Internet.


"We are in the business of trying to provide our customers with impact," Reilly said. "By being able to offer a more complete set of services, we can better ensure both our relationship with our customers but more important to the customer, their successful programs."


Personalization via print on demand is an area where Big Flower's wide-ranging capabilities can be integrated in a dynamic way. Reilly foresees the development of linking software that will allow clients selling relatively expensive products like cars or computers to perform response management marketing with highly individualized, digitally produced direct mail. Mail pieces used for prospecting would become more highly targeted as response data is collected and analyzed. Eventually, he sees personalization advancing to the point where clients can respond directly with a marketing piece to customer queries collected in real time via the telephone or Internet.


"It's an expansion of the service we expect to offer our clients,'' he said. "Big Flower has not only the production capability but the marketing analytics to take responses and add value to them. All of this is designed to make a sale in the end, not run up a bunch of statistics.''

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