Up-Beat Mood Amongst International Mailers at the DMA Annual
Last month I attended once again the DMA's Annual Conference & Exhibition in Atlanta (now known as
"DMA-05").
The International Pavilion had 30 different international flags hanging around its perimeter so it was hard
to get lost for too long at this large event.
The international stands were busy and the international events and drinks parties well supported.The mood
was more upbeat and bullish than I've seen since 9/11.
There weren't that many new "international" faces but it was interesting to see a large number of US
players talking to international service-providers about their direct marketing plans outside the USA and
in many cases from outside the USA. This can only be positive for the international market since activity
from larger, experienced players means more fresh names on the market (hopefully) which will lead to a
larger universe of accessible names which benefits everyone.
In some sectors it has become harder to break in. Some large international mailers will currently only rent
on a reciprocal basis which means you need to hold fresh names yourself to be able to access other fresh
names in the market.
This means the big mailers get bigger and the smaller newcomers find it harder and harder to identify good
lists and penetrate beyond the hard-core existing list universe.
Right now the "international market" consists primarily of the UK, France, Germany, Canada, Australia and
South Africa. These are the markets major mailers are focused upon rather than the smaller "multinational"
markets. The multinational market will only pick up again when more mailers (not just "National Geographic"!)
begin to spend money multinationally once more across the 180 or so smaller markets around the world rather
than just focusing on the large markets. Mailers only go where fresh names are being generated and are
accessible..
* * * * *
How to Expand the Universe of Fresh International Names
What else can galvanize the international market? One encouraging move is the decision by several large
mailers to follow a 2-step strategy offering Free Reports or Questionnaires as a first step (generating
response of up to 8,000 10,000 fresh names a week) and then converting these qualified leads at an average
rate of around 10%. As these and other prospect and paid responder names come on to the market, so the
overall international market place can begin to grow again. Hopefully more individual mailers,
dissatisfied with miserably low response rates regionally and multinationally, can create some compelling
offers and test and pursue this strategy in their own ways.
It would be a mistake for mailers to target their "free offers" to hard-core responder files. This doesn't
add to the universe of accessible good names and many listowners are unwilling to accept "free offers"
anyway since the mailer can effectively acquire up to 10% of their list for the cost of a rental fee only.
It's better to target larger more "marginal" lists which will respond adequately to a solid, authentic
free offer. There are many such lists.
* * * * *
Don't Shut Down the "Good Guys":
In the last issue of DM Diary I wrote at some length about the volume of "mail scams" in the market, what a
damaging effect these have had on response rates, and some comments on the orchestrated efforts which are
being made and could be made more strenously in the future to close down the perpetrators.
Following publication of this issue I received a comment from a legitimate mailer I've known for many years
who happens to use an "aggressive" sales approach in his DM copy. His point is that the real mail fraudsters
are hardened criminal types who "are well hidden and hard to track down". "Bureaucratic regulators", he
believes, "tend to go after legitimate mailers who are not hawking mainstream products, but different
cutting-edge products that require an aggressive approach. They're not going to shut down the real crooks
since they can't easily be identified but they'll put on a big show for the public by shutting down
aggressive, cutting-edge industry leaders instead".
This is his concern, and he may be right, so I'm airing his views.
* * * * *
Importance of "Speaking the Truth"
Meanwhile, I would like to quote Steve Wynn, the Las Vegas resort developer, who delivered the keynote at
"DMA-05". His point was you must ultimately give people the truth in advertising and direct marketing. "We
have to speak the truth", he said, "no matter how inspired (substitute "aggressive"?) our style may be.
People want the truth and if you give it to them they'll come back to you again and again to do business
"
Well spoken! If the majority of us in international direct marketing continue to offer and sell products
which are fundamentally truthful, authentic and of good value (however "aggressive" our copy may be) then
the industry we're in will remain alive and well.
* * * * *
Let's Pass Next Time on Atlanta
A final word on the DMA's choice of Atlanta. I found it a desolate, colourless and threatening city. It was hard to
find a taxi because there were so few people on the streets. And too many of those who were on the streets would
ask for handouts in an insolent and invasive way. I just didn't like the place.
* * * * *
China Will Be Expensive if You Time Your Entry Too Early
Here are my current thoughts on China. Timing, as we all know, is critical and I wonder whether right now is
the best time to invest in the China market? Or is it premature?
