Keep Ad Costs Within 25 Percent of Net Sales, Speaker Suggests

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CHICAGO -- Target your advertising expense at 25 percent to 30 percent of net sales, Steve Trollinger told attendees in his packed session at yesterday's Annual Catalog Conference here.


This expense includes everything involved in getting pieces produced and mailed: paper, printing, postage, bindery, lists, data processing, creative services, photography and color work.


Trollinger, senior vice president of client marketing at J. Schmid & Assoc. Inc., Shawnee Mission, KS, then injected a bit of humor that drew laughter from the early morning crowd at the "Ten Key Catalog Benchmarks and What to Do if You're Not Up to Par" session.


"Just because you're under it doesn't mean you should strive to achieve it," he said. "There are a lot of companies that are at 8 percent and are saying, 'Well, should we have it at 25 percent?' We said, 'let's look at what your contact strategy is and how frequently it looks like you might be able to contact customers. Perhaps we could add some mailings.' Just because you are not at 25 to 30 percent doesn't mean you need to run out and figure out how to spend another 22 percent on advertising expenses."


Trollinger also discussed having an efficient page count.


"Catalogers get themselves in trouble with advertising expense because their book is too thick and not profitable," he said.


He also cited the need to test paper quality and weight to determine whether a lower quality would work as well, along with using the most efficient trim size available from a printer.


"It's not always easy to do a paper test, but a lot of times the difference between 60 pound and 50 pound is very, very small [in terms of] response rates," he said. "I can tell you 10 1/2-by-7 3/8 is a great size, but that may be 1/8 or 1/16 of an inch off for Banta versus Donnelley versus Quad. Each printer has a most efficient print size for their runs. Work with them instead of doing some funky trim size that is not generating much extra for your sales."


From a name standpoint, Trollinger said, consider add-a-name techniques to get the best postal rates. He cited infoUSA and Abacus as having add-a-name capabilities.


"Let's say you lack three or four or 20 names in a carrier route to get the next-best postage rate, use them," he said. "They'll tie them into the mail plan ... to get the cheaper postage rates."


After informing the audience to use exchanges when available to keep list rental costs down, he advised attendees to consider printing multiple drops at once.


"Go back on press maybe just for covers so we can drive down the cost per piece," he suggested.


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