In this podcast episode, BIA's Nicole Ovadia interviews Jay Loeffler, the Chief Revenue Officer of Valpak, to explore the significance and adaptability of direct mail in a world dominated by digital channels.
They discuss attribution, political crowd-out, the complementary nature of direct mail to TV and radio advertising, the economic reasonings behind advertiser decisions, and the impact of continuously changing consumer behaviors, which includes how Gen Z is rediscovering the allure of physical mail.
As Loeffler explains, direct mail bridges the gap from browsing to conversion by delivering tailored content and deals that resonate with consumers across various demographics.
Listen now and download (here) a recent survey of local businesses and their plans and priorities for advertising in 2024.
In this podcast episode, BIA's Nicole Ovadia interviews Jay Loeffler, the Chief Revenue Officer of Valpak, to explore the significance and adaptability of direct mail in a world dominated by digital channels.
They discuss attribution, political crowd-out, the complementary nature of direct mail to TV and radio advertising, the economic reasonings behind advertiser decisions, and the impact of continuously changing consumer behaviors, which includes how Gen Z is rediscovering the allure of physical mail.
As Loeffler explains, direct mail bridges the gap from browsing to conversion by delivering tailored content and deals that resonate with consumers across various demographics.
Listen now and download (here) a recent survey of local businesses and their plans and priorities for advertising in 2024.
Hello and welcome to BIA Advisory Services' Leading Local Insights Podcast. My name is Nicole Ovadia and I'm the VP of forecasting and analysis here at BIA. I am thrilled to host the first podcast of the year and to discuss a key media in local Direct Mail. Direct Mail always leads my forecast in terms of ad revenue, yet it's a media we don't talk very much about, so today we're going to change that. I am elated to have Jay Loeffler with me today.
Nicole Ovadia:Jay is the Chief Revenue Officer of Valpak and has been with the company for about 17 years, which makes him one of the most highly respected experts on Direct Mail. We're going to have plenty of time today to go into Jay's brain and talk all about Direct Mail. So we're going to talk about attribution. We're going to talk about advertising costs, consumer usage and how Valpak is helping to build towards that elusive multi-touch attribution model that we've all been clamoring for. Plus, we'll talk about Direct Mail and how it can be complementary for TV and radio advertising. So, Jay, thank you so much for being here today and please say hello to the audience.
Jay Loeffler, Chief Revenue Officer, Valpak:Hello, good afternoon. Thank you for having me, really excited to be here.
Nicole Ovadia:Fantastic, let's start from the beginning. I want to start on a macro view and then we'll work our way down to the micro. So let me ask you one thing. Let me ask you about your thoughts for 2024, because we're still in January and so I won't say happy new year, but it's early in the year. So, in general, what are you thinking about advertising in 2024? Because when I talk to clients, I keep hearing that cost arising ROI isn't high enough for traditional media, especially compared to digital. So, yeah, what are you thinking for 2024?
Jay Loeffler, Chief Revenue Officer, Valpak:Yeah, it's a great question and we face this quite a bit as well, and what I like to say is you know, Valpak has its finger on the pulse of really the US economy. We're in 44 states, 40 plus million homes. We have over 30,000 advertiser relationships and we're constantly talking to them and surveying them to see what's important, where they see challenges, but also where they see opportunities. So rising costs are a really big concern for local business owners, not just in cost of goods, but also in cost of labor, looking at finding the right labor to be able to step up and fulfill demand. So we do a survey every single year, which we're going to share at the end of this podcast. But that is one of the biggest concerns going into this year.
Jay Loeffler, Chief Revenue Officer, Valpak:And when it comes to advertising, it's always an obstacle, regardless of channel, as to how do you optimize the right media to cost. So right now, there's no more stable or reliable media than direct mail, and it's really experiencing a resurgence. There's kind of a confluence of events that I like to talk about, where you have COVID changed consumer behavior and more people are searching online, which is great for digital advertising, but they're also not converting at a as high of a rate because they're doing more browsing. So what that's led to is driving up costs per click but driving down conversion. So a recent Wordstream benchmark survey shared that across all different verticals you have cost rising in SEM but conversion going down, which is leading to kind of an inequity in terms of the performance of the media. So not saying that it's not strong it is an extremely strong media. But there are some economic challenges that are changing due to consumer behaviors. There's also going to be a high contested political advertising season, which can drive up costs in media such as TV and radio, and then just the economy as a whole.
