In response to upcoming postage rate increases, insert media company Stanton Direct Marketing Inc. has reexamined cost per thousand rates, concluding that sometimes inserts aren’t worth including at a standard price.
Stanton Direct, Elmira, NY, recently changed the maximum accepted weight on some programs to 0.2 ounces from 0.25 ounces. Any inserts over this weight incur an overweight charge for the marketer.
“A program owner shouldn’t be a banker, subsidizing one insert because it’s heavy and charging the lighter guy,” said Al Stanton, president/CEO of Stanton Direct. “Everyone should carry their own weight.”
This maximum-weight change reduces incremental postage costs for program owners by nearly $2.50/M, he said. Savings likely will increase when postage rates rise. The company began considering a change in May 2006, a year before the rate increases are expected to take effect.
Rather than increasing CPM rates across the board for marketers, the company aims to consider all price factors on both sides of the deal and provide the fairest pricing scenario. Mr. Stanton said that in some programs mailers with the lowest weights may even receive lower CPMs if it is affordable.
Incremental postage, or the difference in postage cost between the product being shipped with inserts in the package and without inserts, became a factor the company considered when setting rates. Collation costs also are considered: Volume buying deals are negotiated when possible by researching collation houses, freight rates and envelope manufacturers.
Reaction from marketers has been mixed, based on each company’s pricing and weight needs. In general the strategy is to foster positive word of mouth among clients and a broad offering of programs to encourage new business.
“We lost some business in [lowering the maximum weight], but we didn’t lose money for our program owners,” Mr. Stanton said.
The insert industry may see more marketers looking to save money by trimming their direct mail costs. A decrease in direct mail could result in fewer programs, which would face a higher demand. Programs such as DCU Address Label Package Inserts, Franklin Covey Package Inserts and JR Cigar Package Inserts are managed by Stanton Direct and are still offering maximum weights of 0.25 ounces.
Stanton-managed package insert programs that carry lower weight restrictions include the Information Products Co.’s PIP and Children’s Package Inserts. The Salem, VA-based product distributor sells personalized gifts including mailing labels, decorative clocks and poems. Most of its buyers are women, and its children’s program reaches mothers of children aged 0-12.
For an annual mailing of 1.2 million, the PIP cost is $50/M. The program is accepting up to 10 inserts. Information Products Children’s Package Inserts program costs $55/M and expects a mailing of 85,000 a year. It accepts up to eight inserts. In both programs the cost rises if marketers exceed the 0.2-ounce weight restriction.
“We certainly want to have lots of inserts in a package, but we don’t want to have a situation where there is only one winner,” Mr. Stanton said.