August 14, 2011

Dear Catalog CEOs: Spending Money Online

Dear Catalog CEOs:

Here's a frequent comment, uttered by many of you, to me, directly over the telephone:
  • "With our co-op, we can spend money, and I mean we can really spend some money.  If we want to circulate to 10,000,000 households, heck, we can.  Sure, we'll lose money, but we have the option to grow top-line sales as much as we want.  This opportunity doesn't exist online.  Even if we wanted to spend two million dollars in search, there simply aren't enough people searching for our products to be able to invest that kind of money.  And banner ads don't work, so while we could spend two million dollars there, we'd get three orders.  So we're stuck, we can't grow the online channel because we can't spend money there."
Oh boy!

I recently spoke with a business leader about her approach to growing the online channel.  Here's a different view on the same topic.
  • "We're never actively trying to grow the online channel, ever.  We're trying to grow our business.  We do a ton of offline marketing, all focused on getting a prospect to visit our website.  We try to get people to talk about us, because that is cheaper than paying people to pay attention to us.  We make it easy for the customer to act.  We offer an item in print, and we only give the customer the choice to visit our website to buy it ... one product, one offer code, one URL, that's it.  We tell the customer what we want for her to do, and we eliminate all interference.  In this situation, an offline ad and an online order are meaningless to us as channels ... we're looking at this as an awareness program that results in an order ... the fact that the order happens online is irrelevant."
This is the main difference between a cataloger and a merchant.  The cataloger demands that the catalog is the heart of the brand, with online spend designed to grow the online channel.  

The merchant has a product she wants to sell.  She simply wants to connect a customer to the product.

The longer we avoid connecting customers to products, the faster we accelerate our way to a 60+ rural customer that will not be interested in purchasing merchandise via catalogs at rates that sustain us into the next decade.

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