Jay Loeffler, Chief Revenue Officer, Valpak:We have inflation that's been taking hold for months. We have really factors leading to families needing savings more than ever to maintain and sustain their lifestyle, and Valpak has been doing that for 50 plus years. So all of those things together are resurgence. And direct mail, other media is having cost rise due to some circumstances, and then just the need for savings is really putting Valpak in the perfect center of the concentric circles from this confluence of factors. Now I know it's really important too about the performance for advertisers. So what I think is the most important thing is not for any advertiser to get too enamored with one media, but it's to find each channel not mutually exclusive but together. That drives top of funnel engagement to zero moment of truth conversion, and it's about finding out all of the ways to make them work together to optimize media campaigns. And right now, if you combine direct mail with digital, according to the USPS data that consumers spend up to 25% more, so there's actually data substantiating the need for direct mail to partner with digital strategies to drive activity.
Nicole Ovadia:That's so interesting and the most interesting you said in your answer I heard that little tease at the beginning that you've been surveying consumers and that you've got a report to share with us later. So I will come back to that later because if you make a promise to our listeners, I'm gonna force you to deliver on it. So very interesting insights about 2024. I agree with a lot of what you're saying on a macro scale, everything that I'm looking at in terms of trending the economy and inflation and everything related to that. I do wanna dive right into the elephant in the room, because when I talk to buyers about direct mail, sometimes they brush me off. They just tell me, oh, it's too expensive, it's too old school.
Nicole Ovadia:And then when I talk to Gen Z I have nephews that are Gen Z they tell me how much they love direct mail and I am always shocked by. I'm like why? What are you talking about? It's direct mail. And they're like well, it's a novelty, they don't get mail addressed to them. They don't get what I call I'm a Gen Xer snail mail addressed to them with their name on it. And so they love this. And then they dive into the content and of course it backs up what drew them in to begin with, but can you talk a little bit about what you're seeing in terms of trending demographics of your users, because that's my experience. But does the data back that up? What's going on with direct mail users?
Jay Loeffler, Chief Revenue Officer, Valpak:Yeah, it's a great question and we do see quite a bit of activity amongst all kind of the generational divides. But the Zoomers in particular, they love direct mail. Really interesting. I was reading some statistics that you know vinyl record sales were up 21% in the first half of 2023. Instant camera sales, like Polaroid, have an actual keger projected at 7.9% over the next five years.
Jay Loeffler, Chief Revenue Officer, Valpak:So really what it shows me is anytime something gets too polarizing, like the shift to digital everything, it opened up opportunities for novel old school things to become chic again.
Jay Loeffler, Chief Revenue Officer, Valpak:And I do think that Gen Z is starting to see that they like the tactile feel of direct mail. They've been conditioned through Amazon to look in the mailbox when things come, so it's almost like Christmas in the mailbox when they're ordering and having things delivered every day. So I think the mailbox is starting to mean more. And then you have kind of the millennials, who are now having families for the first time. They're buying homes, their responsibilities are changing, so saving money is becoming a fabric of their life. And then still, the baby boomer generation were frugal by nature. They were savers. You know they went through a lot in their lives, different economic times and periods, so they are still heavy users but we're not really seeing one generational kind of cohort driving the performance of direct mail. We're seeing emergence in the Zoomers and we're seeing kind of real stability with millennials and boomers. So really across all generations we're seeing really good activity.
Nicole Ovadia:I agree, and one of the things that I always think to myself is I should have kept my wardrobe from 20 years ago because everything is coming back again. But I love what you're saying about like the mailbox is a destination again and, yeah, that is something that is coming back into the pattern of my life and those around us. So that's very interesting and along those lines, I wanna ask more about Valpak strengths. So, okay, they're in that mailbox that people are going to. On what verticals does direct mail work the best? Like what markets do you do well in compared to others? Like what makes it a good Valpak market? What makes it? You know what demographics? If you could talk a little bit about the strength and where and when it works the best.
Jay Loeffler, Chief Revenue Officer, Valpak:Yeah, sure, and so when we talk about verticals, I think one thing that's really unique to Valpak in the space that we're in is that I think, valpak, you receive it in the mail. You think of it as a shared mail envelope, but Valpak really is a data company that distributes direct mail. We have over 500 million data points on over 130 million homes, so that allows us to message precisely to households, based on a myriad of targeting criteria, in a fully data compliant way, and we like to say it's not your parents, Valpak anymore. But what that really does is it allows really all brands and verticals to optimize their offers, target different offers to the right cohorts, not kind of overextend coupon liability and just give a blanket offer where maybe they're giving more than they need to. So one of the strengths is the audience that we've built and then owning the data behind that gives us the ability to help everyone from you know, debt relief companies, through retailers, through consumer package goods, target effectively and eliminate waste. We also have decades worth of performance data categorically on what offers work best. So in some categories it's percent off versus dollars off, because consumers don't necessarily like to do math on high ticket items. So having that data to be able to make campaigns accelerate from start to great is really one of the things we pride ourselves on here at Valpak.
