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Trends Drive Creation of 'Below-the-Line' Marketing Firm

Trends indicate that Madison Avenue wants multichannel direct response marketing services, and the more services it can get from under one roof the better, according to the founder of newly formed The V12 Group.

“If you look at Madison Avenue and where the marketing trends are over the past year, two things become evident,” said Paul Chachko, CEO of The V12 Group, New York.

The first is a shift of dollars from above-the-line marketing principles to below-the-line ones.

“What I mean by that is everything above the line is TV, radio, billboards and things like that, and below the line is direct marketing, digital marketing, analytics and modeling, database marketing, insert statement marketing and all of those channels in which you can actually measure response and gauge the effectiveness of your marketing dollar,” Chachko told DM News.

The second trend he sees is the consolidation of service providers.

“The below-the-line part of the business really couldn't effectively manage 10 or 12 vendors to work different channels so they were limited in the breadth and scope of what they were able to do by selecting a few of those channels,” he said. “What they started using were consolidators that offered multiple services.”

Based on those trends, Chachko began assembling a company that could address both by offering clients multiple below-the-line services with a single point of contact. Multichannel marketing company V12 likely will seem to be a new company at first glance, but upon closer inspection it is a conglomeration of about 30 years of direct marketing history and experience that will make its debut next week at DMA*05 in Atlanta.

The company name was derived from an engine, though it is not alluding to that in promoting its services.

“We're not going to use any kind of reference back to an engine but if somebody wants to think through it a V12 engine is one of the biggest and best in its class,” Chachko said. “It's powerful and it's working with 12 different pistons. We kind of looked at the company and said we have all these channels working at the same time.”

As founder and CEO of database marketing firm Datagence, Chachko already owned a database of 228 million consumers at postal address across 116 million U.S. households and an e-mail file of 88 million names from 200 to 300 sources of data acquisition. This serves as the basis for V12's database marketing services division.

“The data channel complements everything else by being able to provide traditional direct marketing principles including list rental, list targeting, list segmentation and analytics,” he said.

Jumping off from database, V12 acquired and brought together two industry firms to form its insert media division, which currently focuses on billing statement inserts. In May, V12 purchased Spectra Products and Media Solutions Services. Industry veteran Ben Giordano founded MSS as Media Syndication Group in 1980. He sold it to Snyder Communications, Bethesda, MD, in April 1999. It was acquired by French media conglomerate Havas SA in February 2000, and V12 bought it from Havas.

According to Chachko, V12's insert division will put out 3 billion inserts this year and work with 94 percent of major U.S. banks. V12 looks to expand into other types of insert programs in the future.

“It is an untapped — and I think disrespected — channel,” he said.

Other V12 divisions include analytics, with a team of analytics and modeling experts; interactive, which offers lead generation, search engine marketing, e-mail marketing and cost-per-acquisition services; and affinity marketing, which acts as a liaison between clients and nonprofits to create affinity marketing opportunities. The affinity division resulted from Datagence's acquisition of Memberdrive in November 2004. In addition, V12 also offers back-end services such as list management, list hygiene, merge purge, printing and fulfillment.

V12 has more than 500 clients and plans to do in excess of $90 million in annual revenue, Chachko said. Its roster of clients that it has a direct relationship with includes Bose, McDonald's, Warner Music, AT&T and Chase. Clients that it works with through ad agencies include American Airlines, Cingular, Office Depot and Procter & Gamble. The company has 110 employees in three major offices, including the New York headquarters.

Despite all V12's offerings, Chachko said he's not ready to rest on his laurels.

“Over the next 12 to 24 months, we are going to be fairly acquisitive not only in strengthening the channels that we currently have but expanding our product offerings,” he said. “We want to be able to provide a bevy of services that kind of couches us as the complete provider for below-the-line services.”

Kristen Bremner covers list news, insert media, privacy and fundraising for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters

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