Interview: ‘Inserts may not be sexy, but they have massive scale’

By Darryl Danielli, Monday 09 March 2015

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It’s not often that that PrintWeek gets invited to media agency bashes, where the beards are short and the hair directional.

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Jim Lewcock, The Specialist Works

But then there aren’t many media agency bosses who are more bullish about the impact, ROI and growth potential of print than printers themselves. However, Jim Lewcock at The Specialist Works (TSW) is one such individual.

Which goes a long way to explain why TSW decided to theme its annual bash ‘Give print a chance’ with Lewcock taking the role of ‘Jim Lennon’ and Parry Jones, managing director, print media, playing ‘Yolk’o’ – with the duo recreating John and Yoko’s legendary bed-in protest.

But the event had a serious message and one that many in medialand all too often forget: print works. And TSW, with its mantra of offline media solutions to drive online response, is the proof.

Started by Lewcock in 2003 as The Insert House with the proceeds of a ‘salesman of the year’ prize, TSW was, at the time of the interview, a £55m, 110-staff, multi-channel media agency responsible for 1.6bn inserts annually. But last month, following the acquisition of Bath-based The Response Team its billings leapt to £80m and its insert volume started to nudge 2bn.

And, according to Lewcock, that’s just the beginning; because print has plenty more growth fuel in its tank.

Darry Danielli How did The Insert House come about?

Jim Lewcock I used to work for IPC Magazines. I ran their insert sales team, so I had already become a specialised sales person if you like.

Was that across multiple brands?

It was across all their titles. Basically we were a booking shop to make it easy for agencies to book into anything from Marie Claire to TV Times. Looking back now I realise that it defined the business that I ended up starting; what I realised was that if you go into niches, that are only niches by perception, not by their potential, then there’s a lot of business to be made – and inserts are regarded by some as ugly ducklings.

What do you mean by that?

What I mean is that you’re either in a niche defined by your own magazine brand’s narrowness, say a fly fishing magazine, or you’re niche because you’re unsexy, but you have the potential to be massive. Think about TV advertising: it’s sexy and has massive scale. Inserts, by comparison, are not sexy, but they do also have massive scale – so it’s a really good thing to get into.

So how did you get your start?

I won a car, as IPC salesman of the year. It was a Peugeot 306, I think. So I cashed it in and, with some help from dad, set up The Insert House.

Really?

It’s true. However, since then I have become their [now Time Inc UK] biggest customer.

So there a no hard feelings then?

I doubt it.

How old were you when you started the business?

30. I basically turned my pub talk about the power of inserts into reality. Inserts are such a good concept, but so many agencies just don’t get or understand inserts. This was the niche. By the way, this all happened before print turned ugly – print was still sexy. But as the years went on it turned from the beautiful swan into the ugly duckling. 

When was this then?

I started The Insert House in 2003 on Brick Lane with a single desk and a chair, with the cash from the car and the home improvement loan my dad took out. 

Did you start it alone then?

There were three of us: me, Justin Bisnar – he really pushed our print business, he worked for me at IPC – and also Gary White. That was the founding trio.

Did you all put money in?

No, that was all me. But they had equity, because that was all I had to offer them. It all sounds like a very romantic idea, but because I started it and essentially had the experience, they grew with me. So we set up The Insert House as something that should have been a large channel by scale, but just wasn’t being represented properly by the [media buying] industry. There was no real equivalent until we turned up.

By the sound of it you simply took the IPC model and expanded it across more brands and publishers.

Absolutely. With an insert, I don’t care about the environment it’s in or what editorial content is in that issue – I’m buying the audience. So what we did first was set up a contract sales house for all of the other publishers that didn’t have a central insert sales team. So we worked with lots of small to medium publishers and very quickly built a portfolio of brands. Within two years we had around 110 publishing brands that we worked with; from publishers like Hachette, Evening Standard and contract publishers like River.

So not just small companies then?

Well no, but with small to mid-sized titles. However, after two years we had our own portfolio of titles, probably bigger than the likes of IPC, to go to market with.

And probably broader too, in terms of the audience types.

True. But there was a turning point, probably after four years. We had created a really nice sales business, but the difference between being a sales business and an agency is that a sales organisation, quite rightly, just represents its portfolio – that means it’s restricted by the performance of that portfolio. What we realised was that The Insert House had become a true specialist in the channel and it would be so much more scalable if we had 100% of the client spend, not just what was spent across our own portfolio. So in the space of six months we resigned every single publisher contract we had.

