December 27, 2015

Major Catalog Trend - The Life of a Catalog is Shrinking

FYI - we're going to talk about catalogs for the next six posts - if this is not your cup of tea, no worries. If your career depends upon profitable management of a catalog marketing program at a traditional catalog brand, well, buckle up!!


This slide is from a presentation I gave, way back in 1999 at Eddie Bauer. I was trying to convince everybody/anybody that every catalog needed two versions ... one that was 180 pages sent to 1.5 million customers ... one that was 64 pages sent to an additional 2.0 million customers.

I was passionate about the topic because something interesting was happening.

  1. Business was below plan.
  2. The internet was chopping the "life" of a catalog off.
In other words, we'd measure how long a catalog generated sales. In 1996, a catalog would generate sales for 12-16 weeks. In 1999, the dynamic changed. The catalog generated sales for 10-12 weeks. The internet cut off the tail of the catalog.

Worse, the sales we'd obtain from the catalog in weeks 2-9 were less than we'd historically measured. Weeks 0-1 seemed ok, then the catalog would sort of die off.

When this happened, the dynamics of a catalog business changed.
  1. The online channel captured the sales that were cut off from the tail of the catalog, but the catalog did not cause the online sales to happen. This is the "organic percentage" I've talked about for nearly a decade.
  2. The 180 page catalog was much, much less profitable.
  3. For 70% of the file receiving a catalog, a smaller catalog ... 64 pages ... became more profitable than a larger catalog (180 pages).
When the life of a catalog shrinks, the catalog becomes less productive.

When a catalog becomes less productive, you have to make one of two choices.
  1. Reduce circulation.
  2. Reduce pages.
Now - read what Bill LaPierre had to say a while back (click here). Go down to the "changing patterns" paragraph. Read that paragraph.

I get to analyze a lot of mail/holdout tests. I measure the incremental demand generated by a mailing, by week. Over the past two years, there is a clear dynamic at play:
  • The life of a catalog is shrinking.
This is one of the reasons why your co-op names are not performing well. You used to generate $1.30 per catalog ... but now the tail is being cut off catalogs, shortening the realistic life of the catalog down to 2-4 weeks, in so many cases. This lowers the dollar-per-book down to $1.10 or $1.00 (or $0.50 for many of you) on co-op catalogs. 

Again. Go look at the incremental difference between your mailed group and your holdout group. This tells you what the realistic life of a catalog is. In many cases, the life of a catalog is down to 2-4 weeks. Look at your matchback results for co-op names, and you'll observe similar trends.

Now, if your customer is 70+ years old, this doesn't really apply to you - the rules of modern marketing do not apply to you.

If your customer is between 50 and 65 years old, this is about to become the story of 2016.

When the life of a catalog shrinks, page counts shrink - they have to shrink in order to maintain circulation depth.

When page counts shrink, demand shrinks. To make up lost demand, smaller page count mailings are mailed more often.

In the next five posts, I'll describe which of four paths a cataloger is likely to take, in response to a shrinking life of a catalog.