At True Creek, we are into big ideas. The Creekbed draws from the brightest, most creative minds in the industry today; people who have shaped brands like the 495 and 95 Express Lanes, Intel, Apple, Nissan, Best Buy, Volkswagen, Cox, Comcast, NASA – and many local and regional names that are big fish in a smaller pond.
We offer our clients a wide variety of services: Media Planning, Placement and Reconciliation, Television and Radio Production, Newspaper, Digital and Video Production, Four-Color Magazine, Collateral Materials, Direct Mail, Promotional Merchandise, Point-of-Purchase, Outdoor and Out-of-Home, Logo Design and Corporate Identity/Graphic Standards.
Our agency is based in Oakton, VA, which is just outside the Capital Beltway in Washington, D.C.
Please take a moment to tour the site. Afterwards, let’s talk about how we might be able to help you. 703-281-2165. Or send a note to joseph@truecreek dot com.
By Sarah McBride.
Last year was the first since 2002 that U.S. consumers spent more money buying movie tickets than buying movies to watch at home, underscoring the changing economics of Hollywood.
According to new data from Adams Media Research, Americans spent $9.87 billion at the box office in 2009, 10% more than in 2008, according to a report Adams plans to release Tuesday. At the same time, sales in the U.S. of feature films on DVD, long a cornerstone of movie studios’ business models, plunged 13% to $8.73 billion, including Blu-ray high-definition discs. (Other companies that track box-office receipts include Canada in their North American figures, adding about 7% to the total and pushing the year’s gross above $10 billion.)
The figures indicate that studios will likely have to continue looking for ways to survive in a marketplace where they can’t count on hefty home-entertainment revenue to offset giant production costs. Those costs often more than eat up the studios’ half of the box-office receipts, which are split with theaters.
The ongoing decline in home-entertainment revenue has already fundamentally altered the way studios do business, forcing them to place big financial bets on hoped-for mass-market blockbusters at the expense of features that cost less to make but that also have smaller earnings potential.
Hit titles such as “Transformers: Revenge of the Fallen,” “Harry Potter and the Half Blood Prince” and “Up” were among those that lured large numbers of Americans to the cinema last year.
“Consumers are still in love with movies,” said Tom Adams, president of Adams Media. “In this environment, however, they’re seeking the biggest bang for their bucks.”
For studios, which count on income from home entertainment to underwrite growing production costs, the trend represents a giant headache. In the early 2000s, studios began counting on the cash bonanza generated by consumers’ building up libraries of DVDs. Now, they will have to alter budgets to reflect the shrinking DVD income stream.
More about how Cinema Surpassed DVD Sales in 2009 here.
By Emily Bryson York, AdAge
Not everyone wants a value meal. And not everyone is unemployed. These insights informed an impressive year at Panera Bread Co., in which the chain outperformed much of the fast-casual category. To do so, the chain focused on quality, innovation and marketing.
“A bunch of folks have been cutting quality to cut price to go after the marginal customer,” said Exec VP-Chief Operating Officer Rick Vanzura, who added that Panera donates about $100 million in bread each year. “We said a better strategy that addresses a bigger group of people is providing better value.”
More about Panera: an America’s Hottest Brands Case Study here.
Real moms still have unmet needs—as women and mothers. Boston Consulting Group estimates that women control $4.3 trillion of the $5.9 trillion in U.S. consumer spending, or 73% of household spending.
To reach this demographic, marketers need not just to communicate that the goods and services they offer are practical and convenient; they also need to make real moms feel confident and in charge.
Marketers should empower these female consumers to delegate to others (spouses, children,brands) so they can have more time to be who they want to be—at home, at work and on their own.
And marketers have to use new ways to reach a population that rarely has time to sit down to read or watch or enjoy something without simultaneously doing something else.
Read the entire report about marketing to moms here.
“Keep on Truckin’” was a one-page comic by Robert Crumb, published in the first issue of Zap Comix in 1968. We thought we’d have a little fun with it.
Heinz is going to spend more money on its marketing campaigns over the next few months to attract new shoppers and please consumers loyal to its products. The giant food company’s profits rose to $2.67 billion (2.5%) in the last quarter, and the giant believes it’s high time to adopt new approaches for gaining more popularity among customers, looking for discounts and bargains.
