Boost Your Bottom Line With Insert Media
Rising postal costs and falling response rates have given many a marketer pause to consider testing insert media. In turn, this interest in inserts has led many direct marketers to consider opening up their packages to third-party advertising offers.
There are many benefits associated with creating a package insert program. The most obvious is an additional revenue stream that leverages the postage you already pay to deliver your goods. In addition, a package insert program increases your exposure in the marketplace as brokers and mailers
investigate your com-pany and product line to determine their offer's affinity with your program, notes Diane Caruso, vice president of insert media at Stanton Direct Marketing. She adds that a third benefit is the know-ledge program owners gain about their customers. "When you put advertising into your packages and you see what your customer is responding to, you're learning something about your customer that may help you come up with additional products of your own or that may give you a new avenue for list rentals," Caruso explains.
So when is your business fertile for creating a package insert program? Since insert users crave volume, a good rule of thumb is when you ship more than 500,000 packages a year, although plenty of exceptions exist, says Jill Eastman Vidal, director of third-party marketing at 1-800-Flowers.com.
Also, you want to target shipments that won't push your packages into the next postage class when you include an insert. "Not everyone has this level of sophistication built into their warehouse management system, but it is ideal if your system allows you to enter the weight of the item you are picking," says Eastman Vidal. "If you have the operational ability to include that intelligence, you know you're not jeopardizing the weight of the package and that what you're throwing in is making you money and not costing you postage."
Shop for an Insert Manager
If you determine that an insert program is right for your business, the next step is to secure management. Hiring an insert manager to oversee your program is a must, says Eastman Vidal, who suggests you ask other mailers and list professionals for recommendations. If you currently use insert media to promote your own products and services, get a recommendation from your insert broker.
Look for a company that knows your market, because it will have to figure in exclusivity, volume and seasonality when putting together your program. For example, notes Eastman Vidal, a manager developing a program for 1-800-Flowers.com's Plow & Hearth program would need to know that possible insert advertisers, such as bulb and seed suppliers, want fall and spring packages. The manager needs to determine how many times those advertisers would come in, when they'd come in and in what volume.
After obtaining some recommendations, send an RFP that specifies your volume and income projections to three or four managers. When putting together a program proposal, a manager wants to know such information as the minimum and maximum number of inserts you can accept; your insert weight and size specifications; how you fulfill product; your buyer demographics; and the details of the promotion used to drive orders.
In addition, Rich Mercado, senior manager at Madison Direct Marketing, says he asks about a mailer's warehouse, including the type of order management system in place, as well as whether or not the facility is "organized with flow shelving so the picking and packing of inserts can be easily done."
Once received, Eastman Vidal recommends putting together a grid that compares the proposals. When reviewing proposals, consider:
* Experience. What is the company's experience with insert media and in researching vendors? You also want to investigate the level of experience of the individuals who will be servicing your account.
* Goals. Are the manager's financial and growth goals for your program realistic?
* Resources. What is the manager's promotions and marketing strategy for your program?
* Clients. What other clients does the company represent? Some program owners prefer managers who handle competitive programs, while others do not, notes Caruso.
* Networking/references. This is critical as your insert manager will be responsible for advertising and promoting your program.
Assemble the Program
Once hired, an insert manager will assist you in putting the program together. Your manager will create a datacard to promote your program and will recommend a rate based on similar programs that, according to Mercado, "should be no higher or lower than your nearest competitor." The datacard also will include a minimum test quantity, the number of inserts allowed, and whether overweight inserts can be accepted. Inserts weighing more than 0.25 ounces generally are considered overweight and are charged an extra fee based on the additional postal costs incurred by the program owner.
When launching a new program, Caruso says that she likes to send in advance the inserts of a few potential advertisers to the program owner for approval. Then, when the program is launched, she will call the mailers to alert them that the program has hit and that they have been pre-approved for insertion.
At this time, you also will need to decide whether inserts will be collated into an envelope or inserted loose into packages. Mercado says he's a "big believer in the envelope because it organizes [the inserts] and gives the person a chance to look through things and hold the inserts longer, which increases your chances of a sale." The outside of the envelope also provides you with valuable real estate to promote your products or to sell to an advertiser.
If you opt for an envelope, your insert manager will assist you with outsourcing envelope creation and collation services. Most programs use a standard 6" x 9" envelope to collate inserts. Eastman Vidal recommends you print enough envelopes for a year's worth of insertions in one run to get better costs.
An insert manager plays a very important role in the collation process, because he or she is responsible for scheduling inserts and for making sure competitive offers aren't placed in the same envelope. Each month the manager will send the collation house a grid that specifies which inserts are nested in an envelope and in what order.
Commit an Internal Resource
As a program owner, you'll need to provide an internal contact to work with the insert manager, approve or reject insert offers, and track and report on package inventory.
The tracking and reporting of inserts is essential as advertisers will want to know how many offers are in circulation so they can track order flow, particularly if they are selling a high-volume product like checks, Mercado indicates.
Your fulfillment operation will receive shipments of envelopes from the collation house and put them into an inventory structure. In some cases, mailers enter insert packages as a SKU and put them on the picking and packing line, which facilitates tracking, according to Mercado. This also allows you to do weekly counts of how many inserts have been inserted into packages, remaining inventory and when a program completes. This information needs to be provided to your insert manager on a weekly basis so he or she can report back to the broker who placed the order.
Once a program completes, your insert manager bills the advertiser, collects all payments and sends you a revenue check. In addition to financial reports that track insert receivables, many insert managers provide program owners with a monthly report of all insert activity. This information can be particularly useful in putting together a P&L report on your program for upper management.
In addition to working with your insert manager and reporting on insertion activity, your internal contact should make visits to your distribution center and communicate the importance of your insert program directly to your packers, according to Eastman Vidal. "Building your infrastructure is really important out of the gate," she says, adding that packers need to understand that you can generate 6 cents to 12 cents per envelope. "Their support is crucial."