Advertising
Advertising – When Is Enough Enough?
On average Coke and McDonald’s each spends $2 billion a year on advertising
Geico spends $244,137 a day on Serach Engine Marketing advertising alone.
actual ad for a McDonald's in India
And then there’s the Big Pharma companies. How much do you think they spend on advertising each year?
Speaking of pharmaceuticals, don’t know about you but my rule of thumb is if you need to spend more than half of a commercial for a given drug laying out all the possible side effects, that may be one drug you don’t necessarily want to take.
But I digress…
I like advertising. I’m pro advertising. I’ve been doing it long enough to know it’s importance and relevance. I get that. I realize there are times and places where advertising is a necessity.
And I surely don’t want to bite the hand that feeds me, but…
When it comes to numbers like the ones bandied about above… when is enough enough?
If Coke and McDonald’s “only” spent $1.5 a year on advertising, do you really think people would stop buying 12-packs and Big Macs and suddenly switch to Pepsi and Whoppers? Of course not.
I mean do we really need to see yet another commercial showing people gorging themselves on Quarter Pounders, fries and a shake?
I’m picking on McDonald’s here but I’m merely trying to make a point. Maybe instead of spending so much money in advertising, McDonald’s could create more healthy-choices. Yeah, I know, they tried it and people clamored for more grease… I heard all about it. Perhaps it was because the healthy-choices tasted like crap?
And how bout the big pharma boys? These are folks who are entrusted in creating drugs that save lives, cure diseases and so on, right?
Clearly they would be putting more of their dollars into research than advertising, yes?
Um, no…
Back in ’08 a study by two York University researchers estimated the U.S. pharmaceutical industry spends almost twice as much on promotion as it does on research and development, contrary to the industry’s claim.
To say that’s a little disconcerting would be an understatement. But as disconcerting as it is, it’s not surprising in the least. It’s all about the bottom line, correct?
What do you think? Am I being naive in thinking big companies are spending too much on advertising? Or should they spend less and if so where should those “savings” go?
Update on 5 Day Delivery–New Website
The U.S. Postal Service has launched a website on usps.com to provide information to all customers about its proposal to implement a five-day street delivery schedule. The Postal Service proposes to end regular Saturday mail delivery to street addresses as part of a comprehensive plan to ensure that it can continue to deliver affordable service to the American people. Post Offices will remain open on Saturdays.
The website, www.usps.com/communications/five-daydelivery has a planning guide for businesses and household customers, and answers to frequently asked questions.
Delivering Something Extra
From the New York Times
By Stuart Elliot
Published: September 23, 2009
Since 1907, United Parcel Service has been delivering packages ordered by consumers. Next week, the company plans to deliver packages they have not ordered, in a test of an effort to expand into direct marketing.
United Parcel Service will begin testing its direct marketing service on Monday.
Beginning on Monday, U.P.S. will experiment in five major markets with a service it calls Direct to Door, giving advertisers and retailers a chance to provide offers and product samples to U.P.S. customers. The marketing materials will come inside small boxes labeled Direct to Door Paks, and will be delivered to customers along with merchandise they actually ordered.
The test, to run through Oct. 2, is intended to gauge whether there is interest in having U.P.S. serve as an alternative to marketing mail delivered by the United States Postal Service or by companies like Valpak.
If Direct to Door goes forward, the added revenue could help United Parcel offset declines in demand for its mainstay package delivery service since the recession started.
In July, U.P.S. reported its sixth consecutive quarter of lower package volume in this country. The decline in the second quarter was 4.6 percent compared with the period a year earlier, which Bloomberg News described as the worst result since United Parcel went public in 1999.
“I wouldn’t say it was developed as a result of the economy,†said Lisa Lynn, marketing director for new-product research and development at United Parcel in Atlanta.
Rather, she said, it stems from “some opportunity we saw at the heart of what we do every day working off our delivery network.â€
The test is also meant to see if U.P.S. customers welcome unsolicited packages or dismiss them as some new type of junk mail.
One effect of the economy is that “people are very receptive to offers right now,†Ms. Lynn said.