The company is going to spend 25-30% more in the second half of the fiscal year, and in four years the expenditures set for these purposes will comprise $130 million. Over this period the marketing investments will be greatly increased particularly in North America and Europe.
“Even though the global recession appears to be abating, there’s no question that consumer and customers remain intensely focused on value which they are more often defining as price,” comments Bill Johnson, chairman/CEO of Heinz. The new approach is going to be based around the company’s Consumer Value Program scheme involving “selective price point adjustments that are more attractive to cost conscious consumers, targeted media, increased point of purchase, in store marketing and increased new product activity,” noted Johnson.
The Nike (RED) campaign was launched yesterday, December 1, in 13 countries around the world. Like Starbucks, another global brand, the sportswear maker joined the movements dedicated to fighting AIDS in Africa. All the revenues gathered from selling red football laces, with each pair costing $4.00, will be donated to the Global Fund.
From Consumer Reports:
Bell ringers, perfume sprayers and the steady drumbeat of holiday music may be annoying to some shoppers. But what really brings out their grinchier instincts are stores that fail to open all the checkout lanes and then use pushy retail tactics when shoppers finally make it to the cash register.
Customers don’t like being pressured to open store credit cards or being asked for personal information. And they really object to being hounded to buy extended warranties, according to a nationally representative survey by the Consumer Reports National Research Center.
The survey was conducted as part of Consumer Reports’ annual “Dear Shopper” campaign that highlights holiday gotchas and shopping traps. This year Consumer Reports had an assist from its sister Web site, Consumerist, which collected a list of annoyances from its readers.
When the list was taken to the public at large, those surveyed were in agreement. Here are the top gripes about retail practices:
* 72% Stores that don’t open all the checkout lanes;
* 68% Fake “sales”. If something is always 20% off, it’s not on sale;
* 67% Coupons that exclude almost everything in the store;
* 62% Being hounded with the extended warranty sales pitch;
* 58% Cashiers that ask for your phone number or other personal information;
* 56% In-store prices that do not match the same company’s on-line prices;
“Consumers have told us that they just want a hassle-free and convenient shopping experience,” said Jim Guest, president and CEO of Consumers Union. “We really hope this list of holiday annoyances is a wake-up call for the retail industry.”
When we asked shoppers about the number one non-retail practice that made them grumpy almost a third said the crowds (29%) followed by difficulty parking (28%), sales people spraying perfume (16%) and bell ringers outside stores (13%). Surprisingly, few folks are annoyed by that holiday music—only three percent said that was their top pet peeve. Fa-la-la-la-la indeed.
We’re proud to announce the addition of a new client, Fortress Technologies. They design, develop and manufacture secure wireless networking products for a wide variety of government markets, civilian organizations and corporations.
Right now, on the media side, we’re working on the planning and placement for the first half of 2010, in conjunction with Timberlake Media Services in Chicago.
Creatively, we’re working on a new direction that will offer them the ability to communicate their message effectively, while standing out in a very crowded field.
We’re really looking forward to the opportunity and hope to be posting some great work in the coming weeks.
By Keith Hampton, Lauren Sessions, Eun Ja Her, Lee Rainie
This report adds new insights to an ongoing debate about the extent of social isolation in America. A widely-reported 2006 study argued that since 1985 Americans have become more socially isolated, the size of their discussion networks has declined, and the diversity of those people with whom they discuss important matters has decreased.
In particular, the study found that Americans have fewer close ties to those from their neighborhoods and from voluntary associations. Sociologists Miller McPherson, Lynn Smith-Lovin and Matthew Brashears suggest that new technologies, such as the Internet and mobile phone, may play a role in advancing this trend.
Specifically, they argue that the type of social ties supported by these technologies are relatively weak and geographically dispersed, not the strong, often locally-based ties that tend to be a part of peoples’ core discussion network.
They depicted the rise of Internet and mobile phones as one of the major trends that pulls people away from traditional social settings, neighborhoods, voluntary associations, and public spaces that have been associated with large and diverse core networks.
The survey results reported here were undertaken to explore issues that have not been probed directly in that study and other related research on social isolation: the role of the Internet and mobile phone in people’s core social networks.
This Pew Internet Personal Networks and Community survey finds that Americans are not as isolated as has been previously reported. People’s use of the mobile phone and the Internet is associated with larger and more diverse discussion networks. And, when we examine people’s full personal network – their strong and weak ties – Internet use in general and use of social networking services such as Facebook in particular are associated with more diverse social networks.