Jay Loeffler, Chief Revenue Officer, Valpak:And then our local market expertise. We were built as a franchise environment over 130 franchises across the country so we have local relationships in every market that we're in some of them 30, 40 plus years with advertisers. So we are part of the community. We go to the local baseball games we sponsor you know all of the things that are important to the community. So it's that level of relationship that allows our advertisers to be transparent with us and us to be able to react to what they need to continue to be successful.
Jay Loeffler, Chief Revenue Officer, Valpak:So the other part of it is when we look at verticals, we really work across a whole entire spectrum. Our consumers constantly say they want to see things like dining, QSR, the low ticket, high frequency type businesses that they buy every single week. But we also mail to about 90% homeowners within our 40 million. So Home and Garden is a huge category for us to hire ticket, low frequency purchases, because we're mailing the people that need a new roof. They might need a new bathtub, a remodel of their kitchen, so those offers do really well there. So the unique part about Valpak is mixing in local content with utility content with aspirational content, so there's really something in there for everyone.
Nicole Ovadia:So interesting and you talked at the beginning about data and the insights that you have about each market, about each vertical. I think that is so unique given the history that Valpak has, of course, in every one of these markets. And just helping with the content of the ads, but bringing up that data that you have on your consumers, on campaigns that have worked, everything, what that triggered in my mind is attribution. So the minute you say you've got data, I'm like attribution. So that is always a concern for advertisers and so often now I mean attribution if there is any, it gets assigned to the digital ad that was clicked on just before the purchase. But we all know that there's a lot more that goes into the purchase journey and all of the advertisements that contributed to that sale, whether it's television, billboard, radio, Valpak, whatever. So can you talk a little bit about what Valpak is doing in order to better help with attribution for advertisers? Like, how are you connecting the dots from the mailer all the way through that purchase journey to the final sale?
Jay Loeffler, Chief Revenue Officer, Valpak:Yeah, it's a really great question. I don't think anyone has perfected the multi-touchpoint attribution model yet, but we have all the different tools. So we have call tracking, where we can listen to incoming calls and help track that. We can use Google Analytics to see did we drive increase in surge when direct mail hit the home? We have coupon activity, meaning redemptions, QR code scans, all that good stuff. So all of those tools are there. But kind of a story I'd like to share is I was meeting with a garage door company and one of the things I said is people are just not in the market to fix their garage door every day. So when they look in their Valpak and they see that garage door company and they repetitively see that it stays top of mind, but what ends up really happening as a consumer is, the only time you really need to call a garage door company is when it's seven o'clock in the morning. You're sitting in your garage, the door doesn't open and you're late for work.
Jay Loeffler, Chief Revenue Officer, Valpak:It's the worst morning of your life and you're not going to go rummaging your house through. Where is that Valpak coupon? You're in your car, you're likely going to search garage door repair and then the one that you recognize that you saw in Valpak is the one you click on. So, while Google will get the attribution, valpak started the journey and we help our clients measure that by doing things like incremental lift studies and metric measurement post-analytically. So we essentially could do a mail group and a control group. We own all of the data.
Jay Loeffler, Chief Revenue Officer, Valpak:So, post campaign, we could match how many orders came in from the group that Valpak mailed versus the group that didn't mail. And then we see incrementally did Valpak influence more sales than it didn't by not having it in the mailbox and by being able to provide that level of data? It might not be directly Valpak led to this attribution, but it's Valpak was part of the mix that led people to choose your brand over somebody else's and that lift is what's helping drive the multi-attribution model of what works best to continue shifting market share and driving response with the culmination of all of the media channels together. So that's one thing we really focus on is using data to show Valpak's component as part of a media mix and how that drives lift.
Nicole Ovadia:I mean funny. You should say that because many of the regular listeners of this podcast come from or represent television and radio brains, and so I'm sure, if I were a seller, if I were sales manager or or an executive of one of these companies, and listening to everything you're saying, and so In what ways can Val pack be complimentary to TV and radio advertising? You've talked about how important it is to have that mix, but Can you talk, you know, from from a seller's perspective, if you will like, how can they use Val pak to add more value for the clients that they already have?
