Starting a Package Insert Program

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Previously a haven for low-ticket mailers, now mid- and high-ticket mailers are running to put insert media programs on the market, hoping to make money quickly in this down economy. According to our research, 144 new insert media programs have been born domestically in the past year: 58 blow-in, 52 insert, 24 ride-alongs and 10 statement stuffers.


Many choices need to be considered about issues affecting each company's largest profit center and their own customers. Each issue needs to be assessed with respect to the risk:benefit ratio.


One needs to consider how much really can be earned for a program these days. Factor in a market price, take 20 percent off for insert brokerage and 10 percent to pay your manager. The 70 percent remaining is for you. And how much will it cost your company to do this? Will you need more machinery and personnel? Then factor in the downturn in the economy and that your fledgling program competes with a dozen new programs on the market each month for the past year. This may mean less-than-expected profit for your company, at least for now.


Consider the weight of your merchandise. One general merchandise company requires that products weigh less than a pound so postal costs are in control. Outside inserts would be prohibitive and much too costly for this company's insertion customers.


Despite the Direct Marketing Association's movement toward standardization for insert media, we find overweight fees to be assigned with a lot of variability. Typically, inserts at less than 0.25 ounces are accepted at rate card without overweight fees. Depending on the insertability of a piece weighing 0.25 to 0.35 ounces, there may be an up charge. And starting at 0.4 ounces, one can collect an overweight charge varying from $5/M to $20/M, which can be applied as well for every 0.1 ounce over 0.4 ounces. And if your insert customers' pieces must be hand inserted, charges can be additional.


Do you have the manpower to support this? One person will need to be in charge of these outgoing packages. One person also may be designated in charge of receiving incoming cartons. Make sure your program manager tells all incoming offers (via brokers) to label the cartons carefully with name of company, name of offer, quantity in each carton, key code and insert date. If there is more than one carton, have them labeled one of three, two of three, etc. Your relationships with them as a package insert manager/coordinator are the key to a seamless process of insertion, results, insertion, results.


Will others' pieces fit? What machinery do you have to do the job? Can you use the machines that do your bouncebacks? Are you "stuffing" into a slender statement or are you throwing the inserts loosely into a carton of heavy merchandise? One must consider how many lines or slots you have. It's usually one slot for a blow-in, two for statements, and you can try for six to eight slots for a package depending on your machines, postal costs, the market for pieces that want in and if they fit.


Times have changed. Package inserts have developed from 3-by-5-inch or 7-by-5-inch slipsheets and hearty-stock reply cards to more technologically sophisticated inserts you will receive for clearance. Some will have CD-ROMs and/or perfumed pieces, slim jim catalog inserts, mini-catalogs that fit most machines and are weight-sensitive, and even plastic envelopes. You need to assess how you will handle the new diversification of insert pieces. Always have your manager insist on actual samples for insertion testing.


How will you insert them? This variation in piece type will raise the question of whether to use a "nesting" envelope. A nester can serve as a stronger endorsement for your insertion customers' offers. First, the fact that they are in your packages is an endorsement for them. Second, an envelope touting "we have special offers inside for our customers" does put the customer at ease that these offers are approved. No current data exist, however, on whether this methodology truly affects response. You also can charge for an advertisement on your envelope if you think you have a market for this.


How many outgoing shipments are there? Do you want to hit multibuyers/subscribers monthly with the same ad? Magazine inserts often run into this, as do hosiery and other continuity programs. You may get the monthly rollout, but the discount the mailer will want may affect your return on investment. Be honest and let your manager in on the details so that he or she can advise you on how to market.


Does making your program available guarantee reciprocity or exchanges? Have your broker keep a list of all the mailers that clamored for your insert program before you launched one. You will want to continuously encourage others to test. Use your remnant space wisely and allow offers that do not need long-term planning at low rates on tests. You will be molding the strategic planning for inserters to roll out. Space usually goes to the fairest bidder.


Always think of your customer when you consider the offers to accept in your packages. Does the offer reach the same type of market? If not, your customer might be put off. Is it compatible with the ethics and intelligence of your customer?


An upscale program can provide customers with offers they may find interesting and useful. But if you publish a sophisticated medical health newsletter, you might not want your subscribers receiving a statement for a truer-than-life way to lose 50 pounds. Think of the elderly customer pool of one company who could not read the small print on the insert and was disturbed at the guarantee, and don't risk damaging the valuable customer you have built over time.


Finally, pick a manager who is available, accessible and accountable. There is a finite pool of inserters. The manager should be calling them all and should have progress reports indicating all the activity created on your program. Advise your manager to have printing sent in smaller keyed lots.


The advantage for the inserter is that they can read results a bit sooner, and for you the advantage is that you can bill and collect with more frequency.


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