The potential of personalized ads

Not exactly poetry, but Farm Industry News and Stauffer Chemical Co. broke new ground in advertising with that message. It appeared last spring in FIN, imprinted on a run-of-book ad for a Stauffer weed killer. Never before had individual subscribers been appealed to by name in a magazine ad.

The experiment has caused a riple of excitement in the print world. Advertisers find the idea intriguing. Agency people say it's "sensational." Ad salespeople think it opens up whole new options for their customers.

From a marketing standpoint, it's tough to quibble with the logic. Any direct mailer will tell you that people are suckers for seeing their names in print. Who can resist tearing open an envelope that shouts, "You, so and so, may already have won a million dollars!"? And who wouldn't do a double-take if, when flipping through a magazine, he saw his name on an ad?

But the tactic's appeal goes beyond the ad's shock value. The marketplace is no longer described with broad brush strokes. Advertisers are homing in on ever-narrower market slices. Could speaking directly to an individual with a personalized ad be the next leap in target marketing?

"We're at the 'gee whiz' stage, and at that stage everyone says there's potential," notes print guru Leo Scullin, vice president of print at Young & Rubicam.

But gee whiz, how's it done? Who can do it? Is it cost effective? And exactly what is the potential? These are questions publishers are asking themselves as they consider the technique for their own magazines.

Potential linked to technology

The potential in the ability to target subscribers and promote to them with personalized messages is linked directly to the ink-jet technology used. Ink jet is a "smart" bindery line labeling process that reads data from a computer tape and then prints certain words based on what it reads. For instance, if the computer reads that a person lives in New York, it knows to print one message. If the person lives in Iowa, he gets a different message. Therefore, publishers can segment their subscriber files and ink jet messages to subgroups of subscribers--or even to individual subscribers. That's the bonus: the potential to communicate, through the ink-jetted word, to individuals.

But simply putting someone's name on an ad is not the advertising coup of all time. No one at FIN or Stauffer is touting it as such. If it were, it would have been done long ago. The potential for publishers, point out the people at FIN, is in creatively tapping their database of information about subscribers and offering advertisers new ways to reach the most desired segments.

"There are two good reasons from the publisher's perspective for doing this," says Stuart Legaard, vice president of agricultural publications at The Webb Company, which publishes FIN. "The first is to offer more service to our advertisers. The second is to provide more income for ourselves." That can be accomplished by attracting new advertisers with the personalized technique, and by charging a premium rate for these types of ads, Legaard explains.

The ultimate in helping advertisers target readers, of course, is using ink jetting combined with computerized demographic binding. R.R. Donnelley & Sons was the trail blazer in this with its Selectronic binding, available since 1977. The computerized bindery line allows a publisher to compile separate editions of the magazine without ever stopping the bindery to change signatures. Bindery charges are thus kept to a minimum and postal sortation discounts are maximized. Combine computerized binding and ink-jet messaging, and you have the power to reach targeted segments with personal messages at a reasonable price. This is Star Wars publishing!

Technology explained

To understand personalized advertising, it's first necessary to understand the technology behind it. The Stauffer ad in FIN is nothing more than a rather gutsy use of an old process: ink jetting. Ink jetting, notes one printer, is like a Chevrolet. Standard stuff. It is a form of nonimpact printing that was adapted about a decade ago for the bindery line by A.B. Dick Co. It is most commonly used for addressing catalogs: Instead of appearing on pressure sensitive labels, the customer's name, address and usually an identifying code are sprayed, or ink jetted, on the back cover of the publication as it moves down the bindery line. Computer software controls the process by telling the ink-jet heads what letters to spray, how large to spray them, and where to begin and end the message. The information to be ink jetted is read from a magnetic tape.

The message in the FIN ad was a by-product of this process. While the subscriber's name and address was being ink jetted on the back cover, a second gun sprayed the same name and a message on the ad. Most ink-jet set-ups allow for a second message to be sprayed on one inside page of the publication.