An experiment in figuring out how to better aim traditional, tangible marketing materials at consumers may seem quaint when so much of the buzz along Madison Avenue is about aiming virtual pitches at them online.
But direct marketing remains a lucrative business. According to the Direct Marketing Association, it accounted for $176.9 billion in ad spending last year in the United States — 52.1 percent of the total, by the association’s tally.
“We did some focus-group research and it really indicated that people were receptive to receiving offers from U.P.S.,†Ms. Lynn said. “What we heard was, ‘If U.P.S. brings it to me, it’s not junk.’ â€
Still, the company is taking several steps to try to ensure that a Direct to Door Pak is received more like a gift than another application for another credit card.
For one thing, the offers inside each box are intended to be special rather than “mass offers distributed through other channels,†Ms. Lynn said.
For another, no Direct to Door Paks will be delivered unaccompanied by packages ordered by that household, she said.
And the boxes will not bear the addresses of the recipients, Ms. Lynn said. Rather, they will carry phrases like this one: “Inside are premium offers from some of America’s best-known brands.†They will also include a photograph of the familiar brown United Parcel truck next to the words “Delivered to you by U.P.S.â€
About a dozen companies — advertisers and retailers that use United Parcel to deliver orders to customers — are taking part in the test, Ms. Lynn said. They include the Finish Line; Men’s Wearhouse; Sephora; two Williams-Sonoma home furnishings brands, Pottery Barn and West Elm; and Zappos.com, the online retailer of shoes and housewares recently acquired by Amazon.
“It’s an interesting way to reach out to our customers and partner with one of our closest business partners,†said Aaron Magness, director for business development and brand marketing at Zappos.com in Henderson, Nev.
“We are an online retailer,†he added, “but we want to maintain a high-touch relationship with customers, constantly trying to find different ways to interact with them in whatever means they’re comfortable with.â€
Mr. Magness said he liked the idea that the boxes would not arrive “out of nowhere, from random people knocking on your door.â€
The offer to be made by Zappos.com during the test will invite recipients to “become a member of our V.I.P. program,†he added, entitling them to “free next-business-day shipping on every order.â€
United Parcel plans to deliver about 250,000 Direct to Door Paks in about 150 ZIP codes in Chicago, Dallas-Fort Worth, Miami, Phoenix and Washington.
Those chosen to participate in the test are “high-opportunity consumers,†Ms. Lynn said, meaning that they often order merchandise delivered by United Parcel Service.
“Our drivers have relationships with these people because they deliver to them frequently,†she added. “There’s a lot of trust in the driver and the brand.â€
Mr. Magness also cited the trust factor as a reason Zappos.com was interested in the test.
Ms. Lynn described the customers to receive Direct to Door Paks as ages 35 to 54 in households of two persons or larger and living in single-family, owner-occupied homes.
As for what the service will cost marketers, “I can’t go into specific pricing,†Ms. Lynn said, “but the pricing model is similar to other media.â€
The goal is for the cost to reach each 1,000 consumers — a common media measurement known as cpm — to be “comparable or less than an equivalent piece of direct mail,†she added.
Junk mail delivers a sense of satisfaction
From The Chicago Tibune
By
Steve Johnson
Tribune reporter
September 22, 2009
E-mail Print Share Text Size There’s still time to improve my lawn. Public radio needs me to renew my membership. A “quality closet” can be mine for just $495.
And the Lyric Opera, of course, has another great season of songs in foreign tongues and “projected English translations above the stage for all operas,” information clearly worth sending in duplicate.
I’m supposed to hate this stuff. It kills trees, which contributes to global warming, and weakens the grip of the screws attaching my mailbox to my house wall, which leads to stucco failure.
I’m supposed to hate it for constantly nagging me: Buy this, sign up for that, donate to us. And above all, I’m supposed to hate it for having the temerity to try to make me change, in however small a way, the way I lead my life.
But the truth is, except for the rare, genuinely deceptive stuff — credit-card solicitations designed to look like bills — I don’t mind junk mail.
In a “Seinfeld” episode, Kramer once bricked up his mailbox to fend off a catalog onslaught. I open my box to all who care enough to write or, more accurately, stuff an envelope with printed material.
