I Asked The Question Because ...

Here's the question I asked at the end of last week (click here).

I was recently sent a document where an agency mentioned that "you need to mail catalogs to reactivation candidates because catalogs are effective at boosting response".

The statement was correct.

One omission?

The catalog was not profitable. It was highly unprofitable, in fact.

• Demand = $1.30 per book.
• Ad Cost = $0.90 per book.
• Profit Factor = 40%.
• Profit = $1.30 * 0.40 - $0.90 = ($0.38).

The "brand" lost $0.38 among every reactivation candidate. Mail 100,000 reactivation candidates 12 times a year and you lose $456,000 of profit. Per year. Every year. That's what the agency wanted to accomplish.

Look, I get it. It is terrifying to spend your entire career working on a dying discipline. You could put digital folks on blast mode in 2002 because the catalog still mattered. You could put the search folks on blast mode in 2007 because the catalog was part of a "multi-channel" strategy. You could put the social folks on blast mode in 2012 because the catalog was part of an omnichannel future.

Then 2016-2019 happened, and you couldn't put anybody on blast mode because the catalog was dying. Slowly. One drip at a time. Mail/Holdout tests showed that 50% to 90% of demand attributed to catalogs via matchbacks was "organic", meaning it would happen without mailing a catalog. Nobody outside of smart practitioners within "brands" and a handful of industry experts believed the results. Why should people believe the results? The results were a threat to their existence.

From 2020-2021, people were in their homes ... buying from every direct-to-consumer brand under the sun. Your business was "fixed" ... no need to worry about the troubling trends of 2016-2019.

In 2022-2023, response crashed (the end of the COVID-bump). At the same time, paper either wasn't available or became too expensive. Printers fired my clients while at the same time becoming "full service digital agencies". A fun pivot. Co-op performance died, and when performance was acceptable, the co-ops delivered a 65-75 year old customer.

In the past two years mailing costs skyrocketed. Declining response paired with increased costs and high organic percentages yield a clear signal ... it's over.

We have no choice now ... we have to change.

Go ahead and mail the top 10% of your file, where a 70% organic percentage and declining response still result in a stead diet of mailings.

For 90% of your customer base and for prospecting purposes, it's over.

I "asked the question" on Friday because your trusted partners are in a difficult situation ... your business can thrive without catalogs ... their business model is predicated on keeping you mailing catalogs.

We need to move on, together. There's no sense in protecting a business model with declining response, increased costs, and high organic percentages.

What am I missing? Tell me (kevinh@minethatdata.com). Don't bring "72% of Gen-Z are digitally exhausted" as proof of what I'm missing. Bring profit. What am I missing in my argument?