PointCast is taking a page out of America Online's prospecting handbook for a campaign that begins next month.
The push-technology company found in an early summer test that even though CD-ROMs cost five times more to produce and mail than lead-generation packages with business reply cards, high conversion rates make getting the disks into prospects' hands worth it.
Recently, PointCast, Sunnyvale, CA, concluded that the most fertile prospecting medium for new subscribers to its custom desktop-delivered news service probably wouldn't be the Web.
“Our target audience is a business consumer who is incredibly time-pressed and looking for an easy way to get updated information throughout the day,” said Ann Shepherd, director of viewer marketing at PointCast. “These are not people surfing the Internet.”
The company tested e-mail prospecting with some success, but reputable lists are still few and small, Shepherd said. The answer: direct mail.
Besides scale, direct mail prospecting offers the chance to build a predictable acquisition program — still difficult online, said Richard McCarthy, manager of viewer acquisition programs at PointCast.
“Having a program that's been tested in a list universe that we can go back to on a regular basis gives us an opportunity we haven't had,” he said. “It's a breakthrough for us to be able to say, 'This is what we need to spend and this is what we think we'll get.' ”
In June, PointCast dropped a 108,000-piece test mailing of two sweepstakes packages in its first-ever direct mail campaign to 16 undisclosed lists. Both packages offered a chance to win a 1998 Volkswagen Beetle to people who signed up for the service.
The bulk of the campaign — about 103,000 — was a lead-generation package that gave recipients their choice of a business reply card or a special Web address as a response device. PointCast sent a second package to about 5,000 prospects that included the CD-ROM so they could register for the sweepstakes and load the software immediately.
PointCast weighted the test heavily toward lead-generation packages because the firm had no list-performance benchmarks. The lead-generation package allowed them to test multiple lists more inexpensively than the CD-ROM packages.
Eschewing compiled lists, PointCast chose business-oriented magazine and technical journal subscriber lists and online software-buyer and online club-membership lists. McCarthy declined to name the specific lists.
“I'd hate for those lists to get hit too hard before we get a chance to test them [again],” he said.
Response to the lead-generation package averaged 7 percent, with three of the lists topping 10 percent, McCarthy said. Respondents used business reply cards over the Web address 3 to 1.
McCarthy declined to say how many lead-generation respondents converted to subscribers, but said it was comparable to the conversion percentage from people who request disks after learning of PointCast by word of mouth.
To give the lead-generation package every chance to work, PointCast sent a last-chance e-mail to respondents who failed to register for the sweepstakes, garnering the firm a “huge spike” in response, McCarthy said.
In the end though, the far more expensive CD-ROM package converted at a rate of 6.25 percent, making it the clear winner.
“We got a 7 percent gross on the lead-generation package, and that was just people requesting the product, versus a 6 percent response of people who installed the product when they had it put in their hands,” McCarthy said. “It was phenomenal. We never expected [the CD-ROM package to pull] that high.”
Though 5,000 pieces cost PointCast between $2.50 and $3 per CD to produce and mail, the packages were “absolutely profitable,” said McCarthy, but he declined to say how much a new subscriber to the free service is worth in ad revenue.
Like videocassettes before them, CD-ROMs saw a brief period several years ago when many marketers thought they would be the next major breakthrough. They have yet to pan out. But recent drops in production prices from about $1 to as low as 30 cents to 40 cents per CD and the ability to design them to work in about any computer make them more viable than ever, said Chris Peterson, president of Times Direct Marketing, San Francisco, the agency managing PointCast's campaigns.
“When CD-ROMs were hot, you had to spend a fortune to develop them,” Peterson said. “Now, you don't have the technical issues and development is much more straightforward. I'm convinced that putting CDs in the mail is going to become a standard marketing practice for a huge number of companies.”
PointCast is set for an early October drop of 150,000 CD-ROM prospecting mailers featuring the same Volkswagen sweepstakes offer as in the June test. It also plans to test an Internet coupon offer, the details of which at press time had not been determined. The company also is back-testing about 5,000 lead-generation packages similar to the June test.
The company is planning another prospecting drop before the year ends. Executives declined to give PointCast's current subscriber base or audience projections.