Jay Loeffler, Chief Revenue Officer, Valpak:Yeah, it's such a great question. And first, we love TV and radio. We actually were part of Cox enterprises for a really long time and worked quite frequently with our television and radio brothers and sisters. Recently, the puppy bowl in January was featured on the outside of our blue envelope and we just wrapped one of our largest instant wind cash giveaways with I heart radio. So we partner all the time and it's really about our audience being able to help these brands promote, to drive viewership, listenership, and it comes with our ability to not only version based on different day parts and personalized messaging at the household level.
Jay Loeffler, Chief Revenue Officer, Valpak:So how could you put your affiliates in every market but have a national campaign?
Jay Loeffler, Chief Revenue Officer, Valpak:We help television advertisers do that quite frequently and have multiple different examples of it. But we also have a hundred percent viewability in the mailbox. If you tie in with the outside of Val pak's , which many of our TV and radio partners do, led by Chris Bellata and our promotions team, then anyone that opens their mailbox, which is pretty much everyone in the United States, will see your ad and you have the chance to influence them with some type of bespoke promotion or tie to make you stand out and drive what's important to television, radio and streaming partners, so we support them. Our data really helps us drive who's the right audience to reach for them, based on If it's country music versus hip hop music, and then we also conversion down to the market level so that you could put different affiliates if needed. So our data, tied with our ability to version, and the fact that we are so relevant in the mailbox, really helps support our TV and radio and streaming partners in the industry.
Nicole Ovadia:Very cool, and when we, when I first started this conversation, we started on the macro and you brought up politics, which is interesting because I mean it is what is on the minds of many we brought up political and you brought up the economy. So so actually, let's start with the economy. But spoiler alert, I'm going to come back to political. So let's.
Nicole Ovadia:As you mentioned and I agree with you, you know all this data is out there that inflation is slowing. It does remain high. In the job market, it's starting to show some signs of getting tighter, but still doing pretty well. So when I'm sitting at my desk and doing my modeling and forecasting, I'm seeing that people are looking to save money on the day to day items like groceries and things like that, so that they can splurge on the larger ticket experiences, such as travel, and you alluded to that, too that they're not going to be able to do that. So I think you alluded to that too that they go to their Valpak for the for the day to day things as well. So, in an economic landscape like we're in right now, what is Valpaks value there?
Jay Loeffler, Chief Revenue Officer, Valpak:Again kind of having a real strong diversity of content across the board. So working with big partners like Wendy's that are that's going live here with us this month, you know, working with grocery companies like Walmart and Sam's Club, we're able to put in kind of that utility that people need every day to maintain their life. So because we're a savings vehicle with savings equity, people look to us for that reason so they are saving money there. But to your point, we are seeing companies like Princess Cruise Lines who is increasing advertising spend with us this year because they see the same trend that people are saving on the utility to be able to splurge on the excitement that they really were pent up for during COVID. So the splurge items, as as we put it here, are really starting to take off. And I think again it's what makes Valpak extraordinarily unique is that we don't just focus on national brands, we don't just focus on local brands, we don't just focus on any one particular vertical. We really make a concerted effort through all of our teams, from local to national to promotions, to put the right partners on that tie into our readership surveys of what consumers say they want to see inside Valpak. We do a great job as an entire company of procuring not only those advertisers but the right offers that will make consumers happy.
Jay Loeffler, Chief Revenue Officer, Valpak:And then working with businesses. In our Valpak surveys you know we see that advertisers still want to spend. Six in 10 local businesses plan to increase their advertising spend this year 34%. I expect to maintain a similar level. So when you really think about that, only 6% are saying they may pull back. So I think when you have kind of the environment where the economy didn't really go, as I guess, deep and dark, as some people anticipated it, what is the beginning of last year? We are still having some economic challenges, but advertisers seeing the opportunity to shift market share right now and really kind of build that relationship with consumers when they need it most, which is here is some money for you. Working with a partner like Valpak that has the equity in the space to help you save money so that you can live your life. Whether it's through saving on everyday items or spending on the splurge items, Valpak really is a destination for all that content.
Nicole Ovadia:I think that's so interesting that you know, as the economy, I mean from my perspective it's, you know it's bifurcating. You know I mean they're spending and they're saving, but from Valpak's perspective, no, we encourage all like Valpak encourages more spending and more saving. So it's, it's I'm not going to say recession proof, it's economy proof from that perspective, because it kind of doesn't matter what direction the world is going, Valpak can reinforce that messaging. Very interesting.
