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Re: news of the day: t-shirts...and ads

You're welcome, Bonnie.  Well, as I recall (won't swear on a stack of
bibles about it) that 2% was the break-even point - where you got
back what you spent on the advertisement.  Dimly recalled is that a
5% return was considered good and anything above that really good.

But, in the world of mailorder advertising, even massive quantity
still costs a bunch to send out.  Say you sent out 500,000 offers for
some gadget that you were selling for $10.00 (or $9.99 + shipping:-))
 That gadget actually costs you $4.95 (just about anything mailorder
is going to be close to100% mark up from wholesale).  You get 2% of
the 500,000 responding with a buy - that's $10,000 people willing to
part with $10 for your gadget....which results in a gross sales of
$100,000.00,  for a gross profit of $50,500.00.  

Say you mailed out a flyer for this that you developed yourself (no
artist or copy costs), but printing cost you 4cents each copy (it's 2
color) - that's $20,000.00.  Mailing would have to cost you only 6
cents each for you to actually break even with total costs at a 2%
response.  Of course, my numbers are pulled out of air and don't take
admin. costs and other operating costs into consideration (they ought
to come out of the mark up, really), but even if the gross take
sounds marvy, the cost of that ad has to be factored in there and it
(even at pennies each) mounts up.  Doesn't really make a lot of
difference how many were sent out; the math percentages work out
about the same except that fewer copies cost more each.

That's why smaller companies can't keep you on their lists if you
don't buy from them.  May be that the larger companies who blanket
the earth with catalogs get a much higher return percentage, which
works out in the end....must be or they'd all go out of business,
even charging higher prices to pay for the glossy 4-color catalogs.

What a very interesting article, Bonnie...thanks for sharing it; I'd
never have seen it otherwise.  I can well imagine marketing types
salivating at the idea that they can finally read a consumer's mind,
whether it's true or not:-)  Have to agree about the focus groups. 
I've run enough of them to know that when you get people in a group,
you only hear what they want the others to hear; not necessarily what
they truly think:-)  Not to say they can't be useful, but as a real,
true reflection of what someone thinks...nah.

Marge Talt, zone 7 Maryland
Editor:  Gardening in Shade
Current Article: Variegation on the Green Theme - Part One
Complete Index of Articles by Category and Date
All Suite101.com garden topics :

> From: Bonnie Holmes <holmesbm@usit.net>
> Thanks, Marge.  A 2% return is not very much when you think about
it.  I
> wondered what the cut off point would be and have noticed that the
> companies often charge for their catalogues and/or cut you off if
you don't
> purchase in a set period of time.  Some catalogues I like only for
> ideas...some gift catalogues have interesting ideas for decorating,
> arrangements, etc.  Noticed an interesting article on the brain and
> advertising recently...thought I would share and see what you
> now you know why people prefer Coke and are attracted to Porsches.
> October 26, 2003
> There's a Sucker Born in Every Medial Prefrontal Cortex

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