International Presence Reinstated At DMA Annual in New Orleans
It was good to see an international exhibitor “enclave” reinstated in the middle of the exhibition
hall at the DMA Annual in New Orleans this year. I say “enclave” because it wasn't exactly a “pavilion”
and there was no “International Banner” either to show where it was positioned. Since demand this year
for stands in the “enclave” was greater than the supply of stand space available, an extended
international section is planned for 2005 which will cover 29 stands as follows:
1629 – 1647: 1628 – 1644: 1735 – 1741: 1728 – 1746.
If you're an international service provider and you're interested in reserving a stand at the next
DMA annual in 2005 in Atlanta, email Gaye Dullaghan on and she'll send you details.
The bigger the international section is, the more of a meaningful presence it will have and the
more visitors will come to talk and make things happen.
* * * * *
Can the International DM Industry Help India and China Establish Workable DM Infrastructures?
There was a lot of talk (and plenty of questions) in New Orleans about mailing into both India
and China, two huge potential DM markets which have both been simmering away for some years now
without taking off due to lack of a solid DM infrastructure.
At the Global Weekend, and during the “International Track”, there were four full sessions
focusing on India which I think was overkill. One covered outsourcing in India (I'm told no one
turned up for this), two were dominated by executives from New York Life where the focus was on
locally managed direct marketing particularly related to the insurance industry and one was an
excellent open discussion presided over by Dharti Desai and Wes Wood who own a direct marketing
operation in India and have years of hands–on experience in the Indian market.
In contrast there was virtually nothing on China except for an early morning breakfast hosted
by MLA and chaired by Charles Prescott of the DMA. This focused on what major players in the
international direct marketing industry could do to help China build up a working DM infrastructure.
In both these large markets there's clearly a will (locally and internationally) to promote
the growth of direct marketing. In India, India Post is talking about facilitating direct mail
through establishing “mechanized direct mail centres”. A group of direct marketing agency heads
in India have set up an independent body to promote direct mail (and other DM media channels)
– but everyone is too busy to sit down and make things happen. There's a one–man Direct Marketing
Association in India but it sits on the side–lines making small noises, and is basically redundant
with no one willing to join.
Meanwhile India Post does have a reputation for delivering front–end bulk mail in full (although
their back–end fulfillment services are less reliable. Many mailers prefer to fulfill through
private courier delivery).
Data security is non–existent in India so mailers do business in the knowledge many of the “grey”
lists they use are stolen and their own lists are stolen in turn. Listowners will rent but only
on condition they control the lettershopping themselves. They don't mind one of your staff being
present while materials are lettershopped and posted.
* * * * *
A Big Challenge is to Get Paid
Offshore mailers into India are very challenged by how to get paid. If they set up locally they
pay 42% tax on profits as a foreign company before they can receive any transfer of revenues in
foreign currency through a local company or agent. If you decide to test by mailing into India
from offshore the situation is beginning to improve. There are now 12 million credit card holders
(Visa, Mastercard, American Express and Diner's Club) who can charge a US dollar mail–order
purchase legitimately and have this charge processed offshore. I'm told Global Collect are now
also able to process rupee charges offshore and pay offshore in foreign currency. The population
of credit carholders is growing at 30% – 35% a year.
It's illegal to transfer rupee notes offshore, but I understand some mailers successfully solicit
cash.
To mail into India from offshore you must be able to access lists. There are Indian subscriber
addresses owned offshore you can mail from offshore (eg. National Geographic 30,000; Time 66,000
and Newsweek 12,000) but it's possible to mail many leading local Indian lists now by having the
names emailed to an acceptable lettershop offshore in return for a premium rental fee (averaging
around US$210 per 1,000). Onshore lists rent for US$31/M (grey market) up to US$84/M (top of the
market). In India, rental rates for large quantities are very negotiable. However, response must
be received and processed offshore if you want to avoid being taxed locally.
In India you don't have to worry about whether lists are opt–in or opt–out. There's no privacy
law whatsoever.
* * * * *
It Will Help to Find a Local Agent in China (and India) You Can Trust
China's DM infrastructure is not a lot better than India's.
What's worse is the postal service. You're lucky if 60% of your direct mail gets delivered
especially if you mail from one city into other cities. China Post is divided into 32 autonomous
postal regions and each one is accountable for their own P&L. If one city is paid in full for a
national mailing the other city posts don't like to deliver the mail in their areas without
compensation or “credit”. So the mail simply doesn't get delivered in full. The best way is to
drop mail for any one city or province within that city or province (if China Post allows this
which isn't always the case).
