September 07, 2008

Debunking An Article/Study: Catalogs Still Rule?

Multichannel Merchant published an article titled "Print Catalogs Still Rule, Survey Shows". The first sentence says "If you think the print catalog is a dying channel, you better think again." Sounds like an agenda will be shared. Let's explore this article, which is an advertisement for the DMA's State Of The Catalog Industry Report, 2008 Ed, a $245 article for members, $445 article for non-members.

Quotation #1 = "Of 106 merchants polled by the Direct Marketing Association". Who was polled? Is the polling representative of all catalogers? We don't get to know in this article.

Quotation #2 = "And our data suggests a consensus among successful marketers that there are consistent and integrated standards across all channels". Could we get a definition of a "successful marketer"? Bloomingdales just killed their catalog division. Nordstrom killed their catalog division, and enjoyed the most profitable years in the history of the company. Is that success?

Quotation #3 = "And despite buzz to the contrary, the number of print catalogs in circulation has actually increased since 2003." Ok, let's assume you are right. Tell me what has happened since 2006? In the past two years, you have a postage increase averaging about 30% that wreaked havoc, an economic downturn that is shredding circulation, and the implosion of catalog customer acquisition. None of those points are mentioned in the article. From 2003 to 2006, we enjoyed the buoyancy of the home equity piggy bank.

Quotation #4 = "The survey estimates that total annual housefile circulation reached about 15,463,891 while total annual prospect circulation reached about 5,536,424. That's up significantly from the total annual housefile circulation of about 5,169,011, and total annual prospect circulation of 3,423,389, recorded in 2003." What does this mean? Are these total numbers in the survey, or are they averages per survey respondent? And how about the word "about", bantered around in the quote? What does "about" mean? Does it mean that 5,536,424 is really 5,536,429? Or does it mean that 5,536,424 really means 2,536,424? Help us understand!! Finally, let's assume these numbers are accurate, representing an average cataloger. Let's ask a question. Have you tripled your housefile circulation in the past five years? Have you nearly doubled your customer acquisition circulation in the past five years? Ask Talbots, or J. Jill, or Nordstrom, or Lands' End, or L.L. Bean, or Eddie Bauer, or Bloomingdales, or Lillian Vernon, or Hanna Andersson if they tripled their housefile circulation in the past five years. If the numbers are accurate, this suggests that the sample of respondents are small catalogers that are growing rapidly. Heck, I know of several small catalogers that are growing rapidly --- that's the nature of a young, growing brand. These businesses rent/exchange names with big companies, growing from the hard work of the larger brands that preceeded them, while big companies already have all the names available. Catalogs are wonderful for small, growing catalog brands.

Quotation #5 = "The findings are also based on a detailed analysis of billions of transactional records from 100 million households in the Abacus Alliance database, maintained by marketing firm Abacus, a division of Epsilon, which helped underwrite the report." Ah! So the DMA did a survey, Abacus kicked in a few bucks to complete the study, and results were merged together so that the reader does not know in this article which statistics are from the study and which statistics were paid for by Abacus. Why doesn't the mystery author honestly tell us which stats are from the study, and which stats are from Abacus? And how come the information in the article is so glowingly positive? How come there is no discussion about the true hardships facing catalogers, including but not limited to declining response rates across housefile and especially customer acquisition segments? And why isn't the fact that Abacus contributed metrics and underwrote the study not mentioned in the title of the article --- the title of the article says this is a survey?

Why do our industry leaders continue to offer us misleading information? This style of writing/selling is exasperating to me, a sales pitch to continue to execute the practices that make sure the DMA and Abacus stay in business.

Or am I way off base? If I'm off base, please use the comments section to defend the article ... I'll even publish your responses as a complete post if you wish. What do you think?

6 comments:

  1. Avinash Kaushik9:19 PM

    I am hardly qualified in the nuances of the DM industry but I have to should a "Go Kevin!" on this post.

    I am quite tired as well with "Analysts" (or worse anonymous folks) publishing thought pieces that are this short on context and reality.

    On the positive side I think with time antiquated models will break as people realize that the "interweb" demands a layer of accountability that was nearly unheard of in the past (or not possible).

    I am reminded of this cartoon that you could mail to Multichannel Merchant:

    http://www.tranism.com/weblog/images/blogger-gate.jpg

    :)

    -Avinash.

