News of the death of the catalog is greatly exaggerated. It’s no secret that the catalog retail universe is a big one. Brands that started as paper catalogs sent in the mail go back more than 100 years to the Sears & Roebuck catalog sent to families in rural parts of the country. In its pages people could order everything from bars of soap to do-it-yourself homes delivered right to the doorstep.
Catalogs in general have gone through a sea change of sorts and nowadays the best-known ones sell mostly apparel, kitchen and bath goods, electronics and other home and gift items. Many of the brand names are nearly ubiquitous: L.L.Bean, Eddie Bauer, Chadwick’s, Patagonia, Harry & David, Spiegel, The Sharper Image, Brookstone, Crate & Barrel, Hammacher Schlemmer, Pottery Barn, Williams-Sonoma, Land’s End, Lillian Vernon and Victoria’s Secret.
Some of these brands are, of course, multichannel marketers now – be it Web sales, catalog, physical store or telemarketing. The printed catalog may be how the brand is recognized, but it’s the various channels that keep sales humming.
In fact, multichannel marketers are very big participants in the $2 trillion U.S. retail market, according to the Direct Marketing Association (DMA). About 40 percent of retailers sell through three or more channels, 42 percent through two. That’s almost a quarter of all retail sales generated through direct marketing efforts and that direct mail (such as paper catalogs) accounts for half of that revenue, according to the DMA.
When e-commerce came along many predicted that the pick-up-the-phone-and-order-from-a-paper-catalog model would die out. It hasn’t and is in fact thriving, especially as affiliates for these catalog businesses do extremely well.
Like the overall affiliate cosmos, the top 20 percent of affiliates for catalog retailers bring in the heaviest sales. Contrary to their fears, catalogers, as they are known, have transferred the catalog model to the Web rather well.
Online catalog and call center revenues reached $9.87 billion last year, and online sales through retail chains brought in $27.75 billion in 2005, according to Internet Retailer. Eighty-two percent of multichannel retailers who have a catalog component run profitable Web operations, according to Internet Retailer/WebSurveyor. This is actually ahead of the virtual-only merchants – only 75 percent of them are profitable.
Contrary to what might be suspected, the Web presence does not take away from the overall catalog brand. All catalogers believe in e-commerce, says Chris Henger, vice president of affiliate marketing at Performics. He says the days of catalogs asking if they should invest in the Web are over. “There may not yet be best practices in what channels get the credit for sales, but they are learning. Sending a catalog is a tremendous vehicle and so what better time to be omnipresent with an interactive message,” says Henger.
Performics manages affiliate marketing programs for more than 300 advertisers, including more than 100 catalogers. Catalogers are kind of its specialty, he says. Some of its top catalog clients include Blair, Cabela’s, Eddie Bauer, Brylane, Chadwick’s, Patagonia, L.L.Bean, Harry & David, Spiegel, Newport News, Sears, and Sportsman’s Guide.
According to Henger, the message from consumers is loud and clear: The customer needs to touch the brand the way it wants to – whether that is on the Web, over the phone or walking into a store. The good news is that those channels all help each other.
“Customers are seeing growing sales on the Web – 30 to 60 percent of sales,” Henger says. “They have all come to the conclusion that [mailing] catalogs is not going to go away. It builds brand equity and there is a balance to the push and pull.”
“Going online in general has benefited us greatly,” Chris Park, affiliate and partnerships manager at Blair, the men’s and women’s apparel seller, says. “We may drop catalogs all the time and [customers] may look at a catalog a few times but they go to the website many times.”
He says there’s really no choice anymore: The print catalog and online have to work together. Many customers look through the catalog and then come online when it’s time to buy, Park says. Blair can then promote a $0.99 shipping offer once customers come to the website.
Some catalogers take the time to look at the affiliates themselves and measure their value in a more granular way instead of just heaping together all affiliates into one category.
“Before we were just looking at the sale and now we are looking at the affiliates themselves and putting them in different buckets,” Park says.
Knowing so much of their sales are now attached to the Web and by extension, affiliates, some catalogers believe they need to go the extra yard for their earners. Brad Sockloff, vice president of e-commerce at Lillian Vernon, says he works personally with top affiliates every day.
“We do special promotions with the top 20 percent and we do monthly meetings with them,” he says. The top earners get to know when Lillian Vernon has overstocks prior to the holiday season. “Why sit on it for another year?” Sockloff says. The company also produces a newsletter exclusively for affiliates.
Lillian Vernon additionally has a link to find out about their affiliate program prominently displayed on their home page, as does Brookstone, The Sharper Image, Eddie Bauer, Hammacher Schlemmer, and Chadwick’s of Boston. None of that personalization is too surprising from Lillian Vernon, who markets gifts, housewares, gardening, seasonal and children’s products among other gift-related items – most of which can be personalized with a name or monogram.
As far as helping affiliates, you might not get any better than at Sierra Trading Post. They were named Innovative Merchant of the Year by LinkShare in 2005. The tools on the company’s site to help affiliates are plenty, more so than most of the other cataloger affiliate Web areas. Sierra has available on its site an extensive guide for affiliates, website templates in three different styles, a product data feed and tools for easier product showcasing on your site. In beta are two new tools: Synonymizer, for maintaining your search engine rankings even with a data feed; and Linkwrapper, an automated linking tool.
Justin Johnson, affiliate manager at Sierra Trading Post, says if he makes the affiliate’s job easier they will make more money. “Help them fill the hole,” he says. “Data feed sites give visitors a good idea what they are looking for and we automate some of that for those that don’t know. I try to figure out what affiliates are struggling with” and base a tool on that.