That must have been more than a little scary?

At the time the guys were a little bit nervous about it. But we had to, to become the buyer rather than the seller. If you’re the seller then you can’t have all the magazines you need in your portfolio, because the agencies would know that while we were trying to sell to them, we were also competing with them. So to compete with them properly we got rid, and the business has gone crazy since then.

But how did you come to that decision? Was it an opportunity you saw, or client feedback?

Well, it came about because of one really simple deal. We had one client that had no real in-house [insert] skills at all, and they wanted us to design, print and book their insert not just in our portfolio, but other places. We worked out that when we went through the processes from a planning point of view, because the results were fantastic, it gave us the insight to realise it was scalable. To cut a long story short, the insight was to stop selling and get into working for our clients.

And it worked?

Well, to put it into context, we did 1.6bn inserts into the UK [last year]. We’re 27% of the entire insert market – we’re bigger than any agency in that one area.

Are some of the agencies your clients though?

Well, what we had was a number of years when were trying to compete with the agencies because we were trying to win the insert programmes of their clients. But then we had a big collaboration with Omnicom, which largely came about through friendships, we both had to leave our egos at the door, but when we did it just made perfect sense – we effectively became their insert resource. Ordinarily inserts would be handled by an agency’s press team, but in the scale of whole media plan they’re not really that interested in inserts.

I suppose that gets you back to the point of print not really being seen as a sexy channel by some agencies; they’ll get excited about TV or digital, but not print – so it’s understandable that it becomes a bit of an afterthought.

Well, that’s what we can do – we have the skillset in the area, so we can take that on and be the agency’s insert resource and their clients will benefit from our expertise and get better results. Anyway, Omnicom is now our biggest client and we don’t compete with them. Of course they also represent brands that we probably couldn’t win anyway – so it works very well for everyone.

So what’s the split between [The Insert House] client direct and agencies then?

Around 70% client direct and the rest is through Omnicom.

Do you manage the whole process?

We built this process, which we call the ‘four balls’ strategy, which is basically to optimise the four elements of inserts. 

So what are the four balls?

Audience; channel impact, which I’ll come back to; ad format, which is print; and creative, which is, well, the creative. Agencies only really do the audience bit, so you can see why it’s hard for them to do a good job. But rather than make any of these balls obstacles, we make them services. So that’s how our print management business was born, Catalist, which is now responsible for producing 600m bits of paper and feeding lots and lots of UK printers. 

Back to the four balls though, you mentioned channel impact?

If I’m an agency and I’m planning the Radio Times, it just tells me what the audience of Radio Times is. What I don’t know is the difference in response between the subscription copies and newsstand, and that is just the beginning of understanding that the distribution format is the most critical to the performance of inserts. The reason I mention it is because as well as understanding that, it became our model. Because if it’s about the distribution, rather than the magazines, then it got us thinking about other possible delivery mechanisms.

And what did you come up with?

Well, what else works and also happens to be a massive growth channel? Basically: boxes. Parcels that are delivered to the home from people like Amazon, Ocado and other etailers. So on one side you have newspapers and magazines in slow decline, but they’re going to be around for a long time and they’re still responsible for a lot of volume, but then we also have this new channel that no one understands, because it exists in a place their bored with – print.

Can you get into the data from the likes of Amazon though, because I appreciate that it would be pretty powerful to put an insert into a package for a product or service that was relevant to a specific purchase in the box, but would they share that?

You don’t need to go that micro. So for example we’ve just started a programme with a premium clothing retailer, but we don’t need to know that a person has bought blue trousers or white shorts from them, because there’s not a lot we can do with that and you don’t get any scale. And scale is always the first thing people ask for. 

Instead what people are buying into is the brand profile, the customers and also, most importantly, the fact that they have just made a purchase. When people buy lists, what they really want is a zero to three months list. Well, this is absolute zero. 

I guess there’s also value in trading off the power of that brand, in some cases.

Exactly, it’s like an endorsed environment – it’s a piggyback mailing. But the two-way value goes well beyond that. Clients can start to use their distribution to trade, so you have this cost-neutral, carbon-neutral delivery method – because the package is being delivered anyway and the weight of the mailer will have no impact on the cost of sending that parcel. We can then also turn that activity into advertising credits. So the client who’s parcel is carrying the mailer gets credits that they can use to jump into someone else’s parcel, or cash them in, if they prefer, and create a new revenue stream.

