February 12, 2015

Ad To Sales Ratio

It is common for a cataloger to have an ad-to-sales ratio of 30% or greater.

It is common for an online marketer to have an ad-to-sales ratio of 15% or lower.

Guess what the online marketer gets to do with the 15% marketing expense savings?
  • Free Shipping.
  • Lower Prices.
  • Other Investments.
To be competitive, the cataloger has no choice. The cataloger must stop mailing 20 catalogs a year to online-centric buyers. Next, the cataloger must greatly reduce co-op expense, which for catalogers with 40% or lower annual repurchase rates, is destroying the ad-to-sales ratio.

It is nearly impossible for a cataloger to compete with an e-commerce business when 15% of sales are gobbled up on paper expense that does not materially contribute to the bottom line.

Is it any wonder e-commerce businesses routinely out-compete catalogers?

Send me an email message (kevinh@minethatdata.com) if you'd like me to fix this problem for you!

Scott Galloway / Code Commerce Presentation

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