Ink jetting is becoming increasingly popular, especially with catalogers. It's nearly as fast as using pressure sensitive labels (the line on which FIN is bound, for instance, can ink jet 200 publications per minute) and there are no pesky labels failing off during mailing. It is more expensive than regular labeling, although now that more printers are offering it, the price is coming down.

"Ink jet is still rather new, so the costs vary from printer to printer," explains Bert Paulucci, a printing consultant. Prices can range from a high of $10 per thousand to as low as $2 or $3 per thousand for ink jetting. Tacked onto that charge are the prep costs to format the data on magnetic tape. Some printers require that they do the tape formation in-house (Why? "So it's done right," explains one), while others will accept tapes formatted by an outside service bureau. Again, the pricing is not standard but varies based on the job. Pricing in the printing business, notes an executive at one large printer, is highly customized.

FIN was a natural to experiment with ink-jet messaging. It is published and printed by The Webb Co. of St. Paul, Minnesota. Webb has many catalog clients, and like most printers that do large volumes of catalog printing, it had already invested in ink-jet equipment--about $3 million, in Webb's case. The printers who service primarily magazines often do not have ink-jet capabilities.

"We've checked with our customers and they'd like us to get it as a curiosity," remarks John Tiffany, vice president/manufacturing services at Arcata, a major magazine printer. "But for the business we're in, it would be a waste of money."

Why have catalogs, not magazines, been the big users of ink jet? There are a few reasons particular to the catalog trade. These direct mailers test huge numbers of lists--many times more than magazine publishers do. They use ink jet to address the catalogs and simultaneously spray a list code on the order forms so they can associate response with list source. Often catalogers will also ink jet the customer's name and address on the order form to make it that much easier for the customer to order merchandise.

Magazine publishers, without this need to closely track lists, have simply not demanded ink-jet addressing from their printers. And in fact, there's even vocal opposition to ink jetting within the ranks--from design and advertising. Ink jetting requires that a small white rectangular space be left open to hold the address on either the front or back cover. Who gets it? Not the designers, who don't want their covers marred by a white space. And not the ad directors, who can't tell their prime, back-cover advertisers that an address will now be joining them on the coveted page--for which they paid a hefty premium.

But there's another reason why catalogers have latched onto ink jetting. From the inevitable "Dear Mrs. Jones: You could be the lucky owner..." to the more touching "Dear Mrs. Smith: We've missed you ...", catalogers used ink jet for hard-sell personal messages that magazines have never seen fit to use.

Tunnel vision

This, say ink-jet believers, is a case of tunnel vision on the part of magazine publishers. We can and should tap our databases and use ink jet to personalize magazines, they say. As Mark Anderson, general manager of FIN, points out: "The capabilities of the equipment are limited only by the database we have to work with. We can produce individual messages on the basis of income, sex, geography, age.... That's where the magic comes into this."

"Limited by the database." For many publishers, that is a key limitation indeed. While publishers know many things about their subscribers, they often know them in the aggregate. How many subscribers to a particular magazine are aged 18 to 34? Most publishers can tell you the percentage. But can they name the actual subscribers who fit that description? Probably not, especially if it's a consumer magazine. They likely could find that information on one of the mammoth databases kept on individuals by list compilers, but nevertheless, it's not stored in-house. Business magazines generally have more complete subscriber files because of reader qualification efforts, so they are more equipped to offer that database to advertisers for personalization purposes. For the others, well, if this personalized targeting catches on, note the FIN executives, it will spur them to collect more information and beef up their databases.

Some easy options for right now

There are less futuristic ways to put ink jet to use, however. First, easiest, and already being done: Personalized renewal notices, either on outside wraps or inside the magazine. Yankee magazine does it, and publisher Rob Trowbridge says it increases response and saves him postal costs. "I don't know why other publishers aren't doing it!" he exclaims.

