Submitted: The Two Sides Team September 26, 2013

In the age of digital media, where consumers are plugged in, tuned out and engaging in high-speed comparison-shopping at the click of a mouse, ecommerce and social media is fresh and exciting while traditional print catalogs are un-responsive, costly and old-school, right? So why are ecomms hopping on the catalog bandwagon at a rapid clip?
via Huffington Post – 24 September 2013

In the age of digital media, where consumers are plugged in, tuned
out and engaging in high-speed comparison-shopping at the click of a
mouse, ecommerce and social media is fresh and exciting while
traditional print catalogs are un-responsive, costly and old-school,
right? So why are ecomms hopping on the catalog bandwagon at a rapid
clip?

In the old days (and by that we mean the mid-late 2000’s), the best
an online retailer could do was max out on paid search, tap
lead-generation programs and buy some static display ads (they used to
be called banner ads in the ancient 90’s, but they bombed so publishers
repackaged them) and hope for the best. By 2005, the primary online
marketing channels available at the time -house-file email, search and
affiliate marketing–had plateaued. But a witches-brew of modern
marketing, improving overall data quality and targeting, soon took
shape. By tracking users’ browsing history through cookies; employing
proven statistical modeling techniques; the marrying of online and
offline consumer data, behavioral targeting and re-targeting was born.

So now instead of Mary Smith visiting the Good Housekeeping Magazine
site and seeing random ads for items she has no use for, she now sees
ads targeted to her specific e-footprint from marketers she’s most
likely to buy from, or from companies whose sites she’s recently visited
without making a purchase. For many retailers, ecommerce–through
search, display, social media advertising (Facebook, Twitter, Pinterest,
Tumblr, et al)–is a pot of gold. It’s cheap, its fast and it reaches
bazillions of potential customers. So why then all the sudden interest
in catalogs from ecomms?

Online-only retailers are facing the need to keep their businesses
growing, and are turning to experts in the traditional direct-marketing
space to provide a terrestrial road map. They’re discovering that a
high-quality, 4-color print piece is a powerful, and often necessary
(especially for smaller, lesser-known brands) initial blow in a 1-2
punch contact strategy. Small, mid-size and premium brands alike are
discovering that a high-impact direct-mail piece–from full-size
catalogs to postcards–has become an effective means of ushering
customers to their sites and has become an excellent path to this
offline target audience.

While most online marketers initially focused on email as their
primary retention tool, their direct-mail efforts were largely
concentrated on new-customer acquisition. Over time, while maxing out
their email marketing efforts (increasing to almost daily contacts and
focusing on different email-capture initiatives), they’re now realizing
that direct-mail is a very effective acquisition and retention tool as
well.

Over the past several years several pure-plays have launched offline
campaigns, while others are working to develop viable direct-mail
channels. These brands include Amazon, eBay, Shutterfly, Zappos,
Art.com, JustFab, Snapfish, One King’s Lane, Modcloth and Minted. The
key for these ecomms is to build meaningful direct-mail campaigns that
deliver positive ROI and which require a fine balance between who is
mailed (the customer/prospect mix), the offer and the overall marketing
costs. Each step in the process is equally critical, including campaign
strategy, circulation planning, design and production, mail execution
and results analysis.

The overall attraction of direct-mail is easy to understand. Catalogs
remain the highest-quality, most visually-alluring vehicle to capture
an audience, present product, create an aspirational lifestyle and
generate solid customer loyalty and brand-awareness. No one can argue
the distinct advantage catalogs have through photography, paper and
printing quality, size, use of models and share of customer attention.
And, catalogs have proven to be the most successful driver of web
traffic. There’s no better way for a multi-channel marketer to target
and acquire customers. It’s extremely cost-effective to initially
attract the customer through direct-mail while having them make their
purchases online.

But entering the direct-mail space isn’t as easy as it might seem,
even for deep-pocked online marketers. There are a lot of factors for
companies to consider, such as the competitive landscape; the scale of
the prospective customer universe; the size of their customer database
(by traditional recency, frequency monetary metrics); availability of
creative assets (i.e lifestyle and product photos);
product/merchandising strategy; cost-per-piece and ROI; square-inch
goals; and the overall call to action (75% of direct-mail pieces have
some sort of promotional offer).

It’s also critical to accurately measure the impact direct-mail has
in the multi-channel mix, ensuring that demand from stores, websites and
catalogs are allocated properly so that decisions on future advertising
spend will be made as scientifically as possible based on source and
results. The goal should be to generate incremental sales from these
direct-mail initiatives and not merely cannibalize ecommerce revenue.
One common method is known as “matchback,” where marketers analyze all
mailed names and addresses and match back transactions across their web,
phone, and retail channels for a defined period of time (often 60
days). More sophisticated companies go a step further and apply
attribution rules to this matched demand which analyzes interaction with
other marketing efforts.

So what does the typical catalog test campaign look like in terms of cost and ROI?:

Total circulation- 400K (50/50 split between customer file and external prospects)
$0.45 cost per piece for a 24 page catalog = $180K in direct mail costs
$0.12 per prospect name = $24K in list rental costs
$3K in mail house fees
$20K in project management fees
Total budget = $226K
Forecasted response rate = 4%
Forecasted orders = 16K
Estimated average order size = $100
Total Sales = $1.6MM
Total Sales per Piece = $4
Ad Cost % = 14%

Put simply, the math works. Especially if this channel is fine-tuned
and acutely integrated into the multi-channel equation. Remember the
1-2 punch strategy: find ’em through direct-mail, fulfill orders online.
It also can address a major challenge ecomms experience in having large
amounts of lapsed customers and one-time-only buyers. In these cases,
direct-mail becomes an invaluable reactivation tool in addition to being
a visually superior, cost-effective acquisition and retention vehicle.
Sometimes old-school is the best school…

Andy Ostroy is Chairman and CEO of Belardi/Ostroy, a New York
City-based direct marketing agency providing multi-channel solutions,
including customer/donor acquisition and retention, strategic, online
marketing, social and full creative services, for catalog, ecommerce,
retail, business, non-profit and educational client. Visit at
www.belardiostroy.com.

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