Internet Companies Slow to Open Their Package Insert Programs
Although many traditional direct marketers that make available their package insert programs have extended these programs to include the packages that now are being ordered through the Web, few Internet-only retailers have allowed advertisers to have access to their customers in this manner. Alternative media professionals have a variety of opinions about why this is this case, but they seem to agree that a virtual Santa's sack full of programs is about to be delivered.
"The dot-coms have been getting a lot of press, but really all but the top five or so have been too small for package insert programs," said Paul Thau, vice president of Fred Singer Direct Marketing Inc., which specializes in alternative media management and brokerage. "Only this year, at this Christmas time, will there be a sizable number of packages being delivered from dot-com companies that will make it something worthwhile for package inserters to consider."
FSDM recently acquired the management of the package insert program for Outpost.com, the online technology vendor, one of the only Internet-only retailers to make its insert program available.
"This is just the very tip of the iceberg," said Fred Singer, president of FSDM. "I'm sure there are others that are coming on the market as well."
He said he expected Outpost.com, to deliver about a million packages next year. The Internet package insert programs, like e-mail lists, are little more expensive than their traditional counterparts, he said. An insert in Outpost.com, for example, costs $60 per thousand, compared with an average of about $50 per thousand for traditional package insert programs.
In addition to Outpost.com, a few other Internet-only retailers have begun experimenting with some package insert programs. America Online, Dulles, VA, has an active insert program available, managed by Millard, Group Inc., Peterborough, NH, but many of the largest companies, including Amazon.com and barnesandnoble.com, have only dabbled with the medium.
Amazon.com, for example, has included coupons for drugstore.com, the online pharmacy in which it holds a minority interest. Bill Curry, a spokesman for Amazon.com, Seattle, said the e-commerce giant also has conducted similar programs on a limited basis with other partners. He declined to say whether or not the company has considered putting the insert program on the alternative media market, however, saying that the company does not discuss its strategic plans.
A spokeswoman for drugstore.com, however, said that company has been very hesitant about accepting advertising in any form because of its desire to project an image of objectivity. It does, however, include free samples from some of its manufacturing partners in its package program.
At barnesandnoble.com, the company currently is conducting an insert program with automobile marketer Mercury, in which the bookseller is including flyers for the Sable 2000 with books it delivers. During the holiday season, the company also is using the insert space to promote itself, enclosing a flyer that advertises deals available at the site, according to Lisa Lanspery, a spokeswoman for the New York company.
Linda Callahan, senior vice president at Leon Henry Inc., Scarsdale, NY, said she thinks that some of the dot-com companies might be trying to protect their customer files for themselves by not sharing them with outside advertisers.
She said she remained optimistic, however, that Web merchants soon would join their traditional direct marketing counterparts and recognize the potential profits they could reap by delivering ads along with their products.
"I think that as they start to look for other ways of generating revenues, they will fall into this," she said. "I imagine that there will be dozens, if not hundreds of opportunities that eventually will become available."
She also said she expected that more Internet companies will join in when they see that others making money by renting out their insert space.
"Like with many other industries, they wait for somebody else to do it, and hopefully they reduce their learning curve," she said.
Meanwhile, most traditional direct marketers are combining their mail- and phone-order package insert programs with their Internet programs, unlike mailing lists, which often can be selected for Internet buyers vs. buyers through other channels. Callahan, however, said she has seen some catalogers who have separated out their blow-in programs so that advertisers can select to be included only in catalogs that are ordered online.
Meanwhile, industry professionals said they have seen an increase in alternative media buys by Internet companies - which itself could induce them to open up their own insert programs.