Insert media poised for slow but steady growth
The more than 50-year-old insert media industry has been reaping slow but steady growth in the shadow of a booming technology age. But in 2007 will Internet traffic bust or boost the medium's use?
Industry players agree that many marketers who use insert media find its targeting ability and tangibility can add significant lift to campaigns. However, future growth is reliant on the impact of e-commerce trends and rising fuel costs on campaign planning.
"It's either very simple or very complex," said Leon Henry, CEO of Leon Henry Inc., Hartsdale, NY. "My observation is that most people in our business are fairly satisfied with what they do [with insert media advertising]."
Mr. Henry said one possible threat to growth is that mailers are looking for more distribution channels, while the percentage of program holders is not increasing to match the demand.
Wendy McLaughlin, vice president of brokerage at Mokrynskidirect, Hackensack, NJ, had a different view.
"The number of program owners opening up their packages to outside inserts as well as the number of mailers is continuing to grow, which will only have a positive impact for our industry," she said.
But that growth will be tempered.
"[The industry] is going to grow, it's just not growing at the speed of the Internet advertising industry," Mr. Henry said. "There's nothing wrong with slow and steady growth."
There is an increase, however, in what Mr. Henry referred to as "under the radar deals," or direct deals that are not insert programs that are released officially on the market but are instead co-mailing agreements.
Co-mailing and insert programs appear very attractive in light of expected postal increases and the rising cost of business.
"Anytime [postal costs increase] it's good for our segment of the industry," said Jim Zuckermandel, co-chair of the Direct Marketing Association's Insert Media Council and president/CEO of Zed Marketing, Edmond, OK. "Advertisers explore insert media options and mailers consider accepting more programs."
Al Stanton, CEO of Stanton Direct, Elmira, NY, agreed that there was room for growth, predicting that the industry would be "as strong if not stronger" in 2006-07.
However, he also recognized a need to stay competitive, particularly in the face of online business.
"If you looked at some of the stats about people who have ordered over the Internet you might be a little nervous about the industry," Mr. Stanton said. "But the fact is people still rely on catalogs to browse, and catalogs are still driving Internet sales. No matter what happens with online shopping growth on the Internet, there will always be packages going out of the door."
An additional challenge on the horizon is balancing program costs.
"Overall, especially with the upcoming postal increase, mailer response rates and program owner profit margins are being held to an even higher standard," said Jody Smith, senior sales executive at Mokrynskidirect.
Mr. Zuckermandel said last year more big-name marketers were involved with inserts. He said educating new users often resulted in a fresh appreciation for the targeting capabilities.
"With the ever-increasing placement of orders via the Web, we expect to see a rise in the number of mailers using Web driver offers in addition to 800 numbers," said Tricia Hamel, account executive at Mokrynskidirect.
Meanwhile, Mr. Henry's hope is that the industry finds a means through insert to get more exposure with the mailer.
"You've got a colorful exotic medium that's competing for attention and growing at a rapid rate," he said.
When it comes to advice for marketers next year, the insert media industry chorus is: go with experience and test, test, test.
"Work with a professional that knows the industry," Mr. Zuckermandel said. "It takes very few requirements for someone to put up a shingle and say they are a broker."
Testing is, by definition, a risk proposition and not a guaranteed sale, Mr. Stanton pointed out.
"Be prepared not to make money the first time," Mr. Stanton said.