In China, as in India, lists are widely stolen. Listowners require you to supply your materials
to their premises where they will lettershop and post.
One solution about to be implemented is for listowners to supply data to one of two approved
lettershops in Hong Kong where materials are then personalized, lettershopped and airlifted for
direct injection into Shanghai Post for Shanghai, Beijing Post for Beijing etc.
In this way major mailers will have the added advantage of being able to de–dupe and personalize
many lists at the same time which saves money.
There is heavy duplication between the large mail–order files in China due to the incestuous
culture of list exchanges over the past few years really for lack of a wider list universe.
Few new files have become available due to list theft, to lack of a list rental tradition, to
ignorance of the commercial value of a good list and to the lousy condition of data in many files.
In other words, the position now in China is the same as it was 20 years ago in the rest of Asia.
For an offshore mailer into China to get paid is more challenging than in India. There are 27
million credit cards and 685 million debit cards in circulation. Unlike in India, China based
cardholders cannot charge a foreign currency offer and have this processed for payment offshore
(except for about one million holders of international credit cards living in China).
The only real way to get paid is for your local agent to receive renmimbi payment (through debit
or credit card charge, postal transfer, COD or cash), to retain this payment and to transfer the
equivalent amount to you in foreign currency offshore less their expenses.
There is data protection law in Shanghai which applies to data collected within Shanghai by
Shanghai registered companies, but it does not apply elsewhere in China. These laws do not seem
to be enforced at all. No one seems to be sure whether China will eventually take an opt–in or
opt–out position on data protection.
This is a broad description of the current DM infrastructure position in India and China.
I really do feel it would be good if the US DMA and/or FEDMA could take a lead in helping each of
these major markets establish structures and ground rules which will facilitate and provide
momentum to allow both domestic and international direct marketing to grow. This can be done by
setting up groups of major local and international mailers and service providers in each market
to sit down together and work it all out. Input from (and participation by) large international
players could significantly speed up the process of growth.
* * * * *
Final Words of Wisdom from
Thomas Leavey, Recently Retired Director–General of the Universal Postal Union (UPU)
Mr. Thomas Leavey completed two terms as Director General of the Universal Postal Union (UPU)
earlier this month and at the UPU Congress handed over responsibilities to his successor, Eduard
Dayan from France's La Poste.
He attended the DMA Annual in New Orleans to make a farewell speech to the direct marketing
community. Mr. Leavey discussed decisions made at the Bucharest Congress, commented on growing
liberalization in the international postal industry and described the UPU's commitment (aided by
the newly formed Consultative Committee chaired by our very own Mr. Charles Prescott,
Vice–President, International Business Development & Government Affairs at the DMA) to find ways
of fostering the growth of direct mail. (We look forward to hearing more about these plans in
due course).
After the session was over I mentioned, in a brief conversation with Tom Leavey, the continuing
concern among international mailers about the possibility of less than full delivery of their
mail in a more liberalized environment. I mentioned a client who very recently lost 1.5 million
Euros in mail costs from a US mailing which was to be dropped at a premium through a European
postal point. They were more than concerned when they discovered response from the mailing was
just 0.3% compared to a normal 4.5%, and became positively alarmed when they received one of
their seeds back carrying a Caribbean ETOE postal indicia.
Tom Leavey's comment on this experience should be programmed into the mental database of every
international mailer: “If in any doubt at all, always ask the postal operator to confirm the
exact routing and service your mail will receive in writing…”
And don't forget to seed your mail.
* * * * *
Postal Costs To Rise – Again
The UPU Congress took place in Bucharest earlier this month and made some decisions. Three of
them in particular affect international mailers:
Singapore to Become an IC:
ETOE Mail Classified as Commercial:
ETOE mail must in future be
moved under commercial rather than postal documentation. After clearing commercial customs,
mail will be direct injected into local postal systems at commercial rates. This will mean
mailers are entirely at the mercy of the operator carrying and handling his mail, costs will
inevitably rise, they'll be more paperwork involved and less certainty of delivery…
My big question here is – how easy is it for receiving postal administrations
(such as the USA, Canada and Japan who don't accept ETOE mail) to identify ETOE mail which
continues to be entered under postal instead of commercial documents?