    ReplyDelete
  2. Anonymous10:50 AM

    While I do not believe 'case study' surveys should be sold or depended on as evidence, I would have to debunk your article as just as biased and unreliable.

    Articles that debunk articles while also not reporting facts are much worse than the debunked article in my honest opinion.

    In your Quotation #2 you stated "Nordstrom killed their catalog division," and had the most profitable year in history..

    I just ordered a catalog from their website..And you can to! If they did indeed enjoy the most profitable year, the catalog was surely out there supporting them.

    https://secure.nordstrom.com/services/RequestaCatalog.asp?source=LIFESTYLE&origin=customerService

    Many well to do companies still depend on their catalogs to promote branding and increase sales. The one company you have mentioned that has done away with their catalog have not yet seen the results of the move. Time has not given either you or them the information to say if it is a good move or a bad one.

    As an employee in an outsource call center, I know that the catalog is very much alive in todays world.

    We receive numerous request for catalogs daily, and for one company alone we process over 4000 catalog order calls a day. This is over and above the amount of calls the company receives at their own 3call centers.

    I know of some 'big name' companies that have upward of 6 inhouse call centers plus outsource to handle the volume of catalog calls.

    While the internet is a great tool to find and compare items, it is lacking in personal customer service. People still enjoy thumbing through catalogs and talking to humans to place their orders.

    ReplyDelete
  3. Ok Anonymous, allow me to be more specific about Nordstrom. First, I worked there from 2001 - 2007, and participated in the termination of their catalog program. I was part of a team that let 1,000 contact center employees go, I had to downsize my team by a third to handle the loss of 250,000,000 in demand that happened when we killed the catalog division.

    So sure, you can still order from their monthly mailings ... they generate maybe 30,000,000 in demand instead of the 250,000,000 that the old program generated. And, the business was more profitable after than before --- go ahead and read the 10-K statements to verify.

    I never said that catalogs weren't alive and well. Read the article carefully. I said they are very important for small and growing businesses.

    But to say that circulation tripled in the past five years is pure folly. That's what is being debunked here.

    And never once did I say that a portion of the population does not enjoy catalogs. Rural customers, customers over the age of 45, and those who prefer paper love catalogs --- so catalogs have a place among that audience.

    I do appreciate your feedback, much of it is valid.

    ReplyDelete
  4. What I find amazing, Kevin, is that you even expected quality from a DMA pub.

    Alan

    ReplyDelete
  5. Chad Elmendorf1:12 PM

    Hello Kevin,

    First off, Abacus supports the DMA and their efforts to provide catalogers with industry research. That being said, I wanted to clarify Abacus' involvement with the DMA State of the Catalog Industry Report. As a sponsor of the report, Abacus promoted participation in the survey to our clients through a client newsletter to support involvement. The survey was completely conducted, and the results compiled, by the DMA. Abacus had absolutely no involvement with compiling the data from the survey or giving the DMA survey data. The DMA survey results are from survey respondents only. Abacus supplied the DMA with the executive summary from our annual Multichannel Trend Report which is printed in it's entirety as an appendix in the State of the Catalog Industry report under the title "Industry Trends According to Abacus Multi-Channel Trend Report. If you would like to receive a copy of the executive summary from our Trend Report please email me directly at chad.elmendorf@epsilon.com. The executive summary is available to anyone who requests it (current client or not) whereas the complete data findings included in the full report are for the exclusive benefit of current Abacus clients.

    Thank you,

    Chad Elmendorf
    Manager, Customer Communications
    Abacus, a division of Epsilon

    ReplyDelete
  6. Anonymous8:06 PM

    In general, I agree with Kevin, as demonstrated by a speech I once gave in Germany titled "The catalog is dead. Long live the catalog."

    My current experience with a highly successful catalog shows that, absent the tracking we once had with consistent source code usage, the catalog is no longer the razor-sharp marketing tool and has become just another implement in the marketing tool chest. Not too different from other, relatively untrackable forms of advertising.

    That said, I still consider catalogs the most effective tool in our arsenal, since it is one of the most *disruptive* forms of advertising. I have seen Direct marketers with 80%+ of sales coming through the web, who have dropped their catalog circulations and then seen dramatic declines in sales and profitability.

    In short, are the days of the catalog over? Yes. And no.

    ReplyDelete

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