Food DMers stretch season for bountiful holidays

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With consumers doing holiday shopping later every year, savvy direct merchants are figuring out ways to extend their season to compete with bricks-and-mortar etailers.

For example, year-over-year sales were flat for several specialty food catalogers and Internet retailers at the start of December. But thanks to an additional mailing that month and intensified online marketing activities, they achieved an average sales gain of 16 percent versus the prior year, said Tony Cox, president of 5th Food Group and Catalog Solutions, a catalog marketing firm that works exclusively in the specialty food industry.

"By being able to adjust our promotions with pay-per-click advertising and electronic gift cards, it helped us extend the season," Mr. Cox said, "and that's what [produced the sales gain] as much as anything else."

After a few years of testing PPC advertising, these specialty food merchants made a larger spending commitment to the strategy this holiday season, and "it paid off big time," he said. "We were bidding on more words and willing to pay higher amounts for them and were still getting the desired ROIs."

5th Food Group, Richardson, TX, has clients such as A Southern Season, Lobster Gram, James' Candy Co., Zingerman's, Kansas City Steak Co. and La Tienda.
The firm's analysis of holiday results indicated that its clients allocated 2.9 percent of their pay-per-click ad budget to keyword phrases containing their trademarks yet these branded keywords accounted for 64.8 percent of PPC sales. 5th Food Group also found that more offline activity such as catalogs arriving in homes generated more people searching for and clicking on a company's name.

Even with non-branded keywords like "vinegar" or "olive oil," the sales to keyword cost ratio was 4 to 1.

"In that scenario, we're making money in bringing new customers to the site, and that's fantastic," Mr. Cox said.

Another strategy embraced more fully this year by several of 5th Food Group's  clients was electronic gift cards.

"Local retailers are being so promotional, it makes it difficult for a cataloger to compete," Mr. Cox said. But electronic gift cards let direct merchants extend the selling season right through Christmas Day.

Lastly, 5th Food Group encouraged several clients to squeeze a second mailing into December to have two mailings within a three-week period. Zingerman's, for example, put a four-page outer wrap on its holiday catalog with copy that conveyed the message that it wasn't too late to place Christmas orders.

This book dropped at the beginning of December. The message on the outer wrap of the catalog that went into the mail two weeks later was that it's really not too late if you order soon.

All of these strategies let the specialty food catalogers get in front of consumers when they finally were ready to start shopping.

Though specialty food catalogers typically generate 70 percent of their annual sales volume between October and December, last year many of 5th Food Group's clients were considering discounting items in November because the season was off to such a slow start, Mr. Cox said. Even knowing that consumers increasingly wait until the last minute to do their holiday shopping, the DMers were nervous.

"During the first two weeks of December, the floodgates opened," Mr. Cox said. Business was so brisk during the last few weeks of the season that several clients canceled e-mail promotions or removed certain items from their Web sites for fear of running out of stock.

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