Sierra also posts sales contests for affiliates where they can compete for prizes. Johnson says while making the sale is great, he loves to learn something from the contests, such as finding out an elusive metric like numbers of new customers. He says Sierra’s recent Summer Camp contest will try to get the affiliates to communicate with each other and learn from each other. “I ask myself, what affiliates do not know,” Johnson says. “It benefits us all. Customers profit because they find what they are looking for and affiliates profit because they get high conversions.”
On A Shoestring
While catalogers restate their commitment to affiliates, there are still the somewhat- tight budgets driving an affiliate manager’s workload. Recent DMA statistics say about 9 percent of catalog/Internet marketing budgets go to affiliate marketing. That’s in line with about 8 percent of affiliate budgets for all retailers.
And JupiterResearch recently determined that search engine marketing managers also did five other jobs on average, including Web design, IT staffing, email marketing and e-commerce management. Or in the case of Andrew Dunn, online advertising manager for Vermont Teddy Bear Company, you manage stuffed bears, pajamas, flowers and mail-order gourmet foods. He agrees he could be doing more to reach out to affiliates. “We’re such a multichannel brand,” Dunn says. “The affiliate is a smaller channel for us, but we will broaden things as much as we can.” He says less than 5 percent of overall sales come from affiliates.
The Vermont Teddy Bear Company began selling personalized stuffed bears on the radio in 1981. The company’s other catalog brands include Pajama Gram, Calyx & Corolla, Gift Bag Boutique and Tasty Gram (which is online only). Dunn says he considers any business in the “gift” category to be his competition, so he admits he is often too busy to attend to all affiliates. Paying more attention to the big earners is just “physics,” he says.
While staying in contact with affiliates keeps him very busy, he finds ways to steer everyone somewhere. He says if an affiliate emails him with a simple html question, he may refer them to an online tutorial. He says he will refuse entry to affiliate applicants whose Web address is a provider name with a tilde denoting their personal site. A person who isn’t going to spend the money for a unique Web address is probably not going to be an earner, he says. Blair’s Park says that some affiliates never want extra emails or phone calls, preferring to be left alone. Some, he says, want all the details – “They IM me, call me and I know who they are. I’ve got to keep those people happy.”
In the performance marketing world, catalogers and other e-commerce sites – whether they sell through multi-channels or not – can’t deny the effectiveness of search engine marketing. While a DMA study stated that 58 percent of catalogers said they use affiliate marketing as an advertising strategy, 65 percent said they used search engine advertising or the buying of search keywords. Interestingly, both pay-per-performance and shopping aggregators have a decent presence among retailers with catalogs, at 41 percent and 24 percent respectively. And it is good to see that the annoyance of pop-ups and adware keep their numbers low, at 9 percent and 4 percent respectively. Up-and-coming strategies still in the beginnings of a groundswell are Flash ads and video ads, at 8 percent and 3 percent respectively.
Park agrees that catalogers will employ better conversion methods as they get more used to the possibilities. “Search is definitely the big thing,” he says. “Aggregators will also get big.” He says he would like to see more of an understanding of adware. He says he won’t work with anyone where software attaches to your computer. He publicly speaks out against adware when he can.
While some catalogers have put a ban on bidding of brand keywords, search may be the only thing catalogers have a certain control over. Some catalogers would rather not lose control over the brand. If you have, say, 50,000 affiliates, all with a different Web address, you don’t know what’s being done to your brand, says Sierra Trading Post’s Johnson.
A high-profile catalog such as Crate & Barrel chooses to have no affiliate program whatsoever. “We wouldn’t have anything like that here,” a spokesperson says.
The more affiliates contribute to your online sales, the more time and investment you’re going to give to an affiliate program, says Johnson.
“There’s lots of pressure more and more in the affiliate channel,” Vermont Teddy Bear’s Dunn says. “There is more competition for ad space, and from a search perspective, contextual ads-wise. I can pick and choose as a marketer but if I’m an affiliate marketer there is more work involved.” He says in his year and a half as online ad manager, “We are growing up with it and see what works and what doesn’t.”
Unlike Vermont and its relatively small 5 percent of online sales that come through affiliates, Lillian Vernon’s Sockloff says affiliates bring between 10 and 15 percent of their online sales. Not only is it a fairly large percentage as far as affiliate involvement in sales figures goes but for Lillian Vernon, half of their overall sales come in the fourth quarter since the holiday season is its busiest. Sockloff says the affiliates really begin to ramp up in early September for the holidays. While he says that increases the incremental customers they get – buyers who wouldn’t otherwise come to Lillian Vernon – those customers are used to looking for items on the Web and the self-serve aspect is a “perfect fit,” he says.
Dunn says that at the end of the day, he sees themselves as multichannel marketers and not just catalog retailers anymore. “If our transactions are online, we have to ask, Would we have gotten that order anyway? The multichannel challenge is what we have every day,” he says. Does it make him think the paper catalog is dying out? He points to the radio market – where Vermont got its start – as an example. With satellite radio now in the picture, he says, the market just evolves.
Henger at Performics is more than optimistic about catalogers’ longevity in the business. “[Catalogs] capitalize off e-commerce growth,” he says. “We [at Performics] see continued growth in the sector. They often need something like us – they don’t typically have a full ad marketing dept. Target [stores] has it and has a history of keeping it in-house. Most catalog retailers, however, are budget-challenged and need us.”
Budget-challenged or not, the benefits for consumers have only multiplied with the choice of sell channels and that means catalogers continue to grow with the rest of the affiliate world – one innovation, one sale, one page at a time.