Some 19% of Internet users now say they use Twitter or another service to share updates about themselves, or to see updates about others. This represents a significant increase over previous surveys in December 2008 and April 2009, when 11% of Internet users said they use a status-update service.
Three groups of Internet users are mainly responsible for driving the growth of this activity: social network website users, those who connect to the Internet via mobile devices, and younger Internet users – those under age 44.
In addition, the more devices someone owns, the more likely they are to use Twitter or another service to update their status. Fully 39% of Internet users with four or more Internet-connected devices (such as a laptop, cell phone, game console, or Kindle) use Twitter, compared to 28% of Internet users with three devices, 19% of Internet users with two devices, and 10% of Internet users with one device.
The median age of a Twitter user is 31, which has remained stable over the past year. The median age for MySpace is now 26, down from 27 in May 2008, and the median age for LinkedIn is now 39, down from 40. Facebook, however, is graying a bit: the median age for this social network site is now 33, up from 26 in May 2008.
It will probably become more difficult to track status updating as an independent activity as social network updates feed into Twitter and vice versa. For now, it is clear that a “social segment” of Internet users is flocking to both social network sites and status update services. This segment is likely to grow as ever more Internet users adopt mobile devices as a primary means of going online.
Ouch. And Architectural Digest is one of my favs.
By Stephanie Clifford
Condé Nast’s ad-page numbers are in, and they explain why the company has had such a rough 2009.
Ad pages fell by 49.9 percent at Architectural Digest, part of an estimated total loss of 8,359 ad pages at Condé Nast monthlies in 2009.
The company lost 8,359 ad pages at its monthly magazines, according to estimates it released Wednesday. That is a 31.6 percent drop from last year.
The worst hit were Architectural Digest, where ad pages fell 49.9 percent; W, where ad pages fell 46 percent; and Condé Nast Traveler, where pages fell 41.1 percent. Details and Wired both fell about 39 percent.
Some magazines showed improving numbers toward the end of the year. Traveler dropped only 5.4 percent from last year’s December issue, and Lucky 8.8 percent. Glamour actually rose 6.6 percent.
In wake of recession, consumers look for value, focus on essentials.
By Allison Linn
The recession has dramatically changed many Americans’ shopaholic habits, at least temporarily and perhaps forever.
Now the question is whether the nation’s retailers have kept up.
“The answer is no,” said Marshal Cohen, chief industry analyst with NPD Group.
He’s not alone in that assessment.
Although it’s still early days of the holiday shopping season, some analysts are already worried that too many merchants are taking a business-as-usual approach to an era that is anything but usual. Any miscalculation could be disastrous for retailers, who typically expect up to 20 percent of annual sales and a bigger share of annual profits during the critical holiday season.
“Retailers still don’t have a full grasp of reality,” said Burt P. Flickinger III, managing director of Strategic Resource Group, a consulting firm.
Flickinger thinks many of the nation’s retail executives don’t completely understand how severely the Great Recession has affected the millions of Americans who have lost jobs, had their wages cut or are living in fear of a job loss.
That, he noted, is on top of other financial concerns many Americans are facing, including a steep drop in home and investment values.
Retailers have good reason to fear such financial jitters, having only last year endured a disastrous season in which holiday retail sales fell 3.4 percent as Americans, rattled by the financial crisis, held onto their pocketbooks.
This year, Flickinger said, consumers are facing the reality of a sky-high unemployment rate and growing concerns about credit card debt.
“Shoppers are more scared going into this holiday season than any time in the last 50 years,” he said.
In the new era of tight budgets, consumers are looking for good value on the items they want and need. But instead, many analysts say retailers seem to be taking a different approach: offering ever-more extreme discounts on items they want to get rid of.
The super-low price method of offloading excess inventory has become so commonplace, even among higher-end retailers, that shoppers are coming to the conclusion that many products are just worth less, said brand analyst Robert Passikoff.
“It isn’t just that you learned that there will be sales — there will always be sales — but what it’s done is it ultimately affects the value perception of the product,” said Passikoff, president of the customer loyalty research firm Brand Keys.
By Joseph Young
Well, we’ve crossed the threshold. In my travels today, I had the chance to stop off at the local Wegman’s to take advantage of their snappy food bar. Lunchtime can be pretty busy in that place and today was no exception.
