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No. 8: Press inserts in National Newspapers and magazines. Not for the faint-hearted, inserts in the press can cost anything from £8 per ‘000 for a single sheet, to £30 per ‘000 or more for a catalogue insert in a quality magazine. The advantage press inserts offer is that they are scalable. The disadvantage is that major shortfalls in circulation are now common and whilst publishers are normally prepared to reimburse insertion costs, the cost of the printed advertising material lost or wasted can be 3 or 4 times as much as the insertion fee, and this is rarely re-imbursed.
A catalogue insert campaign with 10 million circulation can generate 25,000 or 30,000 responses (0.25 – 0.30% response.) The further challenge however is that with such broad circulation, up to 40% of response can be from your existing customers. Scotts would prefer customers to respond to their full-sized mailed catalogues rather than smaller press inserts, as average order values are lower on smaller inserted publications. Remove these ‘existing customer’ responses from the break-even calculation however, and costs per new customer from press inserts are £15+ and therefore unsustainable.
Q = 5 (Respondents to press inserts have much lower LTV than those acquired via mailings.) S = 10 (Press inserts are infinitely scalable if they can be made to work); C = 3 (In long-term decline as a recruitment source. Always marginal, and now with evidence of publishers like the Daily Mail trying to increase insert rates by 33% to compensate for falling circulation, becoming unviable) R = 1 (Severe risk of circulation shortfalls, with inserts being lost without adequate compensation offered and competitive inserts being included in the same issue, few publishers can now be considered to be reliable advertising partners.) Score 19.
Scotts results: Press inserts are only now viable as a source of new customer recruitment if we allow press insert response from existing customers to subsidise acquisition costs. From 95 million press-inserted catalogues in 1999, Scotts is now down to around 25 million, with TV times, the Daily Mail and Times Newspaper Group now abandoned as insert publications due to lost materials, circulation shortfalls and unrealistic price increase proposals.
No. 7: Package inserts (your ad material in your own parcels or order fulfilment packs) These catch your customers at their most receptive moment, when they’re all wrapped up in the excitement of opening their parcel. New customers are acquired as ‘pass-alongs’. Q = 1 (Low Quality channel as a recruitment source. Most are already your customers); S = 1 (not Scalable as a recruitment source); C = 10 (as Cost is low. You pay nothing to insert in your own parcels) R = 10 (No Risk, as you control distribution, so no risk of your inserts going astray). Score 22.
Scotts results: Insertion of a second small-format catalogue of the same brand will typically attract a response of around 0.75% at £80 order value (£600 per ‘000) against a promotion cost of just catalogue print and paper - £35 per ‘000. Highly profitable, with a few ‘pass-along’ new customers picked up as your customer shares your catalogue with friends. Large format catalogues (Print cost £290 per ‘000) can generate £3,500 in sales per ‘000.
We all need a reliable source of low-cost or no-cost new customers for our brands. New customer recruitment is our top priority as although we do everything possible to retain customers, certain types of customer attrition like mortality, are unavoidable.
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