The subscription renewal notices are wrapped around Yankee as a separate cover. The subscriber's name and address is ink jetted on the wrap with a personal message, something like "Dear XXX, This is your last copy. Please complete the renewal card if you wish to continue receiving Yankee." Or, "It's time for Christmas giving. Have you sent in your Christmas gift list?" The system draws excellent response, Trowbridge says, because it links the renewal notice directly to the magazine. And it saves the postal costs involved with an entire renewal series.

FIN, before it ran the Stauffer ad with the personalized message, also tested the waters with a wrapper around the magazine asking readers to requalify. The message varied by the age of the subscription: "We haven't heard from you in 18 months," or 24 months, or so on. The personalized promotion drew a 24 percent response, according to the general manager. That was double what similar wrappers--without the personal message--had drawn in the past.

Yankee's Trowbridge describes some other ideas he's considering that use ink jet. He may try to sell advertising on the back cover of the renewal wrapper. The advertiser could then use ink jet to add a message, such as the name of a local representative. Or Trowbridge may just dig into his data bank and ink jet a message to sell one of his other products. "For instance," he says, "it could say 'Dear subscriber: We know you have ordered books on gardening. We have a new book out....' That way," Trowbridge adds, "we'd have a variable sell to the subscribers."

The next step: Personalized ads

These examples are food for thought on how ink jet could be used by the publisher to promote his own business--no sophisticated database or fast talking to wary advertisers necessary. The next step in using the technology would be the Stauffer/FIN approach: a personalized ad.

After the renewal wrapper pulled so well, FIN's general manager, Mark Anderson, decided to try to market the ink-jet idea to advertisers. Several turned a deaf ear, but one did not.

"I asked them, 'Have you told anyone else in the industry about this?'" recalls Theresa McCann-Tumidajski, Stauffer's advertising and sales promotion manager. "Mark said he had, but no one was interested. I told him we were keenly interested in doing this."

With the aid of Stauffer's ad agency, Bozell & Jacobs, an existing ad for the herbicide Sutan+ was altered to show a small white notepaper clipped to the ad. The subscriber's name, the name of one of the three Stauffer regional sales reps, and the message "Thought you might be interested" were ink jetted in that white space. The rest is...you know what.

The jury is still out on how the ad went over. FIN is conducting a subscriber study of 250 readers to try to measure how many actually noticed their names on the ads, and what they thought about it if they did. But Stauffer, which repeated the ad for Sutan+ and then for another product, is pleased with the response. About 50 readers called the sales reps--two-thirds to express amazement that their names were on an ad, the other third with solid sales potential, according to Steve Blake, one of the reps. One reader, a prominent farmer, was riled because he thought his name had appeared in all 300,000 copies of the magazine, but he eventually calmed down. All in all, Blake thinks the ad worked: "Although it's not a great deal of calls, we feel it's just the tip of the iceberg," he says.

A natural for direct response?

FIN is not claiming that the personal touch is the magic touch for every advertiser. Anderson and others think that the best use of the ink jet technique is to marry it with a direct response vehicle--something that prompts the reader to action. "The ad should have a response mechanism built in--a bounce-back card, check, rebate, whatever," Anderson counsels. "If you don't have that, the rest is hype."

"I wouldn't want to use it just as a means of making a statement," seconds Dan Breau, vice president/creative director at Bozell & Jacobs Direct. "I would use the technology in conjunction with a bona fide offer. If you're going to the trouble to do this, you want to be able to measure response."

The possibilities are not difficult to imagine. Chevrolet, for instance, could direct a reader to tear out the ad and take it to the local Chevy dealer for a $100 rebate. Based on the reader's Zip Code, the ink-jet software could be programmed to print out the name of the closest dealer.

Chevrolet, in fact, did have its interest piqued by the ink-jet technology. Says Bruce Weber, account exec at Campbell-Ewald: "Chevy is always willing to take a look at something new and see how it can be used to advantage."

