From Mini-Medium to Full DM Channel
My father, Len Holland - who died in 1996 - was the father of insert media. He had been sales promotion manager of the L&C Home Catalog and, later, direct mail manager of the Popular Club Plan Catalog. In 1960, he started his own business with a new idea.
At both catalog houses, Len found that the most profitable form of advertising was the catalog's insert for a specific product in the catalog's own outgoing packages. It required the right offer appropriate for the package. With his company, Len implemented his idea - to broker transactions between someone with a mail-order offer and a different company shipping a mail-order product.
He proposed the idea to Columbia Record Club and to Damar, a catalog house very active at the time. The concept worked. Damar got money for allowing the Columbia House inserts to be distributed in its packages. Columbia got orders at a very low selling cost compared with direct mail. Len received a broker's commission. Not only had he started a business, Len had created a new advertising medium.
But, like any start-up operation, there were problems. The biggest hurdle was to get shippers of mail-order items who would accept package inserts in their outgoing packages. Next, there was the problem of how many inserts would be productive in a package. Len also had to uncover the best candidates for profitable use of package inserts.
As part of the expansion of his new ad medium, Len started his first cooperative mailing in 1962. This involved getting a number of direct marketers to share the same envelope, often using the same material they used for package inserts. The next year, he introduced clients to billing insert programs.
Package inserts, however, did the best job. It was estimated that 80 percent of insert media use represented package inserts only. Billing statements were limited by postage, weight, size of the inserts and the number of pieces a First-Class mailed envelope could accept without raising the postage rate. Co-op mailings had additional issues. It was necessary to charge postage, envelope, label and insertion costs. The answer, some thought, was to put more inserts inside the co-op envelope. The result? Response decreased.
For a brief period, a number of co-op mailings were on the market. Mail-order firms organizing a co-op did well if they could get six or seven paying inserts and then include their own pieces for free. It was tempting, but overcrowded co-ops did not pay out.
At the end of the formative years, it was apparent that package inserts worked best, but only with three or four participants. It also was the most cost-effective for all parties. With billing statements, one insert worked best, but that kept the price high and so results did not warrant continuation.
As for co-ops, promoters liked a dozen or more inserts; the participants preferred six or fewer. It was a question of financial success for the promoters versus limited responses for the participants. So package inserts remained the main thrust of insert media.
Of the new co-ops, the biggest, and what became the best for a long time, was Donnelley Marketing's Carol Wright. The "cents off" coupons inside the envelopes made this co-op so popular and successful. The coupons got the envelopes opened and, as a result, made Carol Wright great for mail-order insert users.
At its height, Carol Wright offered 30 million envelopes monthly. But the success of Carol Wright with the packaged goods community could not be transferred to package inserts. No shipper of merchandise could come close to delivering 30 million packages within a relatively short period.
With the growth of this new insert medium, Len encountered several problems. The first was how to develop new sources - shippers of packages who could be persuaded to accept non-competitive inserts from other mailers. Once Len opened up the sources, other brokers entered the field, and for the first time he had competition.
In the late 1960s, Leon Henry went into the brokerage business similarly to Len. Len and Leon both recognized that this medium was rapidly developing into another form of direct marketing for sophisticated marketers who already used solo direct mail. Leon quickly became one of the most outspoken and passionate crusaders for all facets of insert media.
Even today, Leon spearheads a major campaign along with the Alternate Response Media Council of the Direct Marketing Association to promote insert media.
both men recognized that it was essential to keep insert costs a bargain compared with other forms of direct marketing, particularly solo mail. But there were other problems.
In the beginning, one of the most trying issues was the dependability in inserting by mail-order shippers and manufacturers. There also was the problem of inadequate testing. With both Len and Leon working with prospective mailers and shippers, the many insert users who initially failed with this medium returned for new tests.
The early 1980s featured fast-track development of two major insert vehicles that were begun by Len and refined by Leon, but were not major components of their business when compared with package inserts.
First was Ben Giordano and his new company, Media Syndication Group. Starting in a one-room office with his assistant, Inez Rodriguez (now DelGaudio), Ben began working with leading banks to accept inserts in their monthly Visa/MasterCard billing statements. His two major accounts were Franklin Mint and The Bradford Exchange.
In a few years, credit card billing statements became a major media force for some direct marketers. What made these programs so effective was the limited number of inserts per statement (one or two) and that customers could charge the product to their credit cards.
Ben's business rapidly expanded into all billing statement areas - oil and gas cards, department store statements, utility statements and telephone bills. Today, Ben's company, now known as Media Solution Services, remains at the top of a distinguished list of companies whose specialty is the placement of inserts in all types of billing statements.
Then, 1984 saw the birth of Madison Direct Marketing. Learning from the successes and failures in the co-op area, Chris Hulse and Bruce Gold thought they could succeed by mailing their co-ops to large segments of consumers by demographics and/or lifestyle.
For example, by targeting expectant parents, Madison then followed up with mailings to these people when the child was born and on the child's first birthday. The packaged goods community loved it. The direct marketers were savvy enough to know that if these co-ops carried coupons (which they did, along with samples), the envelopes would get opened and their offers would be seen.
Given matching demographics, the Madison promotions reached people most likely to use the products inside the envelopes. The result has been powerful presentations with envelopes containing recognized brands, all leading to increased value in the envelope.
What Len started and Leon enhanced may be poised for its greatest period of growth. With the acceleration of postage rates, more marketers are turning to inserts, both as a vehicle to generate new customers as well as additional income. n