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Postal Proficiency: The Future of the Disc Industry  [PostCom]

February 15, 2008

Published on PostCom.org

  The following is by Todd Butler, President, Butler Mailing Services. Any questions can be addressed to toddb@butlermail.com

The CD music industry celebrated its 25th anniversary in 2007 with the pronouncement that 200 billion discs had been sold over the past two and a half decades.  As the disc industry looks forward, there’s a realization that the market for all content from music to video is moving from physical media to on-line delivery systems.  Prognosticators easily see the death of the disc industry as the world becomes connected to the Internet. These same prognosticators also see the majority of advertising dollars going on line and the death of useless postal services across the world.
The problem with the world is that it’s a big place with lots of individuals.  In the United States alone there are over 300 million residents living and working at 140 million locations.  To market to these people, on-line advertisers need to guess what consumers’ individual interests are, and which one of the billions of web pages they are likely to visit.  Then, after placing their bets, advertisers get to suck their thumb until customers come to click their ad.
In the physical world advertisers are able to target specific people with specific interests, utilizing a postal service as their delivery channel.  Advertisers don’t have to hope that potential customers will see their ad, they are guaranteed that their marketing materials and consumer will meet at the mailbox.  Direct mail is the only medium able to proactively introduce a company and their products to a targeted audience based on demographic and/or geographic information.
While the disc industry believes delivering 200 billion music CDs in 25 years was a great accomplishment, it pales in comparison to the United States Postal Service which delivers over 100 billion pieces of advertising mail per year.  The good news for the disc industry is that almost none of those 100 billion pieces of advertising mail contain discs.  The fact is that direct mail advertising offers the disc industry an established market with potential yearly volumes in the billions.
Advertisers are rushing on-line because of interactive multimedia.  It’s the greatest advance in advertising since the invention of TV.  Advertisers love on-line video, even if 50% of the consumer market doesn’t have broadband and therefore can’t view video ads or flash presentations over the Internet.
Why should the disc industry care about direct mail or on-line advertising?  Because when you combine optical media with paper based direct mail you end up with Internet advertising, delivered by the Postal Service.  This hybrid product called multimedia mail, can deliver the interactive multimedia marketers are demanding, to consumers’ front door.
Multimedia mail delivers greater functionality than on-line advertising.
When video is delivered on discs it can be viewed by 100% of the on-line market regardless of their Internet connection speeds.  Discs provide consumers one click access to the Internet and the interactivity desired by marketers.  By utilizing the tools available in the direct mail industry, targeting consumers on a variety of criteria is possible.  Best of all, when measured on a cost per click basis, multimedia mail is less expensive and more responsive than on-line advertising.
The great thing about direct mail for the disc industry is that it’s a mature industry stuck (like ink on paper) to its past.  The direct mail industry’s past, present and future is dependent on page counts and its desire to process lots of paper.  The more paper the direct mail industry utilizes, the more money it makes.  It fears the future and the Internet revolution.  It’s an aging industry, prime for a take over by an outside, more technologically advanced competitor with a superior product. 
The disc industry is just such a competitor and multimedia mail has been proven to be a success.
AOL used optical discs and the Postal Service to build the largest Internet presence of its day and take over Time Warner.  Netflix forever changed the DVD rental business by using the Postal Service as its video delivery channel.  The disc industry is in a position to not only dominate the direct mail industry, but dominate all advertising by utilizing postal services to deliver multimedia mail to consumers. 
Add an optical disc to a direct mail package and the combination becomes a complete marketing tool. This hybrid package is superior to all other forms of advertising because it delivers the best all other advertising has to offer.
And advertisers are ready for change.
They want print advertising that is interactive and on-line videos that are proactive and targeted.  Advertisers want to be able to identify potential customers demographically and geographically and then deliver their marketing messages (interactive multimedia) timed to meet business needs.  They want their ads opened, not ignored.  In the United States direct mail is read, partially read, or scanned (this equates to an on-line click through) 84% of the time compared to a 2% - 5% (claimed not experienced) click through for Search Engine Marketing.
Direct mail advertising offers the disc industry an alternative use for its products without a massive capital investment.  The knowledge and technology necessary to be successful in direct mail is readily available to either bring in house or use on an as needed basis.  There are people in the direct mail industry ready, willing, and able to assist the disc industry in conquering this market.
Everything needed to be successful in the direct mail industry can be outsourced at competitive prices.  If you have never handled postal data, outsource it to one of a thousand shops that are experts in the field.  When it comes to postal rules and regulations; steal a knowledgeable employee or find a consultant to help out until one of your employees navigates the maze.  Continue doing fulfillment and add mail prep in house.  License or buy postal approved packaging.  Ink jet addressing may require the purchase of new equipment but outsourcing is a viable alternative until revenues justify the investment.
Organizations looking to provide direct mail services should find someone to advise them on the mailing industry.  Software and equipment salespeople are noted for over hyping their products.  Find an expert from the mailing industry that can explain the advantages and disadvantages of various options as they relate to real world mail processing.  Knowledgeable dedicated postal employees are a rare resource; dealing with the rest will take a seasoned veteran.  Having someone to call when working around a rule or an inflexible postal employee will be priceless.
As the disc industry faces the challenge of declining sales as customers’ distribute their products on-line, don’t overlook the opportunity direct mail advertising represents.  All of the tools, knowledge and technology necessary to be successful in this market are available for those not afraid of moving your optical discs from jewel cases to envelopes.

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