Customer relationship management, or CRM, has had as one of its first and major principles the idea of treating customers consistently and appropriately “across all touchpoints”. However, until recently, the range of touchpoints has conveniently missed out two essential areas of regular contact — namely statements or bills, and the checkout. However, the importance of recognising people’s value and treating them appropriately and personally in-store is not the object of this study, as plenty has been researched on the subject elsewhere. Instead we will be focusing on the benefits of targeted advertising on statements and bills.

The debate over whether or how to use statements and bills as an advertising medium has been deliberated quietly over the last few years, especially amongst key banks and wealth managers anxious to find every available means of up-selling or cross-selling to their high net worth customers. However, only recently has the medium become more widely recognised, to the extent that the US technology analysts have now given it a name — “transpromotional” or more briefly “transpromo” advertising. This recognition from analysts is important, as it tends to indicate that the technique has moved from being just experimental but instead mainstream, that a real marketplace of technology and service providers has been established, that end-user organisations are actively taking up those technologies and services, and that the technique is delivering hard results for those employing it.

The last three years have also seen a series of research projects that have put real proof points in place for the performance of transpromo advertising. This research is worth briefly rehearsing.

Firstly, a study in 2005, conducted amongst top British marketers, investigated the response rates that pioneers were experiencing from placing individualised cross-selling messages on their statements and bills. The respondents to this survey were quick to point out that a number of different manifestations of transpromo advertising had been tested, along with a range of varying response mechanisms. These different ‘types’ of transpromo could be summarised as:-

• A solus, targeted advert on a bill or statement, with a telephone number as the response mechanism
• A solus, targeted advert on a bill or statement, with a web address as the response mechanism
• A solus, targeted advert on a bill or statement, accompanied by a relevant insert or leaflet, with a telephone number as the response mechanism
• A solus, targeted advert on a bill or statement, accompanied by a relevant insert or leaflet, with a web address as the response mechanism

Opinions were divided as to the relative merits of telephone or web as the response mechanism. However, there was a consensus that a strong response was only experienced when the targeted advert was accompanied by an equally targeted leaflet, brochure or other insert. In these circumstances, the response rates were received were only a little below the norm for a stand-alone direct marketing campaign (but in the case of transpromo, without the mailing cost). In other words, targeted printed adverts on statements and bills were twice as responsive when accompanied by a relevant leaflet that had been variably inserted at the mail creation stage. It is important to note that, as variable insertion technology has also recently moved up a notch in terms of sophistication, inserting different items in each envelope can now been automated and at high speed.

Next, we have had a raft of analyst reports which have established the category of transpromotional technology and given it a credible persona amongst many corporations — especially the more cautious of firms within investment management, banking, credit card, telecoms, utilities and mortgage finance.

Finally, an update research piece was published this year(1), which asked consumers how long they spent looking at monthly statements and bills (or total monthly attention in the case of web bills and statements), compared with tax notices, government correspondence and direct mail. This refreshed our understanding of the subject, since a similar study had been conducted by the Henley Centre some three years previously. The 2007 research showed that printed monthly bank statements were typically afforded a greater level of attention than that paid to tax correspondence(!), emphasizing the potential for advertising message delivery that the medium holds. Mobile phone bills, utility bills and government correspondence also attracted more attention than direct mail. However, direct mail received more ‘eyeball time’ than statements and/or bills presented electronically over the web. This, the report emphasizes, should be interpreted in the light of the many banking customers who receive both printed statements and have access to a web facility for viewing their transaction records.

With the key proof points of the value of advertising on statements and bills having been established, and the medium now recognised by major analysts, one element is still missing. In order to assess the relative importance and role of transpromo in the total advertising mix, marketers need to understand the extent of the ‘space’ available. This research paper seeks to fill that gap.

Overall, in the UK, marketers (consumer-focused only) buy around £19bn in advertising space, direct marketing, sponsored weblinks etc. every year. It is against this yardstick that the potential of transpromo needs to be assessed. Bearing in mind that, out of all advertising media, the closest resemblance is direct marketing, it is also important to compare transpromo directly with annual DM volumes and values.

This dsicmm study has therefore researched the value of the current transpromo advertising opportunity in eight key markets: bank statements, credit card statements, investment portfolio statements, mortgage statements, mobile phone bills, landline phone bills, power utility bills, water utility bills, and loyalty card statements.

