Insert Media Can Help You Prospect Cost Effectively

By Stephen R. Lett

This article will examine the best ways to test insert media and outline what results you can expect.

Catalogers have historically relied on outside prospect lists to generate new buyers. But it's becoming more difficult to find good lists and thus, fresh prospect names. Moreover, list universes are flat or declining. Consider alternative methods of generating new buyers.

Insert media, for example, can provide a cost-effective way to generate incremental catalog business. Of course, insert media can't replace the use of outside rental lists. But it's wise to test other ways of attracting new buyers.

This month, I'll discuss what insert media is, the best strategy for testing it and what results you can expect.

Insert media encompasses the forms of printed advertising media noted in "Types of Insert Media" (see page 50). The cost per thousand impressions is relatively low — and so are the expected results. However, insert media can be cost-effective — providing your expectations are realistic. Let's focus on two types of insert media.

Package Inserts

These are printed promotional pieces inserted into another company's outgoing merchandise packages. They reach proven mail-order buyers, as well as recent or "hotline" names.

Package inserts carry the strength of an implied endorsement of your offer. Most companies that offer package-insert programs (PIPs) allow four to eight non-competitive inserts per package. There are two primary characteristics you should know about for package inserts:

1. The pieces can vary in size, format and weight, but most programs accept a maximum dimension of 5.5 inches by 8.5 inches, and a maximum weight of 0.25 ounces. They might be a single, tri-fold or simple two-sided piece.

2. Most inserts are going to proven mail-order buyers. That means the lifetime value (LTV) of the acquired new buyer can be favorable.

The challenge to PIPs: Competitors or semi-competitors may rent you their lists, but may not necessarily approve your insert. As mentioned, the company that agrees to put your insert in its packages could be viewed as endorsing your offer, at least indirectly.

That's why PIP owners don't give preliminary approval to an insert. Approval will come when they see the final piece.

The hard part of selling products via PIPs is selecting the items to be featured. So what should you offer? You could promote selected merchandise on the package insert or use it to generate catalog requests. Choose items that are most representative of your product line. Following are a few offer and copy considerations for package inserts:

- Offer a free catalog.

- Offer a discount to encourage response, such as $5 off a purchase of $20 or more.

- Include multiple ways to respond, e.g., toll-free number, Web site, e-mail address and/or a postage-paid response card (designed as part of the piece).

Typical response rates for PIPs range from 0.2 percent to 0.4 percent. Test costs traditionally are $45 to $50 per thousand for inserting, plus printing and shipping costs. The minimum test quantity allowed usually is 25,000 per program.

Free-standing Inserts

These appear in local newspapers. They're printed not by you but by the company sponsoring the insert. The amount of space you contract for can vary; common sizes are one-half of a page to a full page. A free-standing insert (FSI) co-op mailing is a mass vehicle, within which you can target based on the demographics of a market coverage area. You'll distribute to the entire market coverage area, so you'll want to select markets that index the highest against a national average.

FSI costs are low, usually $6.50 or less per thousand. A full-page, full-color FSI can cost about $6,500 (including the printing) to reach 1 million households. FSIs generally are used to sell one product.

Takeaway tip: Measure the LTV of a buyer who comes on your file by way of purchasing from an FSI.

In our recent test, we found that only 17 percent of all buyers who purchased from an FSI bought again within the next 12 months. Compare this with new buyers acquired as a result of mailing to outside rented lists. About 40 percent of buyers will repeat within the next 12 months, generating a much greater LTV. Those who buy from the FSI are purchasing the item advertised — they may not have any interest in other items featured in your catalog.

While FSIs can be targeted to geographical areas based on income demographics, keep in mind this is a mass media. Select an item to advertise that has wide appeal. To maximize response, feature an item that retails for $20 or less. The higher the price point, the lower your response rate will be. Your goal should be to generate as many orders as possible to add customers to your housefile — customers who have LTV potential.

In short, while the cost for an FSI is low, so is the response rate. In our recent test, response rates typically range from 0.01 percent to 0.04 percent.

The chart "Insert Media Compared" examines various aspects of insert media. The chart outlines the average maximum sizes and weights allowed for various types of insert media, minimum test quantities, average cost per thousand, typical response rates and suggested retail price points for offers made.

Conclusion

When used effectively, insert media is a low-cost way to generate new catalog buyers. The various programs help expand your prospecting universe by reaching potential buyers who may not appear on rented lists. Some of those prospects obviously will be proven mail-order buyers.

In general, response rates are low for insert media programs, but so are the costs. As always, test your efforts so you know what works best. Insert media is an effective and valued media channel for many mailers and should be included in your overall media plan.

Types of Insert Media

Package inserts accompany actual mail-order-purchased merchandise.

Free-standing inserts (FSIs) and space co-ops are space ads with FSI coupon co-op inserts that go into newspapers nationwide.

Statement stuffers are inserts enclosed with invoices or subscription renewals.

Catalog blow-in and bind-in programs are inserts that either blow-in or are bound into catalogs or magazines.

Ride-along programs are inserts included in promotional mailings to your housefile.

Mass and lifestyle co-op programs are coupon/special offer mass mailings sent to households (not to specific individuals). Lifestyle co-op programs offer themed mailings; recipients meet targeted lifestyle themes from a compiled database.

Handout programs are special offers or themed packages that are hand-delivered to new moms, college students, etc. They often include special offers and branded samples.

Stephen R. Lett is president of Lett Direct, a catalog consulting firm specializing in circulation planning, forecasting and analysis. He spent the first 25 years of his career with leading catalog companies. He can be reached at (302) 537-0375, or by e-mail via his Web site: www.lettdirect.com.