Direct Marketing, Mail Order, and E-commerce News from the National Mail Order Association


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International Direct Marketing News from DM Diary

 
Better to Dialogue with “Commercially” (Rather Than “Environmentally”) Aware U.K. Politicians About the Benefits of Opt-Out Direct Mail?

Earlier this year, while still Parliamentary Under-Secretary of State for the UK’s Department for Environment, Food and Rural Affairs, David Milliband stated in an interview with the Evening Standard that “war on junk mail” had been declared and that all direct mail should in future become “opt-in”. When Milliband was promoted to Secretary of State for Foreign Affairs recently in the Gordon Brown Cabinet re-shuffle it was no surprise there was an audible sigh of relief from the UK’s direct marketing community. However, this hasn’t prevented the “opt-in” dialogue continuing with his successor at the Dept. for the Environment, Joan Ruddock.
 
My old friend Rosemary Smith in London described the UK situation rather nicely: “Let’s not kid ourselves, universal opt-in is Armageddon for this business and we need to stay awake to stop it happening”.
 
According to Rosemary the most powerful lobby against direct mail in the UK right now is from the “Greenies” and the environmental issue seems to be at the core of the DM industry’s dialogue with Government – rather than privacy. Every political party in the UK is fashionably green these days and the environmentalists don’t like the perceived paper wastage that direct mail represents (despite figures showing only 2% of household waste consists of direct mail materials and most direct mail in the UK is already being printed on recycled paper anyway).
 
Meanwhile Rosemary tells me Ealing (where she lives) was completely inundated by direct mail recently from every one of the UK political parties prior to the first by-election which was held there after Gordon Brown took over from Blair as prime minister.
 
Where generating political support is concerned, Governments all over the world use direct mail because they recognize its inherent usefulness and value. In the UK I suspect that (when push comes to shove) the business and commercial value of direct mail will ultimately be perceived as being more important in the Government’s eyes than the significance of perceived “paper wastage”. Meanwhile the DM industry in the UK should continue to articulate the benefits of authentic, legitimate, useful, recycled, opt-out direct mail (through a preference service if necessary) – preferably by talking to the more informed, commercially minded, less prejudiced types at the Department of Trade and Industry (now called rather forbiddingly “Department for Business, Enterprise and Regulatory Reform”) – rather than to the political “environmentalists” whose positioning is really not that strong at all).
 
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Do Online Ordering Options Reduce Postal Response?
 
Several mailers (including a well-known book publisher) have told me recently they’ve found that using a website (and therefore an online ordering option) to support postal direct mail campaigns reduces rather than lifts response. This is interesting. Their rationalization is that positive response is something immediate, powered by emotion or excitement and creating a momentum, which leads easily to calling either a telephone number or completing an order form sitting there right in front of your nose. If there’s an online ordering option, you must go find your computer (with the full intention of placing an order) but often there can be a diversion on the way to any website – and sometimes you just don’t get there! An A/B split or two will tell you whether an online ordering option does – or does not – work for your particular offer. (I do assume, of course, your online response tracking is fully in place when calculating total response – which takes into account response from each channel including mail, telephone and online). I say this because I know that some mailers’ online(and telephone) response tracking is somewhat less than 100% efficient.
 
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Good News – and Bad News – from
the United States Postal Service
 
The costs of mailing internationally out of the USA are now higher. IPA rates are up 35% and ISAL rates are up by an average 14.1%. However, one huge breakthrough for the USPS is that representatives are now explicitly permitted to negotiate rates enabling the USPS to compete on price with international postal operators. We’ve been offered an ISAL rate from the U.S. to Japan recently by a USPS postal consolidator which is significantly lower than the best rate we can get from any international postal operator (even though we’re based in Asia – and therefore a lot closer to Japan)! Delivery time for USPS’s ISAL service to Japan is also only 4-5 days which is at least twice as fast as their delivery time to most other destinations.
 