Once the volumes of annual statements or bills in each of these categories had been established, they were then reduced by the pioneer proportion in each category already conducting targeted advertising via this channel, whether for cross-selling or introducing affinity partner offers. The resulting volumes were then valued on a very conservative cost-per-pack equivalent, drawn from a direct example in the direct marketing sector. To then make the model ultra-conservative, this value was halved, to reflect the fact that direct marketing puts forward a solus proposition, whereas transpromo is an offer piggy-backing a different main document. In this way, our valuation of the transpromo opportunity errs on the side of caution.

This model resulted in the following unexploited advertising media values on statement or billing communications, per annum, to UK consumers, for each of the segments analysed.

Sector	Unused Transpromo Advertising Value
Banking - Current Accounts	£194,400,000
Credit Cards	£159,372,000
Investment - Equities - Nominee Accounts	£3,200,000
Mortgages	£2,850,000
Mobile Phone Users	£80,808,000
Domestic Landline Accounts	£11,880,000
Power Utilities (Electricity & Gas)	£20,505,600
Water Utilities	£10,192,000
Loyalty Cards	£19,600,000
TOTAL	£502,807,600

The key opportunity evidently lies in banking and credit cards, simply because of the sheer volume of statements generated by this sector. Currently, statements delivered via the web do not significantly impact the value of printed statement advertising opportunities. Only between 3% and 5% of UK high street retail bank customers have chosen to opt out of receiving printed statements, although this is likely to increase in the future. Of course, the removal of printed statements still leaves an advertising opportunity via the web statement facility, but as our model cannot calibrate the value of these opportunities, they have been omitted from the valuations in this study. The development of the transpromo advertising market will significantly impact the extent to which banks, telecoms and utility companies actively encourage their customers to move to online-only statements. If the issuing organisation can monetise this point of contact by selling the space to suitable affinity partners, then to migrate customers away from mailed statements may destroy an important marketing asset, whether for in-house or for third party advertisers.

Nor is sheer volume necessarily the most accurate measure of the value of access to customers. For the purposes of this research, statements of account for investment portfolios (specifically equities held in a nominee account) are valued at just £3.2m per annum, this being the equivalent to the average cost of reaching this number of consumer by direct mail. However, the calculation ignores the fact that these tend to be very high net worth individuals. In other words, they are much higher than average wealth — and therefore any premium paid for being able to reach such people — is not taken into account in our model.

Internal cross-charging for customer access through statements and bills is also an area under development. A few leading IT departments now levy a charge to the marketing function for adding targeted cross-selling messages to the transactional envelope. Sometimes that charge is levied up front, in other cases as a ‘success fee’ on each resulting response. In these organisations, such cross-charging has focused marketers’ minds on really making the effort to target more precisely and therefore maximise return on investment from this exercise.

In conclusion, transpromo advertising opportunities is significant when compared to the UK’s total annual advertising spend. Half a billion pounds worth of advertising opportunity is not being utilised either for cross-selling or for introducing third party propositions, and this represents almost 3% of total UK media spend, or 22% of annual direct mail spend. Attention paid to statements and bills is in excess of that devoted to solus direct mail. And the major analyst organisations have recognised transpromo advertising and predict a rapid uptake in its advertising potential by marketers.

(1) Group 1 Software, Are we paying attention?, June 2007

Following two years at the London College of Printing studying for an HND in print management Yolanda started in her first role as a Sales Representative for SR Communications where she worked for four years, achieving the position of Sales Manager. She was headhunted by Mastermail for the role of Sales Director where she stayed for five years. Yolanda then started her own business City Financial Mailings (CFM) alongside her brother, Alastair Maclean, in 1989. In subsequent years CFM's growth was achieved through the formation of the complimentary data, print, mail and fulfilment business units City Laser and Global Solutions Management in addition to the acquisitions of Alphamail and Burnham International. In 1999 the CFM companies were sold to the Techmail Group who re-branded all the businesses under the Orchestra name. After resigning from the Techmail Group, Yolanda established Corporate Mailing Matters (UK) Ltd in November 2002. In January 2004 Orchestra Group offered the CFM group of businesses for sale to Corporate Mailing Matters (UK) Ltd. This transaction was completed in February 2004 and the businesses merged with the original founder, Yolanda Noble, as CEO. In April 2007, Corporate Mailing Matters merged with Direct Solutions International creating a major force in the direct communications sector. The dsicmm Group is the UK’s largest independently owned direct communications organisation; the merger capitalises on the strengths of both companies and provides a unique platform to extend the range and value of services offered to customers as well as to develop new opportunities in what is a growing global market. Company: dsicmm Ltd