December 18, 2006

Multichannel Catalog Advertising Strategy

Over the past ten years, I have been very pessimistic about the future of catalogs. Catalogs as a true sales driver have become relegated to an audience over the age of forty-five. Younger consumers increasingly use search, e-mail, and social media to complete their direct-to-consumer transactions.

Recently, I've been able to envision a future for a catalog that is purely advertising-related. As multichannel retailers move from mass media (television, radio) to more accountable forms of marketing, catalogs have the potential to drive sales in a more productive way than mass media. It is in this manner that catalog may have a future.

Between the past and future of catalogs is this quirky time known as 2006-2007. You'll continue to see multichannel retailers change circulation strategies. Page counts have to decrease over time, as the catalog becomes nothing more than a targeted advertising vehicle. When page counts decrease, it is possible to increase circulation.

The multichannel retailer could test these strategies in 2007, to understand the sales impact on the business as catalogs evolve from sales drivers to targeted advertising vehicles. Most likely, the evolution to smaller page counts will result in decreased sales. The multichannel retailer can increase reach, save expense, and potentially drive increased profit. For instance, a 160 page catalog mailed to 500,000 customers might drive $3,900,000 across channels, yielding $1,120,000 expense and $128,000 profit. A 48 page catalog mailed to 1,000,000 customers might drive $2,900,000 across channels, yielding $580,000 expense and $343,000 profit (send an e-mail if you want to see the spreadsheet outlining the simulation). The smaller catalog strategy, mailed to more households, could yield increased profit. Over time, multichannel retailers will figure out how to calibrate creative in order to better drive sales across all channels. It's time to start testing!

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