It’s sad psychological comfort, I know, but far better is the day with two credit card offers and a Jiffy Lube coupon than the one with no mail at all.
And in some ways, a Sierra Trading Post catalog is more satisfying than the latest Esquire.
Instead of hanging onto it for a month in hope of finding time to read the carefully written articles, you flip through it in five minutes while waiting for dinner, then toss it on the recycling pile, secure in the knowledge that companies continue to make more hiking shoes than can be sold at full price.
A two-week vacation recently allowed me to revel, upon return, in the full glory of my junk mail.
There, between the rubber bands, were 15 catalogs, four more than the number of magazines, everything from Athleta to West Elm.
There were 25 actual stuffed envelopes of solicitation and such, compared to just 12 pieces of what you would call meaningful mail: utility bills, a library overdue notice, a car registration sticker.
There were another seven pieces on postcards, including, of course, a Bed Bath & Beyond 20-percent-off coupon (I picture cashiers there fainting if someone actually pays full price). And a once-local, increasingly pan-suburban newspaper I no longer subscribe to decided to take a shot and send me a copy.
All told, it was 4 1/2 pounds of clutter. And thumbing through it, opening a piece here, recycling one there, was almost as enjoyable as going through the “real” mail. Sure the junk mailers are after your money, but they’re only asking for it. An actual bill makes demands.
You’d think that junk mail is dying. Beyond the environmental complaints, there’s the relative economic efficiency of spam e-mail.
And although it’s true that last year, for the first time, direct-mail spending actually declined, it’s also true that it continues as a huge business.
I know the statistics (because I looked them up): U.S. junk mail accounts for almost one-third of all mail delivered in the world, and each American household gets an average of 850 pieces of it a year.
Households average 18 pieces of it a week, one survey found, versus one piece of personal correspondence.
I know that not enough people recycle their junk mail, and that direct marketers send out 36 pieces to get one response. I won’t argue that it is all overkill, the sign of a culture with too much disposable income, even now, and too little concern for the ways it chases that income.
But at the same time, junk mail is largely responsible for keeping the U.S. Postal Service afloat; without it we’d have another institution to bail out.
And without all the impersonal stuff around it, the one birthday card in that whole two-week pile wouldn’t have seemed half as special.
Plus, I would have had no way of knowing that I could run an 8K to help abandoned pets, that Clipper Magazine is not about ships or that Trader Joe’s is featuring spicy peanut slaw. Information like that is, literally, priceless.
sajohnson@tribune.com
BMW: Luxury Auto, Meet DRM
BMW is kicking the tires on a direct response campaign targeting luxury auto enthusiasts, turning to an often undervalued marketing platform as a means to entice Mercedes, Volvo and Audi drivers to come in for a test drive.
In a bid to draw likely buyers to their local BMW dealership, last week the New Orleans-based DRM firm Dukky began sending out some 25,000 mailers to premium vehicle owners in the Tri-State (New York-New Jersey-Connecticut) area. Upon registering for a test drive, the recipients of the direct mail material are presented with a $25 American Express gas card.
Participating consumers are directed to visit a unique URL, which directs them to a personalized activation site powered by Dukky. Once the user has registered for a BMW test drive, he or she can share the promotion via email or social networking sites. The digital activity feeds into a dashboard which reports back to the client in real time, thereby creating a database of purchase intent and user feedback.
Although the DRM strategy may seem a bit low rent for the likes of BMW, there are a number of advantages to targeting the mailbox. “BMW for years has been all about acquisitions, whether you’re talking email lists or traditional mailing lists,†said Scott Couvillon, chief marketing officer, Dukky. “By its very nature, direct mail is much more impactful than even the greatest email because it’s there and it’s tangible. Then you take the next step with the PURL and you’re getting feedback on an individual consumer level.â€
Couvillon added that Dukky’s ability to track the target’s subsequent interaction with the material, from signing on for a test drive to alerting friends to the offer on his or her Faceboook page, is what separates the initiative from the shills for garage door openers and pizza chains that clog the mails.
