Outlook 2005: Inserts No Longer Just an AlternativeInsert media is becoming fashionable after shedding its old identity as alternative media. Three experts discuss the potential of this growing direct marketing vehicle as a customer prospecting tool.
Jeff Holland is vice president of new media development at Singer Direct Inc., Scarsdale, NY; Amy Benicewicz is vice president of The Catamount Group, Bethel, CT; and Arlene Rosen is president of ARA Media Solutions Inc., New York.
What advances did insert media make last year?
Holland: One of the most significant advances has been the promotion of our name change from "alternate media" to "insert media." That single event has been primarily responsible for bringing us into mainstream media thinking by those who plan mailers' budgets. The words "alternate" or "alternative" were not conducive to attracting new mailers to test what was once looked upon as a secondary form of new customer acquisition.
Additionally, we are seeing significant use of insert media by consumer brands seeking vehicles for sampling, coupons and other types of promotional literature. Brand managers still do not fully understand the ebb and flow of insert media and how it can be effectively used in achieving their objectives. But that's changing slowly.
Benicewicz: First of all, more companies recognize the revenue opportunities they can reap by opening up their packages or envelopes to third-party, noncompetitive advertisers. This is leading to a steady growth in the number of insert programs on the market.
Secondly, through technological advances, large program owners are able to offer selectivity never before available with insert programs such as geographic, gender and product category, increasing the insert program's ability to compete against solo direct mail in terms of selectivity and responsiveness.
Finally, insert media has been recognized as an important, growing acquisition media among premier direct marketing companies, including Scholastic, Guthy Renker and International Masters Publishers.
Rosen: Increase in popularity for marketing to Hispanics. Some large mailers have had success in this area, which needs to be handled by a specialist. With language nuances, the impact of color, issues of all-Spanish, bilingual or even English pieces, the issues are more complicated than a "regular" insertion. The rewards, however, can be much greater since this market has been underserved.
What trends are you noticing?
Holland: More catalogs allow inserts to be blown into their books, including those like Bloomingdale's by Mail, 1-800-FLOWERS and Newport News. A number of dot-coms are quietly making their packages available to noncompetitive offers. Essentially, they have contacted some of the larger, better-known insert users and inquired if they would be interested in testing their packages. We're in the preliminary stages of what could become an explosive new vehicle for mailers who are constantly asking the brokers, "What's new out there?"
Benicewicz: New mailer categories are testing the media, such as nonprofits and catalogers. There is still a long way to go for insert to work best for these mailers, including offer and creative testing, hard offers versus premiums and for catalogs' single-shot offers versus mini-catalogs.
Where do you think insert media will evolve this year?
Holland: We're actively seeking, and in some cases with success, new and nontraditional vehicles to support our insert media promotions. There are "coffee sleeve" ads, wrap-around promotions and some new statement opportunities - all in an "out-of-the-box" attempt to come up with different opportunities for the advertiser. We expect to see more of these in 2005.
Benicewicz: I think that new mailer categories will continue to test and refine their insert media acquisition strategies, as well as new programs with innovative ways to serve inserts to the target markets.
Rosen: With the increasing number of catalog blow-ins on the market, I'd like to see more catalogers testing insert media so they can feel the benefits not only of incremental revenue but also of customer acquisition. I'd like more partnerships between similar but noncompetitive companies to open up new media opportunities, beyond the managed properties. Also, more ethnic marketing, especially to Hispanics who have not been as bombarded as the general market. Hispanics are a loyal audience and responsive to offers.
Any big programs open up last year?
Holland: If you review the managed properties, you will find few changes from the end of 2003. But, as I said earlier, there are opportunities where owners are "quietly" testing the waters to see whether carrying inserts in their outgoing shipments is compatible with their current business.
Benicewicz: Cigars International and JR Cigars were both new to the market last year.
Business-to-consumer inserts already are established. Now we hear about business-to-business inserts' growth.
Holland: There are few opportunities, and these programs are very particular about the inserts they carry along with their packages or promotional messages to their customers. In some cases, the rates are too high, with limited opportunity for negotiation.
Benicewicz: Yes, business marketers such as Pitney Bowes have successfully used inserts for years, and their story is attracting other business mailers to the media.
What sort of response rates are we seeing for inserts?
Benicewicz: 0.1 percent to 0.5 percent response is the average for inserts, but it does vary by offer.
Rosen: It depends on the vehicle - if it's very targeted - and the mailer. One with a recognized brand probably will have a higher response rate. And the creative requires an effective headline, call to action, etc. Responses can be as high as 2 percent. This is not the norm.
What do you reckon is the size of the insert media segment?
Holland: While there are no official estimates, it's safe to say that about $200 million is spent annually to generate in excess of $1 billion in revenue.
Are there any brands you would like to salute for innovative insert media programs in 2004?
Benicewicz: Rodale continues to revise and repackage its insert programs according to what's working and what marketers want. They package their programs by categories of products purchased such as men's, and have also opened to testing nonprofits in their statement programs.
What are the key challenges?
Holland: The two most difficult tasks we face are finding new programs and developing new mailers to test insert media. In addition, we are constantly trying to find ways of keeping response rates up in order to achieve financial objectives.
Managing programs effectively is a major challenge. It is essential to ensure these programs run on time and that monthly projections are as close to accurate as possible. Managers need to be very careful here. The watchword is to be "conservative" in your projections. Over-projection of monthly counts can severely harm a mailer's insert media test or continuity.
Benicewicz: Continuing to attract new mailer categories while maintaining the response rates as the packages get fuller and fuller with new inserters.
Are retailers still worried about carrying inserts for fear of losing their customer's share of wallet?
Benicewicz: Retail insert programs do not tend to work well for mailers if the inserts are distributed in products at the stores. There are some statement insert programs for retailers with private credit cards, but it has not yet become mainstream.
Any value-adds to win fence sitters over?
Rosen: Place a blow-in into a magazine or catalog and also give online space, like a banner, button or link on their Web site. Or insert into packages and get the logo on the envelope. Another example is to place the insert into the newspaper and run an on-page ad for free.
What advice would you give insert media companies for 2005?
Holland: All companies that have touch points with their customers should be encouraged to allow noncompetitive offers to ride-along with their merchandise or promotional material. We need to expand into new venues. Too many mailers with similar offers compete for limited space in existing insert programs.
If we are to continue our current growth rate and take advantage of the next postal rate increase, we'll need to become more proactive in our support of insert media. We are the one area of direct marketing that faces no potential encumbrances from governmental agencies. But we're at a crossroads: We either move forward expeditiously and develop new programs and introduce new mailers to the value of insert media, or we'll miss a golden opportunity.
Benicewicz: Keep your eyes open for out-of-the-box insert opportunities. Keep introducing insert advertising to new marketers to keep up the industry's growth. The more mailer categories that test and succeed, the more powerful insert media will become.
And for retailers or marketers with or without programs, look for a chance to start an insert program with an insert marketing company. Continue to test and look for new opportunities to insert third-party ads to your customers. Is there anything you are mailing that does not contain inserts, but could? Are there ways to segment your customer mailings that would attract new vertical market mailers?
Rosen: Marketers and potential program owners may find it initially easier to test one insert into their packages or catalog, rather than as a managed property. Future program owners seem to be reluctant to "expose" their customers to other insert ads. By having them accept an initial insert, they can judge customer response. If their customers don't have a negative reaction, they may be able to turn the inserts into a nice revenue stream.