However, a word of caution: I hear that the USPS in their eagerness to become more profitable are seeking to cut ISAL costs by using “hubs” and by negotiating “space available” contracts with airlines. In many instances this will carry the risk of creating even longer ISAL delivery times for some mailers to some destinations in the future. Not good if you’re mailing “hotline” names – or if you’re uncomfortable with the “uncertain delivery time” factor.
 
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There’s no Turning Back. Print Publishers
Must Try to Find Ways of Making Money from Digital Editions
 
One beneficiary of the decline in postal response rates to publication subscription offers has been the “Asia-Pacific Publishing Convention” 2007 held earlier this month which was designed to help print publishers find ways of making digital editions profitable. However, the perennial challenge of acquiring and maintaining audited circulation is not a lot easier online (especially paid circulation) – and circulation costs will continue to eat into publisher’s profits. Useful ideas on digital were exchanged at the APPC, and it’s clear many of the larger publishers (who stayed away from this first conference – as big players tend to do) will be attending the second event next year. They have little alternative but to “stop treading water” (as the convention organizers put it) and to actively begin to find ways of making money out of the digital editions they will soon be forced to develop.
 
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If Advertising in Digital Editions Becomes More Interactive,
Would Advertisers Spend More Money?
 
Whilst circulation costs have become every periodical publisher’s nightmare, advertising continues to be every publisher’s life’s blood (print or digital). David Ennes, ASEAN general manager of L’OREAL, who spoke at ACCP 2007, spelled out how L’OREAL is actively capturing buyer details at point-of-purchase enabling the company to track buyer purchases, value and frequency through a database where relationships and sales are grown through tailored direct e-mail offers. Their objective, Mr. Ennes said, is quite simply to encourage repeat purchasing – and this is proving very productive.
 
However, David Ennes did point out that leading women’s magazines were not yet offering advertisers sufficiently interactive ways of reaching their high-value readers which would enable advertisers (such as themselves) to acquire new customers online and to further grow profitable direct email activity.
 
It’s clear that “exposure” alone derived from online advertising is no longer good enough. Advertising in digital editions will simply have to become interactive to the point where advertisers are willing to invest money because the response they are actually receiving online is trackable, quantifiable and measurable.
 
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Compliance With New Stringent Postal Sort Conditions Needed to
Secure Maximum Discounts When Direct Injecting into the USPS
 
Many fundraisers believe they have a “moral obligation” to their donors not to spend more on new donor acquisition than is absolutely necessary. To this end, U.S. fundraisers cut costs by printing in China (often sourcing premiums there), and then ship by surface container back to the U.S. West Coast and direct inject into the USPS.
 
To get maximum postal discounts from the USPS you must now arrange for enhanced Post Code accuracy through DPV (Delivery Point Validation) Certification. You’re not allowed to access or use this software outside the USA, so you must have your mail sorted using DPV software (effective August 1 this year) offered by one of the postal sort companies on the West Coast (PSI, Pitney Bowes, Anchor or Smartmail, for instance) who will then direct inject on your behalf.
 
‘Dimensional’ packs are being used successfully by many fundraisers these days, but there are also now maximum size and thickness rules being applied by the USPS (and a new “flexibility” test), so to avoid overpaying on postage make sure your ‘dimensional’ package is approved before you print in China and ship back to the U.S. for direct injection. These are extra ground rules being applied by the USPS – but if the extra cost is reasonable and they facilitate full delivery of our mail within the U.S. – who are we to complain?
 
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Make Way for the Good Guys
With Good Products
 
It has always struck me that one of the greatest international mail-order opportunities out there lies with manufacturers and distributors of authentic natural health products which work. Such products are not always prescribed by general practitioners (they weren’t taught about them in medical school) and they tend not to be sold by health product retailers so many of whom are controlled by the pharmaceutical industry against whose drugs many natural health products are competing.
 
It’s therefore very disturbing to see the negative publicity being given in Europe and the USA recently to the scale of bogus and low quality medical products being sold online.
 
