The Making of a Catalog
Package inserts and related insert distribution programs represent an effective, inexpensive way for mailers to obtain new names. By their nature, package inserts can produce the freshest names because they come from responses generated from opening packages of merchandise recently purchased.
If you trace the history of package inserts, you will see that the idea conceived by the late Leonard Holland in the early 1960s has survived the test of time. His idea was to accept inserts from outside and noncompetitive mailers into the packages of Popular Club Plan, the company for which he worked.
Rather than insert for money, Holland did exchanges that let his company generate low-cost leads using the vehicles of his advertisers: RCA Record Club, Best Photo, GRI World of Beauty and many others that are part of the revised corporate entities of today, if they are still in business. Holland soon expanded and set up his own business with their blessing and, of course, began to charge a per-thousand rate. And he soon had competition.
Because there were fewer mailing list brokerage firms than there are now and because their focus was on renting names, the brokerage firms did not embrace inserts. New companies were formed to do the marketing and promotion of inserts. And because the catalog and the entire direct mail industry (soon to be the direct marketing industry) was growing, the insert industry grew, too.
You could start a catalog on your kitchen table and grow to be one of the biggest mail-order companies. Just ask Richard Cabela or Lillian Vernon.
Postal increases provided another impetus for insert growth. It was an easier sell with every postal increase. More companies clamored for outside revenue produced by outside inserts. More advertisers experienced the new names produced from placing their inserts in the increasing number of vehicles. The list brokers saw the potential profits from brokering inserts. Soon the management of insert programs joined the management of lists.
During the period of immense growth in the direct marketing industry, many more forms of advertising emerged, the most recent being banner ads with their click-through measurement. During the same period, however, insert activity took on its own life with constantly increasing activity for all parties.
There is one constant in the insert industry - the invisibility of inserts. They fly below the radar screen of most marketers.
The good news is that inserts work for most mailers, but the bad news for the uninitiated is that most mailers will not reveal their results, let alone their use of inserts. It is hard to audit package inserts unless you make an effort to buy mail-order packages and open them to see who is inserting what.
The big names using inserts are well-known and highly sought after as participants in new and existing insert programs. This obviously lowers the price paid per thousand insertions because of the leverage brought to bear on the program owners, not to mention the pressure placed on the insert brokers for reduced commission structures.
Mailers not using inserts face the proverbial testing phase in getting involved. Once they solve the puzzle of how to enter the arena, they find a large and growing universe of new customer prospects just waiting for their offers.
Here are some issues to consider when looking into the insert market:
Find the marketplace. Whether the mailer uses a broker or does the research himself, the procedure is basically the same. Define the basic market and see what insert programs are available by using SRDS, mIn or both. Then look for related programs. Next, take a position that tiers the programs either by price, volume or other criteria and determine what the potential is. Then decide how much risk capital to put into the test: How many programs will be used before the test capital is committed?
Pay the right price. Paying the right price is a function of the cost per allowable order, so this information must be in place whether the mailer is using inserts or any other medium. Knowing the cost per order, the mailer backs out the price to be paid by estimating the expected return rate. Obviously, the more costly the insert program, the more selective it will need to be to justify the cost per thousand. Many mailers make very low-cost media work by virtue of the low price and low response.
Though everyone wants a deal, whatever the media used, in testing it is always the right marketplace irrespective of price. Price breaks are always nice, but the idea in testing, especially for first-time insert users, is to get enough information to base future buys on. Too frequently the buyer does not get the correct information or enough data, then thinks the insert (or other medium) does not work.
Test correctly. A mailer tests inserts by adhering to the above principles and placing enough inserts in enough tests to have statistically reliable and projected responses and having enough satisfactory tests to determine what and where to go for the retest, which leads to the continuation. If much of this sounds like list testing, it is. The problem once again is trying to do too much with too little in order to get away with a "test." An incorrectly structured test will not stand the test of time or justify the investment.
Further, the insert needs a highly responsive offer to increase the response rate (and lower the test cell to the statistically reliable number mentioned above.) Most importantly, the insert must have an offer that has been used (if at all possible) where the response rate is known and, therefore, is a reference point.
Buy exclusivity. The unwritten rule of insert placement is that this is an exclusive distribution for each mailer. If mailer A is an insurance company, the program owner provides exclusivity to mailer A.
Expand the universe. A mailer must understand that one benefit of inserts is the low profile he can keep. Few competitors can view what is being placed compared with space and mailing list usage. Therefore, it is important for the mailer to ramp up his use of the successful programs as soon as practical. With experience comes confidence on the part of the mailer.
See what is out there. The mailer sees this best by working with a capable broker who has deeper resources than the conventional research facilities. A good marketer knows that testing markets follows testing of the offer. With a reliable offer, the insert mailer ramps up the known programs and works on tests with the unknown but presumably viable programs. With the use of a broker tied into inserts, the mailer sees a very large marketplace is available for his offer.
The master key that unlocks the puzzle is the talented broker who has the requisite character to dig and solve the problem.
The mailer community can look at package inserts as a medium that is viable, expandable and poised for even greater growth. Have you looked at the most obvious marketing activity to produce new names?