Very few DM companies are making money in this market. On the contrary most of them are losingmoney big
time.
Of course, many of these companies will claim they're invested in China now for the "long haul". That's a
perfectly worthy aspiration but their investment may take longer to turn round than they realize.
Why? There's no DM infrastructure in place and it will take time to build one. There's a limited list
universe and good lists are hard to find. Postal delivery is unreliable especially across provincial
borders and this is exacerbated by poor quality address data. Mailers estimate that at best 20% and often
40% of their mail is not delivered. New lists coming into the market will need to be address verified and
cleaned first otherwise they simply won't work and get full delivery. This will all take time.
Most listowners won't release data within China for security reasons. This is a smart move since possession
of a list in China (as Jos Birken of TNT China is fond of pointing out) equates (in the mind of the
possessor) to ownership of that list however that list was acquired in the first place.
For such security reasons, few (if any) listowners in China will release their file for list rental. So
mailers must supply their DM materials to each listowners' lettershop for addressing and dispatch. This
means merge purge and personalization to outside lists is not possible.
There is still a fundamental distrust of direct marketing in China. In the China business community the
expectation is always to be cheated and over 50's Chinese will not respond at all to direct mail. Most
current direct mail and email in China is not used to generate response, create a customer database and
build relationships but to drive people to retail stores and special events.
Above all, China is a price sensitive market and it's hard to allow sufficient margins to be profitable.
Trois Suisses who attended Charles Prescott's "China Interest Group" breakfast in Atlanta (the Group's 3rd
Meeting) pointed out Trois Suisses average order value in China has been equivalent to just 13 Euros
(although they've recently been able to increase this) which compares to their AOV in France of 100
Euros.
Another cataloguer in China the American Paul Condrell also attended Charles Prescott's breakfast. He
has survived in a market where larger multinational corporations have failed and he's to be congratulated
for this. He does say now that business has improved since he began mailing higher ticket offers to his
house file in addition to his standard catalog. This enables him to build a file of individuals able and
willing to pay a higher price for items not available in local stores which yields him more acceptable
margins.
I could use an analogy to describe the China market. We all see the "big wave" in the distance. But a good
surfer launches his surfboard into the water at the right moment, then paddles hard to give his board
momentum so he can be picked up by the wave (assuming his timing is right) and carried gloriously into
shore. But to invest time, energy (and money) into creating momentum far in advance of the "big wave"
hitting is an exhausting, expensive and possibly futile exercise especially while there are easier
markets out there to develop which can become more profitable more quickly.
* * * * *
Test the China Market From Offshore Without Investing in a Local Presence
Meanwhile there will soon be another way to go into China. This will be from offshore.
I was speaking to a representative of Global Collect the other day who told me from January 1, 2006 his
company would be able to process renmimbi debit and credit card charges from cards issued by 40 different
Chinese banks. Global Collect would pay mailers offshore in a foreign currency of their choice for net
amounts due to them equivalent to the local renmimbi amunt.
This is quite a significant move, since it means mailers who simply don't want to invest in a legal presence
within China, or to operate within China with all the headaches and expenses this can entail, can now
"cream off" the market from offshore and receive debit and credit card charge payments offshore which are
then submitted to Global Collect. Orders can be processed and fulfilled from offshore. Response may be
affected negatively if Chinese customers are not given cash or postal giro (or COD) payment options but it's
worth a shot for mailers wishing to simply test the current "temperature" in the market.
* * * * *
Australia Post: Guilty or Not Guilty?
Following our piece in the last issue of DM Diary about postal articles and items being stolen (or delivered
late) by employees of Australia Post, we received an email from Matt Pollard of Australia Post saying "they
strongly reject the assertion that postal theft is a significant problem in Australia". This is despite two
further stories on Australia's Channel 7's "Today Tonight" and one on Channel 9's "A Current Affair" in
which ex-employees of Australia Post were interviewed and admitted to theft. They related how when staff
were caught stealing they were usually asked to resign to avoid prosecution so the story wouldn't receive
publicity. (To be fair, I'm sure Australia Post shares this problem of theft to a greater or lesser extent
with many if not most other postal administrations around the world).
Matt Pollard did ask us in his email to correct the "damaging impression left with the readers of your last
issue". I replied we would do so after a carefully planned independent test using 6 different mail packs to
six different addresses mailed into Australia from offshore through Singapore and Hong Kong Posts. We will
tell you (and Australia Post) in our next issue how many items were posted, how many were delivered of each
pack to each address, how long delivery took after dropping -- and how many items were not delivered at
all.