What was interesting was seeing what I will call “The New Sweatpants Society.”
Men and women, meeting, then having lunch with their significant others at the grocery store. That is no big deal.
What was interesting was that in almost every case, one of them was dressed in business attire. The other, in sweats.
It was striking.
Couples all over the place, dressed entirely differently. Someone obviously didn’t get the memo.
So, do you think it’s a statement of the times? The extremely casual nature of their dress could mean that one of the two is working from a home office, works in a very casual environment or perhaps they have a day off. But this is Tuesday, yes?
Unfortunately, I suspect it’s something a little more sinister. One of them is out of a job.
On the bright side, I’m sure most of these couples are relishing the chance to break some lunchtime bread together.
But on the other, perhaps it’s a sad commentary on the current employment situation in our country.
I plan on checking in again in a month or so to see if the things have changed any. Let’s all hope I see a few more shirts and ties!
By Christina Cheddar Berk
Most of the early reads on how retail sales will shape up for the Christmas holiday period haven’t been all that jolly. At best, they have painted a picture of a shopping season that will be better than last year’s dismal turnout. But, according to some industry analysts, there are several reasons to believe that Santa might bring retailers a little joy this season.
1. Frugal Fatigue
Speaking on a conference call hosted by Dow Jones analyst Indexes and STOXX, Marshall Cohen, chief industry of market researcher NPD Group said consumers are getting tired of watching their pennies.
“Consumers are clearly telling us they are beginning to get tired of saving money,” Cohen said.
It has been more than a year since the economy started putting the pinch on consumer pocketbooks. Consumers have been trying to get their debt under control, and have pushed up the savings rate to decade-high levels. The holidays may finally give consumers a reason to start spending again.
2. Store Traffic Is Increasing
Have you noticed more folks at the store lately? ShopperTrack has, according to data analyzed by Richard Hastings, a consumer strategist for Global Hunter Securities. Hastings said he has seen signs of both year-over-year and month-to-month gains in the numbers of shoppers at the stores.
The increased store traffic is one signal that has prompted Hastings to boost his forecast for holiday sales. Although he previously expected sales to fall, he now anticipates retail sales for the November through January time period will rise 2.5 percent from last year.
3. Improved Guidance from Smaller Retailers
Another sign that things are starting to turn for retailers is the improved forecasts issued by even smaller retailers such as Bon-Ton Stores, Tuesday Morning and Pier 1 Imports.
Hastings said these comments are a sign that a new tide is coming in and “the smaller boats are being lifted up by a bigger wave.”
4. The New Normal
It just may be that consumers are finally comfortable with the new landscape. They have been spending carefully and planning for the holidays.
Retailers also have had time to plan, and with advancements in the way retailers track their inventory, are more capable to reacting quickly to chances in demand.
Weather may also play a role. Trends are aligning right now for better weather than last year, according to Paul Walsh, of Atmospheric and Environmental Research. For example, AER ,a Boston-based firm that analyzes the impact of climate change on business operations, expects, colder temperatures in December for the eastern part of the country, which could put consumers there in the holiday mood.
Weather has already played a key role in helping to boost retail sales in September by driving more sales of warm weather apparel before retailers marked down the cost of those items.
Some new work for Comcast. Full pager for Encore Atlanta and the Fox Theater.
College students are the most connected demographic group in the US. They own multiple electronic devices and are a prime audience for online video.
eMarketer estimates 18.2 million college students, 95.7% of the total, will go online at least once a month in 2009. As Internet usage becomes ubiquitous, the percentage of students online is growing more slowly, rising to an estimated 96.8% in 2013.
“Not only is Internet access widely prevalent, but so is technology ownership in general,” said Debra Aho Williamson, eMarketer senior analyst and author of the new report, “College Students: Connecting with the Connected Crowd.” “Since students own multiple devices, they want to use those devices to interact with friends and information in multiple ways. They care less about what method they use for their interactions and more about how easy and seamless those interactions are.”
Students are heavy consumers of online video—but also regular TV. They use social networking Websites to stay in touch with their friends—but rely on text messaging as well. And smartphones, which are becoming more and more common on campus, give students the ability to do many activities without touching a computer at all.
Despite the fears of some industry-watchers, college students are not abandoning social networks now that the sites have caught on among their elders.
“So far, that is not happening,” said Ms. Williamson. “In fact, the opposite is true. Students are more likely than ever to use social network sites.”
