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In this issue of the newsletter, we will look at mailing trends and results from the Holiday 2006 season. We hope this snapshot helps you analyze your own performance in the context of the overall results of the food-by-mail industry, leading to a more profitable 2007 for your Internet and mail-order marketing programs.
Mailing Trends
From August 1 to December 31, 2006, we received 877 specialty food catalogs. Upon review of these, we found:
The median page count was 30, down from 32 last year and up from 28 in 2004. The mean average was 27.5 pages, down from 30.7 last year and up from 29.5 in 2004. This is the first time in the seven years we have been tracking food catalogs that the page count has gone down.
We believe this is significant and may represent a fundamental shift in the marketing objective of catalogs for many food mailers. Companies are beginning to cut page counts, which lower the unit cost of the catalog. This allows companies to increase circulation without increasing the total amount spent on the catalog. The idea here is to get a catalog in front of more people without spending more money. The jury is still out as to the overall response of a small catalog vs. a larger when the primary goal is to drive web traffic and not generate a phone order right off the page. However, results are encouraging. 60% of the catalogs were full-size, down from 62% last year and 63% in 2004. 11% were slim-jims, up from 7% last year. 9% were digest-size books compared to 10% last year. The remaining 20% of the food mailings we received were various shapes and sizes (including post cards, letters and a few 3-D mailers).
As with the lower page counts, we believe the slight decrease in full-size catalogs signals a move toward smaller and lower-cost mailings whose goal is to drive customers and prospects to the web.
Customers continued to order later in the season, with over 66% of the season’s orders and sales occurring in December. Over 78% of orders and sales were generated from November 16 to December 31. As a result of customers ordering later in the season, catalogers continue to mail later and later each year. 28% of the catalogs we received arrived in December vs. 25% in 2005 and only 19% in 2004.
 55% of the catalogs had some type of promotional offer vs. 51% last year and 32% in 2004. Of the catalogs we received with an offer, 43% were promoting conditional free shipping. The table below shows the percent of catalogs we received with an offer by offer type.
 For the second year in a row, September was the lowest growth month of the season. This is further evidence of customers ordering later in the season and closer to need
The table below shows the percent change in orders and sales by month in 2006 compared to holiday 2005 for the food mailers that report results to us.
The overall growth rate for food catalogers we tracked was a very healthy 16% vs. 14% in 2005. Average circulation increased 6%, so overall revenue per catalog mailed was up 9%.
Final profit numbers are not in yet, but almost all of the reporting companies feel their bottom line will be much healthier this year than last. This is due to several factors:
Sales grew faster than circulation, and marketing expenses as a percent of sales were down. Many of our clients shifted marketing dollars away from high-cost list rental and into lower cost pay-per-click (PPC) marketing. As we reported in the last issue of the FBMIU, PPC generated $10 in sales for every $1 spent, so it was a very cost-effective program. Most of our clients prospected aggressively in 2005, so they had a larger pool of 12-month buyers going into the holiday season. Email continued to play an ever increasing role. Due to its low cost, it has the highest ROI of any part of the marketing plan. The percent of orders transacted online continued to grow. Since it costs less to process online orders than offline orders, variable operating expenses did not grow as fast as sales increased.
As is the case every year, we found several common traits of the food catalogers who experienced above-average growth rates this past holiday season. In the next few issues of the Food-by-Mail Industry Update, we will discuss these common elements and how you can apply them to your mail-order and Internet food business.
We hope these response statistics will be helpful to you as you begin analyzing results of your own holiday 2006 e-commerce efforts and start planning for the holiday 2007 season.
My best,
Tony Cox
President
The 5th Food Group and Catalog Solutions, LLC
ABOUT 5TH FOOD GROUP & CATALOG SOLUTIONS
5th Food Group helps specialty food catalogers and internet marketers grow and make more money by developing, managing and implementing their mail order and online marketing programs. We are the only catalog/internet marketing firm that works exclusively in the specialty food industry. Helping smaller companies or large companies with small mail order or Internet divisions is what we do best.
Visit us online at www.5thFoodGroup.com to download a copy of our free booklet, The Seven Habits of Highly Ineffective Catalogers, and for information on our fully guaranteed introductory program called Jump Start.
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5th Food Group