Dot-Coms Expand Role of Catalogs

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The influence that e-tailers are having on the catalog industry has led me to tell my colleagues that I haven't had this much fun in the catalog business in a long time.


Being in the cradle of the San Francisco and Silicon Valley e-commerce boom this year has given our agency the opportunity to consult with many dot-coms about the power and effectiveness of the catalog medium.


If you're in the direct marketing business, you have felt the impact of both print and the Web becoming synergistic. Catalogers were the first to take the step toward integration, developing robust e-commerce sites with graphic-enabled e-mail campaigns. This year, many dot-coms are heading toward traditional printed catalogs and direct mail programs. Like many first-timers, they don't know the direct marketing/catalog rules and, in some cases, end up rewriting a few along the way.


In fact, many e-tailers are expanding the role of the catalog medium and are placing more emphasis on its ability to build targeted brand awareness. Focusing on pre-qualified, targeted prospects has become a commonly accepted principle this year. There also has been a high value placed on its ability to make the reader do something other than pick up the phone - and that is to go to the Web site. Lastly, the two media are collaborating on new ways to deliver relevant editorial (non-selling) content.


The de-emphasis on the selling model has broadened the traditional roles of marketing techniques and of some commonly accepted catalog principles. The catalog medium is now used to build targeted branding like space ads, drive traffic like a Sunday newspaper insert, drive e-mail registrations like a banner ad, build traditional house files (sorely missing at many dot-coms) and sell a few products.


The reasons for these new angles on an old business are obvious. From an overall business plan perspective, last year's dot-com broadcast advertising frenzy was a bust on many fronts. Among them were a critical lack of targeting and a lack of selling down to the actual product level. Catalogs and direct mail fill those needs nicely.


Another reason centers on basic marketing for prospects. Many great Web sites are struggling for traffic. Catalogs and direct mail are proactive push media while Web sites are a passive pull medium. Direct mail is proving to be the second-most effective way to drive Web traffic after word of mouth. It's certainly more productive than broadcast and other online advertising methods.


The last reason involves business survival and operational evolution. The recognition that pure plays will most likely not survive in the face of two- and three-channel competition has become an unavoidable reality, especially with funding drying up and investor patience wearing thin. As we have seen, the winning merchants will have more than just Web presence and purchasing options for their customers and prospects. And given the necessary operational infrastructure needed to run an e-commerce business, it makes sense to use every resource for other channels of remote shopping and order fulfillment.


Remember how everyone said the 1999 holiday season was the watershed year for online shopping? Maybe it was and maybe it wasn't, but this year's season will be the real deal. Here is where we'll see the future of the integration of the Web and its role and impact on shopping and purchasing. Perhaps the media won't be quite as enthused about this year's version of the success stories, for the numbers will be lower, but the faithful will see the truer, longer-term impact of e-tailers entering the market - particularly now that many will have multichannel marketing efforts.


So what will come of these dot-coms jumping in the catalog game and challenging its conventions? More good things than bad.


On the negative side, it will mean even more mailbox clutter and potential confusion in the marketplace about the role and purpose of the piece in hand. And maybe a few more deathwatch stories for those that produce catalogs and don't make it.


On the positive side, it will expand the number of catalog purchasing households in the United States. The growth rate of this category was fairly stagnant in the late 1990s, and this will expand that universe.


Additionally, it may strengthen the perception and credibility of the catalog in the marketplace among nonbelievers.


It will also cause traditional catalogers to rethink the way they go to market.


Hopefully the new influence will expand the industry's thinking and cause some new design strategies and communications hierarchies to emerge.


Lastly, it will push for better, thought-out cross-media integration. With even more noise in the market, the leaders will be those that know how to integrate the feeling of the brand across multiple platforms, and how to drive customers between channels, while maximizing each medium to its full and unique potential.


Currently our agency is designing new holiday catalogs for four e-commerce/e-tailing companies in the United States. Our experiences to date have been, for the most part, very refreshing. This is largely because we tend to get involved at a higher level of the business plan and with a cleaner slate from the start.


We also tend to have to define marketing and financial objectives much more thoroughly, though, and get creative with return-on-investment modeling, as it is often unfair to judge one of these new catalogs from pure sales-per-book, sales-per-square-inch and customer acquisition cost perspectives. Because of the multifaceted marketing goals that each dot-com has, we typically suggest offloading some of the catalog costs to other non-DM types of advertising and into cost-per-thousand types of accounting methods.


What does it mean to the catalog and direct marketing industries to have these new and unconventional dot-com catalogs entering the marketplace? Too early to tell.


Watch your mailbox closely this fall and let's check back in January. It should be an educational and exciting season.


Mike Wychocki is executive vice president at direct marketing services firm HagginGroup, San Francisco, a subsidiary of Network Commerce, Seattle.
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