Outlook: Insert Programs Build Steam as More Marketers Want In

In the old days, Hollywood renamed its actors to broaden their appeal. The direct marketing industry has done the same by shedding the “alternative response media” tag for “insert media.”

Even without the name change, insert media may have the wind behind it. Mailers and list brokers and managers claim the use of blow-ins, bind-ins, ride-alongs, statement stuffers, bangtails, on-page advertising and package insert programs is on the rise.

“Many more insert programs are available as owners of insert programs determine that revenue from accepting inserts is worth the small effort and the questionable dilution of their shipped product,” said Leon Henry, chairman/CEO of list broker and manager Leon Henry Inc., Hartsdale, NY.

Insert media, as a subcategory of the lists business, represents 7 billion units with revenue last year of $1 billion, according to Vertical Media Group Inc. Its appeal, while not immediately apparent, is not surprising given the no-call registry, lack of new response lists and the current economy.

Plus, inserts cost only 10 percent to 15 percent of an average direct mail campaign. And insert programs can reach the hottest of the hotline names, especially with package insert programs.

Henry said he expects insert media programs will cross many boundaries in the coming months as more companies want in. This will bring more competition for mailers and lower the prices to participate in insert programs.

Certainly, practitioners as well as marketers who are not currently using insert media to acquire or retain customers are showing keen interest.

“This media allows marketers to take advantage of low production costs, and as they realize more and more companies are making insert space available to them, they will be compelled to test these programs as well,” said Jill Eastman Vidal, Madison, VA-based director of specialized media marketing at 1-800-Flowers.com.

Companies also are looking for partnership marketing opportunities. Many mailers, for instance, are willing to trade space, making insert media cost-effective in the long run.

Besides all the obvious arguments for inserts, it is a low-cost entry point into the syndication business — the practice of endorsing goods or services for a percentage on the sale. Put simply, a mature partnership marketing arrangement — say, a mini-catalog for an insert program or a blow-in offer — provides an additional touch point for increasing the consumer's spend with the company.

“Partner-endorsed pieces, like 'A special offer for our valued customer' or an offer 'Presented by' the marketing partner as a way of extending company value, trust and guarantees, are really on the rise,” Vidal said.

Blend of Science and Art

Trends show that take-ones and the testing and targeting of freestanding inserts are becoming science in measurement and art in creative execution. Credit card statement stuffers and bangtails also are working.

“These offers that accompany proprietary retail cards and ride-along into these types of statements are missing an important point if they do not accept that particular company's own method of payment,” Vidal cautioned.

Vidal suggests one way around adding a method of payment is using a third-party card-not-present transaction processor like Programmers Investment Corp. If these offers are allowed to participate in proprietary card insert programs, they should accept that retailer's credit card.

But when it comes down to it, it varies case by case.

Last year, 1-800-Flowers.com introduced new package insert programs for its 1-800-Flowers.com and The Popcorn Factory brands. These two programs target gift recipients. Importantly, they cause little interruption in the gifting experience.

With this knowledge, 1-800-Flowers can determine what revenue to expect as it rolls out these programs and also provide new channels to include cross-brand promotions. The company also is testing on-page advertising programs, most recently with coffee maker Gevalia and stereo systems manufacturer Bose. This offers another type of insert media test for nontraditional players.

This arrangement has let pharmaceuticals maker Aventis' Allegra brand reach mail-order and Internet buyers on 1-800-Flowers.com's file.

“This is a harder sell to our more established direct mail businesses,” Vidal said, “and I don't know of a merchant who wouldn't rather have another page of product in lieu of a page of advertising in their catalog. However, if we can bring brand-relevant offers that complement our own product offering and do not compete with but complement our own businesses, we're very open to testing another potential source of income.”

It is good news that many national brands like Aventis, American Express Co., Amazon.com Inc., Colgate-Palmolive Co. and Procter & Gamble Co. are acknowledging the amount of insert circulation and access to proven direct mail buyers. They go through agency International Direct Response Inc., Berwyn, PA.

The ranks of converts to insert media are swelling. They include Designer Checks and Checks Unlimited, vacuum cleaners like Oreck and insurance firms Geico Direct, Globe Life Insurance and Gerber Life Insurance. Other examples are on-television retailer Guthy-Renker Corp. and Bertelsmann-owned book club giant Bookspan and children's book publisher Scholastic.

Of new entrants, cosmetics firm Yves Rocher is placing heavy volume, using insert media for customer acquisition. Gevalia and tableware and collectibles manufacturer Lenox are players, too.

Last year, Time Inc.'s Real Simple magazine entered the blow-in and on-page ad channels with its partner, women's apparel retailer J. Jill. Similarly, Hearst is testing this channel with its “O” magazine.