EDUCAUSE, which has tracked social network usage on campus for the past several years, found that the percentage of students visiting sites such as Facebook or MySpace on a daily basis has more than doubled in the past three years, from 32.9% in 2006 to 66.2% in 2009.
“But other indicators bear watching,” cautions Ms. Williamson. “One is how often students visit social networks and how much time they spend there.”
Still, in May 2009 Youth Trends found that Facebook was the No. 3 source among college students for learning about new products and services, after word-of-mouth and television commercials. Social networks remain a viable venue for marketing to the college crowd.
By Katy Bachman
Following five years of double-digit growth, local online advertising will moderate next year, growing only 5 percent to $14.9 billion, according to a new forecast from Borrell Associates released Thursday (Oct. 8).
In contrast, this year local online advertising is expected to grow 12 percent to $14.2 billion, with most of the growth coming in the second half of the year.
Over the past five years, local online advertising grew at a compound annual growth rate of 46.5 percent. For the next five years, Borrell is expecting local online advertising to grow at a rate of 2.9 percent. Local online advertising will peak in 2013 at $16.4 billion.
“The local media advertising category is approaching what we believe is saturation,” the Borrell report said. “The game in 2010 will center more around stealing market share than growing the market.”
Next year’s market will be driven by demand for paid search and online directory advertising, while banner sales will decline 10 percent. Both streaming video and audio advertising and email will grow, but still make up a smaller segment of total adspend.
My wife has been complaining about this for years. Do you know a production house that does it?
By John Eggerton.
The House Communications Subcommittee has approved a bill that would require the broadcast and cable industries, which includes satellite and other multichannel video providers, to regularize the volume of advertisements and the programming surrounding them.
By a voice vote, the committee passed the Commercial Advertisement Loudness Mitigation (CALM) Act, backed by Rep. Anna Eshoo (D-Calif.), and referred it to the full Energy & Commerce Committee.
Eshoo said the bill premise was simple: “To make the volume of commercials and programming uniform so that spikes in volume do not affect the consumer’s ability to control sound.” Eshoo said that ad volume spikes had “endangered hearing for decades.” She also said legislative spouses had been urging their husbands or wives to sign on as co-sponsors. “I think they are all tired of getting blasted out of their easy chairs or off their exercise equipment due to these ridiculously loud commercials.”
An earlier post spoke to the great numbers being delivered by sports programming. Looks like it might just lead the way coming out of this thing….
By Brian Steinberg
CBS is close to selling out approximately 80% of its ad inventory for Super Bowl XLIV, according to a person familiar with the situation, a sign that the sports-advertising marketplace may be recovering more quickly than other TV venues.
CBS is still hesitant to force a price point into its discussions but has sought between $2.5 million and $3 million for a 30-second spot in the game, according to this person. As usual, the price hinges on the position of the ad within the telecast as well as whether advertisers want to get more involved with the event by buying up pre-game time or other CBS sports inventory. CBS is expected to broadcast the game from Miami on Feb. 7, 2010.
The pace of sales emphasizes marketer interest in big-audience sporting events. Already, sales for NFL and college-football games at many networks have garnered better-than-expected interest, particularly as cash-strapped consumers stay at home and rely more heavily on televised entertainment.
NBC’s first several “Sunday Night Football” broadcasts of the season, for example, have been ratings bonanzas, and CBS has seen substantial advertiser interest in its college football games. ESPN scored the highest-rated cable event in history for its “Monday Night Football” game between the Vikings and the Packers this week, thanks to widespread interest in the return of Brett Favre. Marketer interest in the events has also been fueled by the fact that viewers often watch them live, rather than fast-forwarding through content — and past ads — with digital video recorders.
Continuing the discussion about the change in consumer spending behavior….from today’s Washington Post.
By Nancy Trejos
The recession has cooled the American ardor for living on credit. After years of saying “Charge it,” consumers are more often paying with their debit cards instead.
Worry about jobs, fear of fluctuating interest rates on credit cards and wariness about spending too much are contributing to the change.
“People are managing their money in a different way,” said David Robertson, publisher of the Nilson Report, which tracks the credit card industry. “You clearly have a situation where those people who have jobs are exhibiting recession anxiety and they are making more debit transactions.”