Just like you have.

Absolutely. We’re making a land grab for parcels – we love parcels because the response rate is three to four times better.

I guess the open rate is guaranteed?

Exactly, and people are in buying mode when they receive them, so much more so than with, say, standalone DM. But we still need the DM to drive the initial purchase. You can also take the parcels multinational, so rather than us planning for the demise of print our insert business is going from strength to strength because parcels go everywhere.

It also seems to be an incredible simple idea, almost obvious, so does that mean a lot of companies are trying to do it?

Of course there are others that are doing it, but none of them have got the wind in their sails like we have or necessarily understand the scalability. What we have is a print marketing device that has reinvented itself to become an online device, because our biggest customers are e-retailers.

Aren’t there potential conflicts though? I can’t image an online brand would want a rival piggybacking its parcel?

It’s common sense really: it can’t compete and it can’t be anything that they would disapprove of – the client approves a PDF before it’s sent.

I suppose in some ways it’s similar to the publishing inserts model, in that it’s all about the audience that the brand has a relationship with.

It’s all about audience, and all the other things that work so well in the publishing model. It also overcomes one hurdle: if you’re in a bad mood, even if you’re the right audience I can’t convert you, but because every time you open a box you’re probably in a good mood because you’ve just got something you ordered, you’re much more receptive. The smart advertisers are tuning into that. But outside of that, we do lots of direct mail using things like our personality profiling tool. Regardless of the method, as a business we always look at the hurdles in front of everything we do and find ways to fix them. For example, as Royal Mail costs go up our job is to look at how we can better segment or help clients use their advertising income to offset those costs. On the extreme end of the scale, one of our big mail order clients actually makes the profit on one programme purely on its insert income, the programme itself is neutral.

So have you ever thought of launching your own catalogue that just sells tat so that you can make money from the inserts?

Very funny. And, of course, none of our clients sell tat either. But every time I see a negative I always look for the positive, otherwise what’s the point? One of our latest launches is bit like the package idea: what if everyone shared an envelope? Royal Mail costs are going up, door drop costs are going up, so what if a client can condense their 100g mailer to 20g and then we get five clients to share an envelope? That’s our AdShare project.

We launched one in Ireland called MailShare which is basically a door drop with six inserts and a cover letter, with the demographics and regions all appropriate for those six companies. The point is turning complexity into simplicity or a negative into a positive. But our clients are really buying into AdShare, because they all have the same problems of rising costs, so we’re going to roll it out across Europe.

And presumably they’re buying into it because they still see print as very effective?

They’re reliant on it – it’s not that they want to do it, it’s that they just can’t afford not to, because they know they can’t get the same performance online.

It’s great that you’re a big advocate of print, but as an agency don’t you have to be media neutral?

That’s a good point. We still believe in multi-channel marketing and we want to build a full service offering across every channel, but we also have to be mindful of not turning into a generalist. So that’s the reason that we’re set up as standalone businesses [under The Specialist Works umbrella], to create a little bit of competition within the business, but also ensure to that we don’t lose our specialisms. We have print, digital and broadcast businesses and the real gain of that is that the clients know that they will get perfect execution across each channel they use.

What about those clients that use all or multiple channels? Doesn’t it make sense for them all to be linked?

Absolutely, and those clients would sit in our central planning department.

But print is still the largest part of your business?

By a long way: it’s still responsible for 80% and all we can see is growth.

So do the other areas generate better margins?

No, it’s still print. Because by remaining a specialist we can ensure we deliver ROI to clients and also remain profitable. I think in the print industry generally though, there needs to be a culture change. The difference between us and say a print management company is that we are proactively planning the print in the first place and that’s a massive difference. Other print management companies are essentially procurement companies that are trying to screw suppliers down on price – because they have to make money in the middle – but they have no impact on the performance of print.

But then, to be fair, you’re an agency first and a print management company second.

True, but because of that we have brought more than 200 clients to the print marketplace. Also, we don’t manage print, we grow it. We educate our e-commerce clients that they’re direct commerce clients, which means that they should look at all the options for driving direct sales: print, TV or digital – and not just default to digital. We had one online client that we generated 102,000 new customers for through print – we also worked with them to improve their print format, which increased their response rates by 120%.

But isn’t that why print management companies are increasingly buying up agencies, albeit predominantly digital agencies, so that they can get further up the chain?

