Co-op Mail Still Works for Some

DESPITE DECLINES IN recent years, cooperative direct mail can still be a useful medium for DMers that want to reach large groups of people at a lower cost than solo mail.

But even though co-op programs aren't as attractive as they were, say, 10 years ago because of the rising costs of postage, printing, insertion, lists and other expenses, they can still be effective, says Al Stanton, president of Stanton Direct Marketing in Elmira, NY.

For co-ops to work, they must have a lot of advertisers — maybe 20 to make it profitable — and co-op owners can't always get that many, Stanton contends.

One company currently expanding co-op mailings is Madison Direct, Stamford, CT. It mails to about 70 million households annually, an increase of about 10 million packages from last year. Most of its programs target young families.

In November, Madison — which sends out six different programs per year — will be launching one aimed at grocery chains.

Overall, large national advertisers such as AOL, music continuity clubs, credit card companies and DVD marketers such as Netflix are prominent users of co-op mail.

But Stanton warns that in a climate of steadily increasing postage costs, these firms may be looking for cheaper alternatives. (At press time, postal reform legislation was still pending in Washington.)

Generally, co-op mailers can look for response rates along the lines of 0.1%, with costs roughly one-tenth of those for solo direct mail — about $40 per thousand vs. $400 to $500 per thousand, respectively.

These conditions make cooperative direct mail's cost-per-response figures balance out, says veteran co-op mailer Larry Tucker.

“Some of the larger circulation programs let marketers reach into millions of households in a very efficient manner, helping uncover new markets or to discover new ‘hot spots,’” he says. “And any offer, copy graphic or format that can raise this response rate even a fraction of a percentage point will pay off handsomely.”

“Response rate is not as important as overall return on investment with cooperatives,” Stanton adds.

In terms of copy, Tucker says using self-identifying label-words common to the group, like “Mother,” “Grandma” or “Working Mothers” in headlines and body copy helps increase response.

“Marketers should speak exclusively and directly to the individual as part of this specific audience and keep generalities to a minimum,” he says. “This definitely will make products seem more relevant and personally appealing to this select audience.”

In addition, “for cooperative mailers, it's important that their mailings carry a theme, such as ‘value’ for Valpak,” says Madison Direct president Chris Hulse.

Marketers aiming at ethnic groups are successful these days because those groups are pre-targeted by nature and “they're a newer market,” Stanton says.

One example of this is Latin-Pak, which over the past several years has sponsored co-ops not only for the Spanish-speaking community but also for Asian and African Americans. The Latin-Pak co-op carries inserts from some 11 marketers in fields like recorded music, consumer packaged goods and financial services to households in several California cities, as well as Austin, TX; Dallas; Chicago; Fort Lauderdale, FL; Phoenix; and towns in Hudson County, NJ.

“Cooperatives work in the Hispanic market because Hispanics don't receive as much mail,” says Vincent Andaloro, president of Latin-Pak, Los Angeles.

What will the future hold for co-ops?

For his part, Andaloro sees a continued overall decline of the medium as costs go up. He cites the stalled merger of co-op mailer Advo and FSI giant Valassis as an indication of bigger problems in the industry.

Just the same, cooperative mail “is still a viable medium for advertisers that want to reach large groups of people at lower cost,” Hulse says.