“We have no interest in dethroning Valpak,†Couvillon said. “Our technology allows a highly respected brand like BMW align itself with what is essentially an interactive coupon.â€
Consumers were also targeted by the specific brand of vehicle they currently own, said Erik Wennerod, vp, director of CRM at Dotglu, the interactive unit of Kirshenbaum Bond Senecal + Partners. “Quite frankly, we wanted to go after each one of the 25,000 competitive vehicle owners with a message that was targeted to their demonstrated preference,†Wennerod said. “So for the Volvo owners, we went after them with a safety message. With Audi, it was tilted toward performance. With Mercedes, it was all about luxury.â€
The gas card works as an incentive to get prospective clients deeper into the purchasing funnel, down past the initial part of the decision-making process where people start talking themselves out of a buy. “For better or worse, they start to add practical reasons for not buying,†Wennerod said. “One of the advantages BMW has is, once you drive one, there’s a much more emotional experience that takes place. If we can get them to that step, the car takes care of the rest.â€
Wennerod expects activations to begin later this week, as the first recipients of the mailer begin making the jump to the online site. “One of the things we love about this is it’s essentially a turnkey approach,†Wennerod said. “Dukky was able to turn this around very quickly, from the DRM piece to getting the microsite online. It all went live literally just a few days before Labor Day, so we’re hoping to start getting the first round of feedback toward the middle of the week.â€
While the typical return on direct mail is less than 2 percent, Dukky’s marriage of DRM, online and social media allows the company to guarantee returns of 8 percent. And in the case of the BMW promotion, Dotglu’s exposure is minimal. “It’s a variable cost deal,†said Wennerod. “We only pay for the people who take the test drive. That’s a lot of upside.â€
Plunge in Credit-Card Mailings Slows
Could this be some good news for a change!From Brandweek
Aug 14, 2009
- Mark Dolliver
When the credit crunch took hold last year, it stanched the usual flood of direct-mail credit-card mailings to U.S. consumers. The subsequent meltdown of the financial system had its own restraining effect on such offerings. But now, a report from Synovate says the research firm’s Mail Monitor operation has detected a bottoming out in the volume of such solicitations.
In the second quarter of this year, says the report, households received 349.1 million credit-car offers in the mail. That’s 67 percent lower than the level of mailings in the same quarter of 2008. But it’s down just 6 percent from the level of first-quarter 2009. Some of the big mailers even increased their volume during the second quarter. Bank of America’s mailings were up 77 percent from the first-quarter-2009 level, and Citibank’s were up 65 percent. Noting that credit-card issuers have been growing less risk-averse than they were earlier in the recession, Synovate goes so far as to predict an “uptick” in card offers next year.
An earlier report from Mintel Comperemedia noted a stabilization (after two years of declines) in the number of mailings sent to households promoting mortgages and home-equity loans. But the nature of the offers has shifted, given lessons consumers have learned the hard way in the past year. Notably, direct-mail offers of adjustable-rate mortgages have “fallen out of favor,” according to Mintel’s analysis.
Of course, the fact that companies are making offers of credit cards and loans doesn’t necessarily mean people are taking them up on it. Polls during the past year have consistently found consumers professing their aversion to taking on more debt of any sort. Typical of the genre was a Gallup poll released last month (based on fieldwork in June) in which 46 percent of respondents said it’s “a bad time to borrow money,” vs. 17 percent saying it’s a “good time” to do so.
Mailbox Explodes in Northeast DC
Updated: Thursday, 13 Aug 2009, 11:43 PM EDT
Published : Thursday, 13 Aug 2009, 11:43 PM EDT
By MYFOXDC STAFF/myfoxdc
WASHINGTON, D.C. – D.C. fire crews say a mailbox explosion shut down several streets and forced evacuations in Northeast Washington on Thursday night.
It happened at 49th Street NE and Meade Street NE just before 10 p.m. Officials say a blue U.S. Postal Service mailbox was destroyed by an explosive device.
D.C. Fire and EMS had to close off several streets in the area, and they were checking to see if there was a second device. There were no injuries reported.
Witnesses said debris was scattered over a large area after the explosion.