This discredits an important mail order channel which potentially enables consumers to obtain authentic, proven and efficacious natural health products which can help their condition but are not easily available through pharmacy networks or the usual medical establishment channels. (I feel strongly about this).
 
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More Fresh Names… Will Lead to Larger Volume Mailings…
Which Will Lead to More Fresh Names… Which Will Lead to …
 
Last month I was very honoured to receive the 2007 “Lifetime Achievement Award” from the U.S. DMA’s International Council. I thank them for that. I flew to New York for lunch to accept the Award (upgrading to first-class from business class both ways using Asia Miles because of my bad leg). It was good to meet up with many old friends in the business at lunch and also the next day before returning to Asia.
 
In my brief acceptance speech I remarked on the difference between the good old days when high response rates were “normal” and today when low response rates are “normal”. The common denominator between good response and poor response was, and still is, the volume of fresh names available. Of course, fresh names in the old days were still comparatively “fresh” while today’s “fresh” names (within the major markets) have all been hammered and overwhelmed by mail pollution (ie. the sheer volume of useless and deceptive offers – offline and online).
 
However, a freshly generated name still has value as a freshly generated name. We know this from those blessed markets where “hotline” names are available which deliver much higher than average response rates. So much higher in fact that in many markets (such as Japan) “hotline” names can only be rented on a reciprocal basis against a similar number of other “hotline” names. Existing mailers don’t like to make it too easy for newcomers into the market…
 
One of the points I made in my Award acceptance speech in New York concerned this issue of fresh names. MLA is currently putting together (with the help of a data compiler) raw data from the public domain in 125 countries (which have been neglected for several years) where there’s no local list industry and low to miniscule volumes of local and international direct mail. This will form the basis of a co-op mailing shared by reputable mailers with authentic offers which would gradually convert compiled and gathered names into ‘fresh” names and allow participants to reciprocate their separately generated fresh names with each other.
 
Many international mailers will argue that only the top half-a-dozen industrialized countries matter. I disagree. Multinationally there is one language (English) – and one currency (US Dollar) – which, to a greater or less degree, are universally recognized. This combination anyway is good enough to generate response which (on average) tends to be 250% higher than response you get from industrialized countries – probably because people in these smaller countries experience less mail “pollution” and are exposed to much less mail.
 
Smaller markets are like currents in a cake. No single country is significant in itself (though response rates can vary consistently by a significant percentage) – but response from many smaller markets together in a single DM campaign can make for a much sweeter overall experience when viewing the bottom line.
 
Rather than continuing to experience a downward spiral in the multinational market where smaller mailings chase fewer fresh names which lead to smaller mailings chasing even fewer fresh names – the reverse would apply. More fresh names can lead to larger volume mailings… generating more fresh names… leading to yet larger mailings… leading to yet more fresh names … leading to even larger mailings… leading to even more fresh names… leading to…
 
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Bulk Mail Penalties Are One More Risk
When Mailing into Larger Markets
 
Another reason for mailing smaller countries is you can do so by mixing and spreading your mail across many smaller countries without incurring bulk mail penalties. Quantities of more than 1,500 pieces a day, or 5,000 pieces over a period of 2 weeks, identifiable from the same sender, which are mailed into certain countries such as Japan, Germany, UK, Greece and France for instance, can incur high bulk mail penalties.
 
Obviously larger mailers have ways of getting around this UPU restriction (it’s not for me to describe exactly how right here and right now) – but it’s a bit messy and entails more than a little bit of planning and one more element of risk – as if there wasn’t enough risk already out there every time we mail.
 
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James Thornton
Managing Director
 

Head Office:
5/F CNT Tower, 338 Hennessy Road, Wanchai, Hongkong
Tel: +852 2526 1208 Fax: +852 2524 9177
 
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32/F Rufino Pacific Tower, Ayala Avenue, Makati City 1223 Philippines
Tel: +632 811 0177 Fax: +632 811 0178
 
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Tel: 91 (22) 22155036 / 7 / 8 Fax: 91 (22) 22155037
 

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