February 03, 2014

A Discussion About The Future Of Catalog Marketing - Don Libey

Don Libey, whom numerous readers have a relationship with, attempted to leave a comment about yesterday's mailbag (click here), an article that ties in to this article about change (click here)

As many of you know, I now require a login for comments, as a response to hourly comment spam. But instead of publishing Mr. Libey's essay as a comment, I asked permission to publish the essay as an independent blog post. His thoughts are unedited, below, for your consideration.

If you have a unique perspective (pro or con) regarding the future of catalog marketing, I will be happy to consider publishing your point of view this week, as a way to stimulate a conversation about the future. Email me your thoughts (kevinh@minethatdata.com). With nearly 3,000 blog subscribers and more than 5,000 Twitter followers, your thoughts will reach a receptive and open-minded audience. I rarely grant opportunities for published thoughts from others, so please take advantage of the opportunity in front of you.

Mr. Libey's thoughts:


Kevin

As a very long time observer and operator of catalogs, I have an almost 45 year perspective I would offer in addition to your observations which are flawless, brilliant and absolutely correct:

The Catalog Age is over: 1) It will become increasingly irrelevant as a medium of commerce due to individual preference; 2) it has become too expensive relative to the utility of response; 3) it has been technologically replaced by online and other alternatives; 4) it has a core of practitioners who mastered its techniques, but who abdicated the direct marketing mastery to massive co-ops, inexperienced managers, and techno-mavens chasing shiny buttons and New Things instead of customer and merchandise mavens focused on what really matters; 5) if you think about it, why would we ever buy paper, print on paper, affix costly postage, send it through an archaic, ever-costly system called "mail" and expect to survive when 95% of what we do is thrown away and most people no longer care about mail?

What we can expect as a replacement of our former high-growth, high-profit catalog universe is a slow-growth, lower-profit, bland amalgam of this mythical and totally nonsensical "multi-channel/omni-channel" world being sold by "Black Box Data Vendors" that depends entirely on price driven by the buyers and the competitive medium itself (Amazon).

When the catalog entity, as we knew it, morphed in the late 1990s, it eliminated the one thing that was responsible for the tremendous success enjoyed from 1970-1998: Margin. We had it, and it is now gone. When margin disappears due to price discounting and commoditization, what is left is a dry husk. There is no business (and no medium) without margin.

But, the overwhelming change was self-imposed. The catalog as an advertising medium was never wholly supported by the catalog companies who benefitted from its early successes. The owners were unable to ever come together and protect it from the margin erosion that steadily invaded from other media. As one of the founders of the American Catalog Mailer's Association, I was always amazed by the unwillingness of a successful and profitable catalog owner to pony up a few dollars to help maintain the margin and the marketing dominance of their chosen marketing approach. Sensing change in the wind, the successful catalog owners sold their businesses to much larger corporations who had no catalog experience or appreciation and were simply buying market share; it was a pure short-term financial transaction with a few dollars to be made. The "small close-knit industry" we had known was suddenly comprised of Big Corporations and the agenda shifted almost overnight (Sears and Lands' End, as an example; Target, Grainger, Home Depot Supply and Amazon, as others).

So, the transfer of profits and assets has taken place, the catalog has eroded over time, and much of the demise is due to Big Corporate greed, apathy, a lack of common support, and the inevitable progress of change and preference. The catalog industry has been "milked" and there is little cream left to squeeze out.

I've owned or run probably 15 catalog companies in my time, small and big, domestic and international. I've been a trusted advisor or director to literally hundreds of catalogs.  All of this was self-evident and talked about as far back as 1992, but nobody seems to have cared. The secret still is actually very simple:

Good products, preferably proprietary, sold at good margin, and backed by extraordinary customer service. Forget about the medium (channel) and focus on the products, the customer experience and the numbers. Result: Profit and relevance.

Best wishes

Don Libey
Managing Director
Libey LLC
Advisors and Intermediaries to the Catalog Industry since 1970