Increase in Terminal Dues:
Terminal dues will rise by 13% spread
over a four year period starting January 1, 2006. What will this do to international postal
rates? They certainly won't go down – and I doubt they'll remain the same. They will certainly
go up but we just don't yet know by how much…
* * * * *
Templates to Help Your Marketing Staff Calculate ACPO (Allowable Cost Per Order)
Peter Rosenwald, best known as founder and chief executive of Wunderman Worldwide and Saatchi &
Saatchi Direct Worldwide, was in touch recently (with some kind words about DM Diary) and offered
to get his publisher to send me a copy of his new book “ACCOUNTABLE MARKETING: The Economics of
Data Driven Marketing”. (Publisher: Thomson. Available through online booksellers). This comes
with a CDROM with 35 interactive templates in which you can plug in your own data and play out
the possibilities of different marketing scenarios.
Too many of us still make direct marketing decisions based on seat–of–the–pants instinct
influenced by what has – or has not – worked for us in the past.
Peter Rosenwald's message is if you can't, in a disciplined and measured way, calculate the
ACPO (Allowable Cost per Order) of a campaign then you're “flying blind” – an activity not known
to contribute to getting where you want to go or even surviving the journey! All international
direct marketers will find this book useful. Quite simply it provides templates and formulas
against which you can project short and long–term profitability and develop strategies. You may
not have time to read and digest every page yourself, but get someone else to do this so you can
use an external discipline and foster a mindset to make every marketing decision count. This way
you have a better chance of getting the fullest possible bang for every direct marketing buck
you spend. (And in this business it's very easy to make expensive mistakes).
* * * * *
Will the Mail–Order Show in Weisbaden Take Over from DIMA in Dusseldorf in 2005?
For the first time ever last September, I visited DIMA in Dusseldorf. My visit was timely – not
least because it may well be the last time the Show will be held.
New owners paid too much for the Show apparently and tried to recover some of their investment
by increasing the cost of exhibition stand space by 400%. Many major exhibitors were not amused –
and stayed away.
Visitors also chose to stay away except for a flurry of activity during and after lunch on the
second day. That was about it.
There now seems to be a serious shift of attention to the Mail–Order Show in Wiesbaden owned by
Norman Rentrop, a well–known direct marketing entrepreneur in Germany. It seems the direct
marketing industry would prefer to support and work with “one of their own”.
Germany is currently a very responsive market for “opportunity” and “esoteric” mailers and the
international players visiting DIMA were almost exclusively from these two sectors.
A number of people I know left New Orleans early to attend the Wiesbaden Show this year. I do
hope next year DM exhibition organizers talk to each other and allow at least a few days
between international DM events otherwise international players will require the stamina of
supermen to be in two places – in quite different parts of the world – at exactly the same time.
* * * * *
How to Cut Your Regional and International Direct Mail Costs with BPO
BPO (Business Process Outsourcing) has been described today as a megatrend. Essentially BPO takes
advantage of lower labour costs applying in countries outside your own country. This applies to
the call centre industry and increasingly to direct mail print and production.
For instance, large international and US mailers have for some time been producing 25 million
plus direct mail pieces each in China annually and shipping back to the USA by container and
dropping into the USPS postal system. Recently, China printing prices have been edging up and
there's a very real risk the Chinese renmimbi could soon be revalued.
This is shifting attention to the Philippines as an alternative print location where the Peso
continues to decline and where English speaking printing equipment operators earn under US$400
a month. (In the US the same operator working the same equipment is paid US$5,000 a month).
International call centre business is growing in the Philippines (mostly at India's expense)
and print and production business from offshore is booming. I also heard recently a leading
international postal operator would like to establish a regional mail hub in the Philippines.
While international response rates are down you have no choice but to find ways of bringing
down your front-end mailing costs. If this means you have to visit Manila (or another
developing country) for a day or two now and then – it's no hardship (and I know). Oh – and
bring your golf clubs.
* * * * *
If You Can't Use ETOE's -- Wait for ETSCS
One final thought for offshore companies mailing into the US from outside the US.
There's a story circulating in UPU circles about the possibility of official approval for
Extra Territorial Sortation Centres. Such centres would be established through bi-lateral
or multilateral agreement between postal administrations which would enable the sortation
of mail in other countries than the country of delivery.
For instance, if there was such an agreement between the Philippines and the USA, major
offshore mailers (incorporated outside the USA) could print and lettershop in the
Philippines (or any other developing country) and drop into the US domestic postal system
having pre-sorted offshore to take advantage of USPS worksharing discounts of up to 16%.
Perhaps this will become another reason to visit the Philippines – and another reason to
bring your golf clubs.
* * * * *
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