“The more pieces direct marketers see in print, especially from the big players such as Time Inc., acceptance of insert media will come naturally,” Vidal said. “Partnership marketing opportunities will provide the necessary targeting that is lacking in some respect when testing high-volume programs.”

In line with that logic, mailers should run a complementary offer — such as jewelry to an apparel offer — when testing a large package insert program that usually lacks geographic or product selection inserting capabilities. This provides the desired demographics for successful targeting.

Among other DMers, The Popcorn Factory is testing freestanding insert ads and package insert pieces. 1-800-Flowers frequently binds offers into catalogs for its self-named brand, Plow & Hearth and Hearth Song properties.

Another retailer, Federated Department Stores' Bloomingdale's catalog, often carries blow-ins of Bose, a longtime user of insert media for its Wave CD/radio product.

Over the holidays, Neiman Marcus included a BMW car offer in its catalog that sold out immediately after the book dropped and went live online. It also featured a bound-in scent strip for a Hermes perfume. Fellow cataloger Cabela's, while selling truck mats in its book, also used a Ford F-150 pickup in the fall.

Amazon opened its customer files in November with a package insert program. The effort started with 500,000 pieces mailing that month. This year, Amazon will make 2.5 million monthly packages available for an annual total of 30 million. The program will reach online buyers of books, CDs, DVDs, electronics and software within four to six days of purchase through United Parcel Service and FedEx shipments.

Amazon is a unique case because it does not rent its postal or e-mail customer files, so this is the only way to reach its database of more than 30 million customers with marketing messages.

More Education Needed

Singer Direct, Scarsdale, NY, gained at least 20 new clients for insert programs last year, up considerably from previous years. One client, Guthy-Renker, Santa Monica, CA, was even honored at last year's Insert Day function as “Mailer of the Year.”

“For Guthy-Renker, the use of insert media has continued to grow but is still relatively small compared to the major source for acquisition, the infomercial,” said James Kushner, director of marketing at Guthy-Renker. “I do not foresee any major changes for this year.”

But Kushner admitted that more education is needed. Brokers, managers and owners must continue to brief the marketplace on the volume of insert media available.

Marketers need to recognize insert media as revenue and profit sources as well as another channel for delivering targeted marketing to potential customers.

“The vast majority of direct marketing companies still do not use this medium,” said Fred Singer, CEO of Singer Direct. “And even more of a challenge is convincing the general advertisers that direct marketing is a viable form of advertising. We need to show them that direct marketing is the future of advertising. Every CEO should seek a better understanding of their return on investment. Our goal as an industry is to convince these executives that this discipline will tell them exactly that.”

Program owners, facilitators and users of insert media undoubtedly will face challenges this year.

“Owners of programs want higher rates, mailers want lower rates — nothing new here,” Singer said. “However, it's my feeling that a marketer tests, reads the results and can only afford a rate to guarantee them a profit.”

On a more basic level, the industry must get brokers and managers to operate on a level playing field. They must use the same paperwork to reduce expenses of clearance, insertion, billing and payment. Then they should strive to persuade more mailers to participate.

As use of insert media grows, expect more demand and limited supply. Marketers should ensure their first right of refusal in programs. Yet they must become increasingly flexible in testing new programs within insert media.

“An ongoing issue for us,” Kushner said, “is determining the accuracy of when and how much a program is inserting our pieces compared to the published plans, as well as the need for more communication between all parties involved.”

For Vidal, the devil literally is in the details. Managing an insert program requires a lot of time for a small return in the launch phase, she said. Production schedules and order and material cutoffs need strict adherence. This is more so for blow-in and bind-in media. And communicating to make full use of these tactics is labor-intensive.

“Until you're able to implement processes and procedures within your organization for dealing with your management firm and coordinating with your production staff and printers, you'll find that a real resource is required to do the job right,” Vidal said.

The on-page insert channel poses challenges, too. From the strategy point, the program owner must decide which brands' advertising to allow in its catalog.

Production and creative have their own muddles. Order lead times are long because merchants must know at pagination where an on-page offer will break up a spread. So if the program owner has not sold all of the space, what contingency plan can be implemented at such short notice?

Vidal suggests building out another page or two of products, creating a cross-company or company services — corporate gift services, for example — advertisement for use.

But coordinating all of this can prove tedious. From a production position, how are these ads being created and delivered? If the program owner is creating an ad for an internal service, it will need color separation and a different lead time than an ad from another firm, which is typically delivered ready to print from a digital file.

“Clearly, venturing into this realm needs the full buy-in of all management, including marketing, merchandising and creative services, to effectively navigate through these obstacles,” Vidal said.

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