As far as I know we still haven’t
come up against a single print management company. It might be because they’re focussed on the digital agencies, which means that they’re missing a trick. By the way, I definitely think buying agencies is the right thing for print managers and even printers to do, but there needs to be a change in culture – print should be a marketing decision not a procurement decision.

Clients need to understand that too, because reputation not results is blinkering an ad industry – print media is many clients’ number-one performing media channel.It’s a channel decision and about ROI, not a procurement decision based on cost. I keep saying it, but media buyers can’t afford not to consider print – just look at the results.

To be fair to printers though, they would love to have those discussions with agencies or brand marketing teams, but they’re kept at arms length and are regarded as a commodity supplier, not a creative partner.

Well, then they should build a credible service that gets them in those discussions, not just complain about it. And a service built on case studies. I think it’s a good thing that printers are moving into other areas, but how joined up is it? Or are they just buying companies and then leaving them to run in isolation? I have yet to meet a client or printer who fully understands the value of print in marketing.

So how should they build those credible services?

To innovate in print, I think you also need to understand the purpose of that innovation. When I look at a printer’s website I’m not interested in what machines it has, or how fast they are, I just need to know what it can do for me, the possible applications, the formats. For example, if Royal Mail creates a PIP format, then why doesn’t the printer create a format that works best within in it? I’m sure some do, but not all.

Do you subscribe to any business methodologies?

The big book for me was the Blue Ocean Strategy [by W Chan Kim and Renée Mauborgne], they’ve sold 3.5m books, so this isn’t niche thing. When I read business books it’s all in the first two chapters, you either completely dismiss the theory behind it or you buy in, but printers will totally get this book. It’s basically about combining value and innovation into one thing. 

For me our DNA is about delivering value innovation, so for print for example there’s no point having a fantastic product if it’s too expensive for anyone to use, the art of optimal print is to develop a really innovative product and then either reduce the cost or increase the ROI. To put it in its simplest terms, they have an analogy that there are red oceans and blue oceans, the red ocean is that if you don’t differentiate then all your doing is competing on cost or innovation, but if you combine both and then look for new audience groups you immediately widen your sectors. I guess in a print context you can see printers going bust because they don’t differentiate and just compete on one, most likely cost. 

I know I’m over generalising, but perhaps the lesson for print is to get the kit to do one thing really well and innovate, which will also win on price because you operate on production capacity efficiencies.

So what do you select your print suppliers on then?

Reliability, quality, cost and speed. We have what we call our hero-formats; they pitch for those and we select a roster and we review it twice a year.

Do you practice what you preach though, if a print supplier comes to you with an innovation?

Totally. We ask for innovation, but it rarely comes back. What we know is that we’re building a demand and we’ll be doing that across Europe.

How much print do you buy then?

We’re probably responsible for around £35m of print a year, of which around £11m we manage, the clients take care of the rest themselves. We’ve just set up offices in Germany, Sweden and Ireland and what we would like to do is centralise our printing in the UK, provided we can get the routes to market right.

Even European mailings?

Yes, because if we get the volumes right they can be more cost-effective here. Also we’ve got some jobs that are in Europe, but they might be fulfilled from the UK – there’s a real opportunity in print, we should be planning for growth, not decline.

You’re clearly passionate about print.

I am and it’s authentic. I genuinely love bits of paper because I’ve seen them deliver 15 times the response rate that an ad in a newspaper can deliver, or can deliver a message that just wouldn’t work on TV or digitally. 

So the future for print is bright.

I genuinely think that there is going to be a renaissance in print, people engage differently on computers and everyone gets frazzled by their phones. So I think people will once again start to see paper as a precious material, because it has a different relationship with the consumer.

That’s why I have a bee in my bonnet about Sir Martin Sorrell’s comment that the amount of money spent on print advertising is an anomaly versus the time spent on other channels. He’s assuming that they have the same impact as print, that’s a massive assumption. That’s like saying that you absorb a film at the cinema in the same way as you would watching the film at home.

Very true.

I met someone quite senior at Microsoft once and they admitted that if they had something really important to communicate to staff they always sent it as a letter, not an email, because emails don’t always get read. If someone at Microsoft acknowledges that, then why can’t media buyers and printers? 


TSW COMPANIES

  • Catalist
  • Outburst Creative Works 
  • The Broadcast House 
  • The Digital House 
  • The Insert House 
  • The Insert House Germany 
  • The Mobile House 
  • The Press House
  • The Response Team

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