New Chief Aims to Expand Billing Inserts Giant
Industry veteran Ben Giordano founded MSS as Media Syndication Group in 1980. He sold the firm to Snyder Communications, Bethesda, MD, in April 1999. It was acquired by French media conglomerate Havas SA in February 2000. Giordano, who served as the company's chairman under Havas, no longer is affiliated with MSS.
Current CEO/president Larry Nusbaum joined the firm in September, about a month before he completed his acquisition of MSS from Havas on Oct. 7. He declined to name the New York-based private equity group that backed the transaction.
Nusbaum started in the business on the agency side in the late 1980s. He has worked at several firms in direct marketing and retail distribution including Advantage Life Products, a direct marketer and retail distributor of healthcare products.
MSS had faltered in the past few years, according to Nusbaum.
"Under Havas I think they had gone into industries they did not understand including TV direct marketing and retail distribution, and that was an easy fix to discontinue those areas, which were a cash drain and an overhead drain that were causing losses," he said. "When I came in, I saw a company that still had the brand recognition, the name and the good will, and I decided to focus on the Ben Giordano model."
After almost a year of consecutive monthly losses, the company reported a profit in October, Nusbaum said.
Credit card insertion represents about 70 percent of MSS' revenue. Of that, half is media brokerage where the firm acts as an agent for third-party placement into statements, and the rest is derived from placing its own branded merchandise into the programs.
The other 30 percent of revenue comes from what Nusbaum called the firm's alternative distribution of its branded products into consumer catalogs such as Harriett Carter, Miles Kimball, Fingerhut and Publishers Clearinghouse through proprietary relationships.
Continued profitability tops the agenda for 2005, Nusbaum said. Part of the plan to achieve that goal involves expansion.
"There is probably a maximum of 3.5 billion billing statement inserts that can be done a year," he said. "We currently do in excess of 2 billion inserts annually and are planning to do anywhere from 2.5 to 3 billion inserts in 2005. I think there's definitely an opportunity for expansion from within and from third-party marketers."
Though not all direct marketers will have success in billing statement programs, it is an inexpensive medium to test. Nusbaum gave advice regarding the types of products that do well in such programs.
"It is a very Middle America-type audience," he said. "Higher-price-point products don't tend to work, but with products that generally range from $9.95 to $29.95, you might find that you only need 1 to 1 1/2 orders per thousand to have a profitable test."
MSS has historical information on each statement program and the types of offers that do well in them.
MSS also hopes to improve on its partnerships with billing statement program owners.
"I'd like to leverage our partnerships with the banks to improve response rates and efficiencies by making sure that the inserts go in correctly," Nusbaum said.
An initiative for the second half of 2005 involves the MSS database of several million consumer insert buyers.
"We have not leveraged the database or partnered with the statement owners for permission-based marketing," he said.
Nusbaum also hopes to test some type of online version of billing statement inserts, though MSS isn't actively working on it yet.
"Although 98 percent of people still pay their bills by paper, I'd like to be on the cutting edge of that," he said. "We are a multimedia company, and we want to be in all the channels."