* * * * *
There are Other Ways to Test the Australia Market
There's another way to drop mail which are printed and lettershopped offshore into the Australia market
(I'm just about to test this myself). This is through a "household drop" using an Australian company. The
cost is around 6 Aussie cents per piece (up to 50 gms) and you need to add the surface container cost to
Australia from wherever you print and lettershop (minimum quantity 200,000 pieces). You incur no list rental
cost, of course, and you can profile a sample of your existing customer base in Australia by city and street
for targeting purposes. A total of 13 billion pieces a year are delivered in this way within Australia, so
results are clearly measurable and have proven cost effective for many direct marketers.
* * * * *
Our Best Wishes to Al Goodloe
I would like here to express the sadness felt by myself and many others, who have known and worked with Al
Goodloe over the years, at his sudden discovery of a malignant brain tumor which has incapacitated him. He
is now at Merwick Rehab Hospital, 79 Bayard Lane, Princeton, NJ 08540, USA where letters or cards can be
sent to him.
Al has for many years been relentlessly producing "Publisher's Multinational Direct" a store of
information and ideas for periodical publishers and others active in international markets. This newsletter
will no longer be published and it will be missed unless there's anyone out there who would like to take
it over. Al who is nearly 80 deserves his rest and may he continue to remain his usual alive and alert
self for as long as possible despite his illness. Our thoughts are with him.
* * * * *
Patience Can Be Rewarded in Japan
The Japanese market is receiving a lot of attention from international mailers these days. Despite the need
to mail in local language, it's a large, rich market and rewards those who persist.
Your cost of acquisition in Japan will be twice as high as in other markets but retention is excellent.
The Japanese are very loyal. However, a word of warning: since the stringent new law on data protection
introduced earlier this year, response from domestically held lists is reported to have declined
significantly. Some mailers have instead been testing the many millions of freshly generated Japanese names
being held by listowners offshore. We've received reports of outstanding levels of response from these
lists. Another effective alternative, of course, is to persuade a local listowner in Japan to endorse your
offer to their house file. This can take a year or two to negotiate but can be very, very effective
indeed.
* * * * *
Cut Your Costs By Mailing into the US Market from Offshore
My colleague, Toti Ramos, came up with some interesting numbers after a visit to the West coast following
the Atlanta Show. I'm passing these on to larger international or US based mailers looking to save 20% - 25%
on printing costs by printing their direct mail in Asia and then direct injecting back into the USA.
The cost of direct injecting pre-sorted into USPS Standard Mail is just 20 US cents per piece
(up to 1 ounce). This price includes fine sorting to USPS requirements for Optical Character Recognition
(OCR) and 3-day delivery within the US.
The shipping cost from your printing/lettershopping point in Asia really is marginal. Allow 15 day delivery
for a 20 foot container load of one million pieces at an estimated cost of 0.05 US cents per piece. Total
cost 20.5 US cents excluding printing and lettershopping.
On the other hand, the cost of a 15 gm pack through Singapore into the USA will be 25 US cents and a
20 gm pack will be 32.5 US cents. So take your pick. (Toti Ramos on toti@MLAresponse.com will let you have
more details).
* * * * *
How Not to Collect Address Data
I'm indebted to Graham Livingstone-Wallace of Nestle for sending me the "last word" for this issue. His tale
reflects the pig-headed efforts some "You Have Won" scammers from Madrid resort to when commissioning the
collection of new address data in Europe.
He received recently an envelope through the mail from Madrid addressed to him as follows:
Those with a smattering of German will know the 4th line "Wunscht keine Werbung" effectively means "No Junk
Mail". A few days later he received yet more junk mail from Madrid in another envelope carrying the words
"Pas de Publicite dans ce boite" on the 4th address line. This time it referred to the French words outside
his house specifically asking for 'junk mail' NOT to be stuffed into his mail box! Graeme guesses someone
walked up and down mindlessly recording names and addresses from mailboxes in the street and then posting
every little word from the address board back to Madrid, where they were just as mindlessly data inputted
into a shared junk mailers prospect file. As Graeme put it: "Bit of a chuckle really!"
James Thornton
Managing Director
* * * * *
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