Co-op Mail Still Works for Some

(Direct) Despite declines in recent years, cooperative direct mail can still be a useful medium for direct marketers 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 Elmira, NY-based Stanton Direct Marketing.

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 Stamford, CT-based Madison Direct Marketing. 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 programs ayear — 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.

Making co-op mailings work

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-$500 per thousand.

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, such as “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.

New and coming soon

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

One example of this is Los Angeles-based Latin-Pak, which over the past several years has sponsored co-ops not only for the Spanish-speaking community but also for Asian Americans and African Americans. The Latin-Pak co-op carries inserts from some 11 marketers in fields such as 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 Latin-Pak president Vincent Andaloro.

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 free-standing insert 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.