Jerrold France, senior vice president/advertising at Communications Channels Inc., thinks that, for business publishing, a direct response ad would be inappropriate in many cases. "Every trade magazine is not a direct response type of vehicle," he says. "Some are put on earth to generate inquiries, others are more sophisticated. They don't even have reader service cards. The industry and type of publication will dictate whether a direct response vehicle would work."

Leo Scullin, vice president at Young & Rubicam and a noted advocate for print, thinks just putting someone's name on an ad, without a direct response mechanism, is catchy enough. But he believes the real trick is to be the first to use this tactic, before readers get tired of seeing themselves solicited in ads. "The potential is really to be there first, and to be there in unique ways," Scullin says. But the potential is not there for everyone, he cautions. "Very unique ideas...never catch on in a big way. But as long as the technology is priced so that some advertisers can take advantage of it, then it can work--selectively. Working selectively is almost as important as working for the masses, or working at all."

Breau perhaps sums up best the thoughts of the advertising community about personalized ads: "It really challenges us to figure out how to maximize this technique."

Start the ball rolling

So, as a publisher, you think there might be a marketing opportunity through ink jet. The advertising people are intrigued by the idea. What do you have to do to start the ball rolling?

Stephen Venarchick, a sales manager at Webb Printing who worked closely with Anderson in developing the technique, puts it very succinctly: "First, your printer will have to have ink jet. Then the printer and publisher will have to educate each other on what they want to do, and can do, with the database. The publisher's first step is to say, 'What in my database can I offer the advertisers in order to do a personalized message about one of their products, or how can I segment my mailing list to make that useful?' Once that's set, the two have to work together in a team effort to make this happen."

Once the decision is made to offer ink jetting, the publisher has to price the service. The cost to format the data, bindery charges and postal discounts all have to be taken into account. Anderson has decided to charge a 40 percent premium over the four-color page rate for this type of ad, and to require the advertiser to use it on a spread. In total, the advertiser has to fork over $22,800. Stauffer, which didn't have to pay the premium on its first trials, is "90 percent" sure it will run personalized ads again in the fall. American Cyanamid, which tried it once in the March issue, is also interested in doing it again.

In pricing this service, also keep in mind that only one or two advertisers per issue can use the technique (one inside and one on the back cover). The limitation is a result of the equipment setups at most printers who have ink-jet capabilities. If demand for ink jet increased, they would add more ink-jet guns to their bindery lines. But Anderson thinks the restriction could actually be good. If too many advertisers in an issue ran personalized ads, the impact would certainly diminish, he notes. Now he can treat this as a special position and get the hefty premium.

Creative restrictions

There are a few important technical details to remember as well. These mainly affect the creative design of an ad. On some ink-jet lines, the message can only be printed vertically--parallel to the spine of the magazine--so the reader has to turn the page sideways to read the message. Webb Printing's system, for one, has this restriction. Some creative directors believe this just makes the message more eye-catching.

The type style available on ink-jet guns is also limited--usually the only choice is between regular and bold, although some printers offer italic as well. The choice of ink color is also less than dazzling--except in special circumstances, basic black. All of these restrictions can and will be overcome, printers say. How fast that happens simply depends on demand.

Here's a final but--and it's a big one. Unless the printer has computerized, demographic binding--and at present only R.R. Donnelley and Meredith/Burda have it--the true potential of database marketing with ink jetting is difficult to exploit.

Why? If the advertiser wants to reach only certain segments of the subscriber base with an ink-jetted message, it will be necessary to stop the bindery to load the signature containing that ad. That creates extra bindery charges and reduces efficiencies in postal sortations.

The restriction is not absolute--it is merely a matter of economics. It could still be cost effective for a publisher to offer certain segments--regional editions are common, for instance. But in general, the more times a publisher breaks up his mailing list, the more costly the bindery and postal charges.

Yet this, too, printers say, shall pass. And soon. According to Webb's Venarchick, other equipment manufacturers will have computerized bindery equipment on the market by the time this article is printed. Webb for one plans to install such equipment and have it running by the end of the year. "In 1986," Venarchick declares, "it's going to be a whole different ballgame."

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