Nine months ago, Alyson Chadwick, a public relations representative for a nonprofit organization on Capitol Hill, got a debit card with a MasterCard logo so she could use it anywhere for purchases. Carrying cash was unsafe, she thought, and a debit card would help her manage her spending better.
“I use my credit cards hardly at all,” she said. “I don’t even carry them with me.”
Trish Preston, head of U.S. debit for MasterCard, said the changing fortunes of debit and credit tell the story of how the recession has transformed consumer spending.
“Think about what’s happening in the economy,” she said. “Appliances, furniture, jewelry: Those are very sensitive to the economy, and those have generally been credit spending categories.”
Debit cards, meanwhile, tend to be used for routine necessities such as groceries and gasoline. “Those kinds of expenditures are happening,” she said.
The Federal Reserve said that revolving credit, primarily credit cards, dropped by $6.1 billion in July, or 8.1 percent on an annualized basis. Debit card usage, meanwhile, had been steadily growing over the years but has surged in this recession.
Credit cards draw on money borrowed at often high interest rates; debit cards withdraw money from the cardholder’s bank account.
Visa announced this spring that spending on Visa debit cards in the United States surpassed credit for the first time in the company’s history. In 2008, debit payment volume was $206 billion, compared with credit volume of $203 billion. MasterCard reported that for the first six months of this year, the volume of purchases on its debit cards increased 4.1 percent, to $160 billion, in the United States. Spending on credit and charge cards sank 14.8 percent, to $233 billion.
“Consumers are rational thinking individuals, and they’re going to shift their behavior in a way that fits with their current economic situation,” said Scott Strumello, an associate with the Auriemma Consulting Group, a Long Island-based payment card advisory firm. “They’re thinking more seriously about it, and many may decide, ‘I’m going to use debit where I can and reserve credit for larger purchases.’ ”
For three decades, credit cards, which emerged about 50 years ago but were not in widespread use until the 1970s, have reigned as the preferred mode of payment, mostly on big purchases, for baby boomers and their children. Before that, people used cash, bank loans or the installment plan.
Baby boomers typically charged responsibly. Their children, who grew up in the mostly prosperous 1980s and 1990s, became dependent on cards from an early age, partly because card issuers marketed heavily on college campuses. Unlike their parents, they tended to see credit cards as long-term loans. And they charged too much.
“An awful lot of kids grew up in a very big house and they grew up with pretty much everything they wanted, and then they became adults and their parents, rightly or wrongly, probably wrongly, conditioned them to a set of conditions they cannot afford,” said Lewis Mandell, professor of finance and business economics at the University of Washington and a senior fellow at the Aspen Institute.
Industry executives said much of the debit card growth is fueled by a growing disdain for carrying cash and writing checks. But they also acknowledged that credit cards have fallen out of favor with consumers who want to save more and limit their discretionary spending. In July, the personal savings rate reached 4.2 percent, up from about 1 percent of after-tax income early last year, according to government data.
“The real question is: Is consumer behavior permanent?” Strumello said. “And that’s something where the jury is still out. Consumers have made moves in other downturns.”
Mandell said the next generation might reject credit after seeing their parents struggle with money. “I think the next generation may be self-correcting depending on the duration and magnitude of the downturn,” he said.
There is some indication that the shift to debit is partly a visceral reaction to credit card industry practices in the past few months. Since a law was passed in May that will limit the industry’s ability to raise rates and fees, many issuers have cut credit lines and increased rates, forcing borrowers to look for other modes of payment.
Very nice work from Glenn. Photography by Burgess Blevins.
Strong piece of design from Kyle, a member of The Creekbed.
In a follow up to one of my earlier posts, research conducted by Hart Research Associates for Citi has shown that consumers in the U.S. have made what they are calling “permanent spending and savings changes” as a result of the current recession.
According to a tidbit in today’s edition of the USA Today, 63% percent of the people contacted by Hart stated emphatically that the way they handle their personal finances has been changed forever and only 29% plan on going back to the old way of doing things.
If this research proves out to be prophetic, and I believe it will, all marketers will have to hope they can get a piece of what will be a much smaller pie.
Combine the brand strength of UPS with their trusted driver network and you just might have the best way to date to deliver your message to a promising audience.
By Stuart Elliott
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.
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.”
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.’ ”
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.”
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.”
Mr. Magness said he liked the idea that the boxes would not arrive “out of nowhere, from random people knocking on your door.”
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.”
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.”
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.”
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.