Insert media programs (newspaper FSIs, co-ops, ride-alongs, billing inserts, etc.) are gaining popularity among Hispanic marketers. This is partly because insert media, as opposed to solo direct mail, is a more cost effective way to reach clients. Chris Hulse, president of Stamford, CT based Madison Direct is especially enthusiastic about co-op mailings. “Co-op mail has terrific growth potential. The lists are there to identify the market.” John Ahern, senior account executive at Marketing Services in Newtown, PA agrees. “Co-ops are easier to segment than other types of insert media.”
“This year we have had a lot of advertising from insurance, perfume and phone companies,” says Vince Andaloro, CEO of Chesterfield, MO based Latin Pak.
Insert media can be particularly useful to circulation marketers at Hispanic publications.
The price of the test is much lower using insert media, than if they ran solo mail campaigns. “Co-ops and other insert media can be an affordable way to test circulation marketing concepts. For instance, as an A/B split,” says Dan Gonzalez, president of Daniel Gonzalez & Associates. Publishers can test out responses rates to different offers (e.g. magazine subscriptions). “Printing is relatively economical. You can print them all out at once and the sorting automatically gives you an A/B split.”
According to Geoffrey Batrouney, executive vice president of Estee Marketing Group, any insert program (co-op, ride-along, insert in a utility bill, etc.) that is based on depth and reach, and targets credit-worthy consumers with discretionary, disposable income, is probably going to be successful in the Hispanic market.
Insert media still accounts for only a small percentage of all Hispanic advertising. Annual spending on general market insert media is approximately US $200 million a year. Latin Pak CEO Vincent Andaloro estimates annual spending in the Hispanic market at about US $15-$20 million a year. “It is a finite market. There are a limited number of choices available to advertisers,” Andaloro notes.
Chris Hulse, president of Stamford, CT based Madison Direct says that advertisers must support cooperative direct mail. “We have not seen much interest in the last 10 years. We continue to offer the young Hispanic family market within our national mailings, but fewer than 12 companies have shown an on-going interest.”
Arlene Rosen, president of Ara Media Solutions, estimates an annual volume of approximately 2 million weekly newspaper blow-ins (156 million a year), 14 million co-ops and ride-alongs and more than 4 million magazine blow-ins (see “Insert media grows as a marketing tool,” page 27, Portada® No. 15, April/May 2005).
Batrouney estimates the total number of Hispanic insert media programs at less than 100. Most of these programs are newspaper FSIs and co-op programs (shared envelopes).
Some Spanish-language music and book clubs offer ride-alongs to brands who want to insert image-compatible, non-competitive ads. Columbia House Latin Music CD and Cassette Club, BMG's Latin Music Club “Ritmo y Pasion,” and Mosaico Book Club all offer this option (see “Bookspan develops different strategies for its Spanish book clubs,” page 27, Portada® No. 14, February/March 2005).
Other types of insert media, including catalog inserts, are practically non-existent in the Hispanic market. Madison Direct offers an interesting way to target Hispanics through ride-alongs in Verizon's flip book directories (see article on page 29).
Insert media or alternative media get lower response rates than solo mail. Latin Pak which offers both direct mail and insert media programs reports client response rates of anywhere from 2-15% for direct mail campaigns. “Our alternative direct marketing programs may receive 1-5% depending on the offer,” adds Latin Pak's Andaloro.
Still, Madison Direct's Chris Hulse points out that Hispanic insert media response rates—especially coupon redemption rates—are much higher than in the general market. “Hispanics see less mail especially mail written in Spanish and English,” Hulse adds.
Estee Marketing's Geoffrey Batrouney says that response rates should not be seen as the be all and end all when it comes to insert media. Response rate is not the critically important statistic one might think it is. “For example, insert media programs or space advertising campaigns might get response rates of two-tenths of 1%, which would be considered a disaster if your selling a $5 product. But if you are selling $2,500 liquid plasma TVs it's actually very good. It is not just the response rate that matters, but the combination of response rate, average order size and gross margin. If the advertisement costs $1,000 and the orders received from the campaign generated 75% of that cost, you are probably in good shape, because you can count on a certain percentage of on-going sales to those customers. But 25% cost recapture is probably not so good.”
The pros and cons of FSIs
Free standing inserts (FSIs) are probably the most common type of insert media.
However, many observers note that the effectiveness of newspaper FSIs is decreasing as readership and subscriber serviced households decline. This isn't the case in the Hispanic market, where the newspaper industry is actually growing. Additionally, newspaper FSIs may be an excellent complement to existing ad campaigns because they reach consumers that other alternative media and solo direct mail may not. According to Latin Pak's Vincent Andaloro, FSIs are a great way to reach newer arrivals who are Spanish-dominant and unbanked consumers. “I cannot see any disadvantages. They complement other media like TV or direct mail and they're mainstream and cost effective.”
John Ahern, senior account executive at Marketing Services in Newtown, PA disagrees. “FSIs are much less targeted and therefore are less effective than a direct mail program that delivers an offer to the prospective consumer's mailbox.”
Geoffrey Batrouney sees the immediacy and relative simplicity of creating and distributing offers through FSIs as definite advantages. However, response rates, average order sizes and values tend to be low, and it is difficult to sell more expensive merchandise through FSIs. “FSIs are an ideal medium for promotional offers that appeal to a broad market segment, like the ones we all see in our weekend newspapers, especially local (smaller and more targeted) newspapers.”
Hispanic Insert media: Small but growing
Size of the market
US $15-20 million, up to 100 programs
Most frequent insert media types
Newspaper FSIs (156 million annually), co-ops and ride-alongs (14 million annually), magazine FSIs 4 million annually
Insert Media targeting Hispanics
Good way to reach Spanish-dominant and unbanked Latinos
Tend to be less targeted than other types of insert media
Offer good segmentation. Availability of lists. Good for circulation marketing tests
There is still a relatively finite number of Hispanic specific programs
Telephone Directory ride-alongs
Excellent way to reach New Movers
Small number of Hispanic programs
Ride-alongs in club programs
Image-compatible, non-competitive brands may gain points by association with club
Very few Hispanic clubs