Did I Read The Profit Row Correctly?

Yes. Yes you did. Read the p&l portion of the mail/holdout test again.

The average catalog professional would look at the $6.40 per book metric and say "good enough"! Of course, matchback analytics lie to you (they're designed to lie to you - they protect your paper rep, your printer, your boutique agency that needs you to mail catalogs so they can make money). The $6.40 per book figure is not actually that ... you'll get $4.50 if you don't mail anything, meaning the catalog actually drove $1.90 of incremental revenue.

At the bottom of the table is a profit and loss statement. Look down the "True Gain" column ... this is a p&l of the incremental volume actually generated by the catalog. Tell me what you observe:

• It looks like the catalog generated $2.09 profit per catalog mailed.
• On an incremental basis, the catalog generated a loss of a penny - the catalog as a whole is a break-even proposition.

Can you imagine a world where all of that catalog work - the spreads, the planning, the inventory management, the creative, the photo shoots ... all of that work ... does not generate profit?

Is it any wonder that when presented with findings like this catalog professionals refuse to believe me? The catalog professional would have to confront an inconvenient truth ... that all of the hard work and knowledge ... and some guy with a testing methodology says it doesn't matter? Would you believe your vendor-centric matchback reporting (which makes you look like an invaluable employee) or would you believe a mail/holdout test (even though the mail/holdout test is communicating the truth)?

Tomorrow we'll talk about what it means when a mail/holdout test suggests the catalog doesn't have value anymore (hint - it likely does have value to some customers, just not most customers).