Postal Service health is still a concern
By Juliana Gruenwald CongressDaily July 30, 2009 While there is little disagreement that the U.S. Postal Service is facing a severe financial crisis, lawmakers voiced concerns on Thursday over the proposed solutions, which include closing some branches and possibly reducing deliveries to five days a week.
GAO this week said it was adding the Postal Service to its list of “high-risk areas” needing attention by Congress.
It said the USPS is facing a “deteriorating financial situation” and is on track to end the year with a net loss of $7 billion. Its financial woes are due to the ailing economy and declining mail volumes as more people and businesses bypass snail mail for e-mail, text messaging and other forms of electronic communications.
At a House Oversight and Government Reform Federal Workforce and Postal Service Subcommittee hearing, lawmakers pressed the USPS for details on what criteria would be used in determining which of the proposed 3,200 suburban and urban branches under consideration would be closed.
USPS acting Vice President Jordan Small said fewer than 1,000 post offices out of the list of 3,200 are likely to be closed. The criteria USPS will use in determining whether to close a facility is a branch’s proximity to other branches and the consuming habits of postal customers in that area.
He declined to give an estimate of how much would be saved by the closures and by eliminating Saturday deliveries. Small said USPS would have a better sense of the estimated cost savings in October when a study on such moves is complete.
But some lawmakers voiced concern about the potential impacts on their communities. “While I admit, the finances here are very grave … there is a need to conduct ourselves with, I think, a thoughtful approach … and do it in a way that causes the least amount of disruption,” Federal Workforce and Postal Service Subcommittee Chairman Stephen Lynch, D-Mass., said. Rep. Gerry Connolly, D-Va., said many of his constituents who have long commutes to work would be unable to visit a post office if they are not open in the evening.
Del. Eleanor Holmes Norton, D-D.C., chastised the postal service for taking too long to implement the necessary reforms but then quizzed Small on whether any post offices in Washington are on the list of possible closures. For the most part, business groups dependent on the postal service said they support the proposed changes if they will help ensure USPS’s viability.
But they voiced strong opposition to raising postal rates. Noting that the bad economy has hurt their industry as well, “mailers cannot shoulder another rate increase,” the Direct Marketing Association’s Jerry Cerasale said. Federal Workforce and Postal Service Subcommittee ranking member Jason Chaffetz, R-Utah, said lawmakers should consider providing USPS with economic stimulus funds and urged USPS to do more to make itself more relevant, perhaps through assisting in conducting the 2010 census.
Postal Officials Ponder Emergency Rate Increases
From the Dead Tree EditionThursday, July 23, 2009
Postal officials are spreading the word that they may seek emergency rate increases next year.
Various scenarios have been bandied about, including one that would raise the price of the 44-cent First Class stamp to 50 cents and other rates by similar amounts. But after several meetings with postal officials, the Direct Marketing Association is telling some members that the Postal Service is more likely to seek an “exigent increase” of only 2% to 3%, including only one cent for the First Class stamp, to help shrink its multi-billion-dollar losses.
Annual increases in most postage rates are generally capped by changes in inflation. Postal officials are realizing that deflation, especially the drop in energy prices since last summer, will probably mean no such rate increases next year, according to accounts coming out of meetings with postal officials. As Dead Tree Edition pointed out recently, USPS will not be able to institute normal rate increases in May 2011 unless the Consumer Price Index rises at an annualized rate of nearly 5% for the rest of this year.
That’s why postal officials are pondering an unprecedented “exigency-based” rate adjustment, which postal regulations allow “only when justified by exceptional or extraordinary circumstances.” Postal Regulatory Commission rules would also require USPS to discuss the circumstances leading to the proposed increases and “whether the circumstances were foreseeable or could have been avoided by reasonable prior action.”
The PRC would hold a public hearing on an exigent rate request and by law would have 90 days to decide whether “such adjustment is reasonable and equitable and necessary to enable the Postal Service, under best practices of honest, efficient, and economical management, to maintain” appropriate service levels.
The Postal Service, which is supposed to break even, is projecting a loss of about $6 billion this fiscal year. To close that gap, which USPS says will grow unless it takes drastic action, postal officials are also discussing plans with mailer groups and postal unions to transition to five-day delivery in the fiscal year that starts in October 2010. That would require Congressional approval.
The closing of thousands of post offices is a possibility, the consolidation of processing and distribution centers has recently accelerated, and USPS continues to shrink its workforce — all in response to declining mail volume that is causing the budget shortfall.
The meetings have also been an attempt by postal officials to shore up union and customer support for legislation that would reduce USPS’ unusually high pre-payments for retiree health care. The Congressional Budget Office estimates H.R. 22 would save USPS about $2.5 billion annually for the next three years.
Lousy economy has a bright side: Less junk mail
Editor’s note: As a direct marketer, you should see this drop in direct mail as a tremendous opportunity to get your message out there in a less cluttered environment!
By Christine Show
From the Orlando Sentinel
July 22, 2009
Sherry Batts used to sort through stacks and stacks of unsolicited mail, from credit-card offers to requests from charities.
But Batts, as a member of a nonprofit group that runs a tiny post office in the small south Lake County community of Ferndale, has noticed a sharp decline in such mailings.
“That kind of stuff I hardly get anymore,” she said. “There’s just not as much junk mail as there used to be.”
Credit-card mail, which spiked in 2006 to 8.3 billion pieces in the U.S., dropped nearly 35percent in 2008 to 5.4 billion pieces, according to Mintel Comperemedia, a Chicago firm that tracks the direct-mail industry. Direct-mail companies — which used to send unsolicited mail to virtually anyone — are now targeting specific customers to cut back on expenses in this difficult economy.
In a reflection of the struggling housing market, mortgage companies also have slashed mailings. Mortgage companies using traditional mail sent 203 million pieces in 2008, down 75 percent from 800 million pieces at the height of the housing boom in 2005.
“It’s fallen dramatically,” said Stephen Clifford, Mintel Comperemedia vice president of financial services.
These businesses have to rethink how they spend on the services to avoid taking big risks, Clifford said.
“There’s definitely a lot less direct mail than there was even a year ago or even six months ago,” Clifford said. “They’re being much more particular and selective of who they’re offering mail to.”
Companies want the most specific information they can get on potential customers — for example, whether someone has children, a swimming pool, a pet or certain ailments, said Ken Lombardi, owner of Action Mail Services in Orlando.
Such pinpointing is essential, agreed Jack Curtin of Tribune Direct, a direct-mail marketing company owned by Tribune Co., whose media holdings include the Orlando Sentinel.
“We lead with data to help them [clients] to understand who their best prospects are and target those prospects,” Curtin said.
Postal Service concerned
The industry’s changes have hurt the U.S. Postal Service, one of the largest avenues for direct-mail companies to reach customers. The Postal Service doesn’t record drops in direct mail but is aware of the situation nationwide, said Elaine Pancake, spokeswoman for Orlando-area post offices.
“It affects us in that we have a lower mail volume,” Pancake said. “There’s a concern.”
The Postal Service already is struggling with large deficits, including a potential $6.5 billion loss this year.
Besides declining advertising budgets, the Internet is playing a role in the dwindling direct-mail volume.
Marketing companies now have more options on how they can get the word out, including e-mail, text messages and Web sites to target specific audiences.
“Communication is more effective if you can do it over more than one channel,” Curtin said.
Low point?
One bright spot for direct mail may be banks. Hit hard by failed mortgages and foreclosures, they are pushing to increase new checking accounts, Clifford said.
So far in 2009, bank mail about checking accounts has reached its highest level since 2005 with 226 million pieces of mail, according to Mintel Comperemedia data.
“Despite the challenges banks are experiencing in this recession with mortgage losses, they are continuing to market checking accounts and savings accounts,” Clifford said. “They are looking for more deposits in order to keep sustaining their loan business.”
But Clifford said it’s too early to tell when and if the decline in the direct-mail industry will pick up again.
But as the industry continues to reinvent itself and recovers from economic turmoil, the numbers of direct mail may increase.
“Perhaps we reached the low point,” Clifford said. “It’s definitely anyone’s guess at this point.”
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