Jay Loeffler, Chief Revenue Officer, Valpak:By the way, I have to deal with that from you. Economy proof is great because we always say we're not recession proof, but we definitely are protected during downturns because we help support consumers and businesses when they need it most. But economy proof, I like that. I might have to steal that from you Trademark pending or whatever, I'm sure.
Nicole Ovadia:Yeah, well, we'll get that copyrighted. Anyway, switching over to political, as I, as I promised I would. So this is an interesting one to talk to you about, because advertisers on TV, radio, outdoor, digital, like everywhere except Valpak, are concerned that you know they're everything coming up about three different things, I would say. Coming up about the election. So, first of all, political crowd out is going to bump their ads and mess up their creative schedules. Second, the high rates because of the high demand in certain markets are going to just mess with the pricing of everything. And lastly, political content in ads next to their ads it could infer affiliation. So I think that a lot of advertisers out there would probably prefer to stay away from a lot of this election noise in 2024 if possible. So tell me, Valpak does not accept any political advertising at all. I know that. So can you talk a little bit more about when you guys made this decision, why you made this decision, and just talk about it being a safe space for advertising in 2024?
Jay Loeffler, Chief Revenue Officer, Valpak:Yeah. So great question, and I wouldn't say I wouldn't go as far to say is we don't accept political advertising at all as a company. We do work with political ads and ballot issues, but typically outside of our Valpak blue envelope, more in our targeted one to one direct mail, gotcha.
Nicole Ovadia:Thank you for that clarification?
Jay Loeffler, Chief Revenue Officer, Valpak:Yeah, no problem. And for the blue envelope, we typically steer away from it just because you know, let's face it politics has become polarized and you know we have a responsibility to our advertising partners to ensure the best environment to interact with consumers, to drive success and in a shared mail environment political ads could cause unneeded consternation just because an ad can end up next to a business, that they may have different political views or affiliation. So for us we just don't want to create that environment. So there are some causes or ballot issues that maybe aren't as polarizing that we would consider, but when it comes to politics in general, we typically steer away from it. We do realize it might impact short term revenue gain for us, but we feel like we have a responsibility to our partners to create long term value in the best environment for our consumers and advertisers and that's the decision we feel very comfortable making.
Nicole Ovadia:That makes sense. Okay, so we've talked about a lot of different topics here and I want to try and pull some themes together. So, as I'm taking notes on our conversation, three major things I'm hearing from you are attribution we talked about everything that you're doing in terms of data and the attribution and the ways in which you can be complementary to other media. We talked about decluttering and we talked a lot about savings. Scales are always in which Valpak is working to help address client concerns, but I know that you're the head of revenue and I know you've always got things bubbling in that you're working on. So can you tell me what are you most excited about personally in 2024? What are you working on? And, Jay, yeah, give us a little tease as to what gets you out of bed every morning in 2024.
Jay Loeffler, Chief Revenue Officer, Valpak:Great question. I appreciate you asking. Yeah, recently we were acquired by a model, martin, which is really exciting for us. They own Clipper Magazine as well, so one of the things that gets me really excited is when you put Clipper Magazine and Valpak together, we really are leading from the front in terms of shared mail, and that puts us in over 61 million homes. So when you think about the scale of that, we're actually larger than traditional cable is right now. We just met with a partner in Los Angeles this week that said, yeah, with that reach, you're actually one of the biggest channels of reach that's out there, with the exception of, maybe, the NFL. And that's really important because what that does is it gives us the ability to take all of the data, all of the reach, and continue to build out circumstances where our advertising partners can get the most effective use of their advertising dollars, now in a magazine format, in a shared mail format.
Jay Loeffler, Chief Revenue Officer, Valpak:And then, as we think about what could potentially be, the desire to connect the mailbox to the mobile phone and create a digital extension of everything that we do really excites me every day, because you always want to be where consumers want to be. The mailbox is extremely relevant. The phone has become a staple of everyone's life, so when you can connect the two together, you create really an unstoppable force to help connect advertisers and consumers. Another thing that we're really excited about is Valpak made a huge investment last year to bring all of our postcard business in house, so what that's going to do is help us reduce deadlines that let our customers act more quickly. We're trying to use that to reduce costs as well, so we can bring more effective costs to the marketplace. So that's a whole new area of business for Valpak to use our data not only to target in our blue envelope but to target outside of that as well.
Jay Loeffler, Chief Revenue Officer, Valpak:And then, finally, our promotions really excites me. Chris Bellad I mentioned him before does a really great job of working with everyone, from Legoland to Warner Brothers, to Discovery Plus, to HGTV, and what we try and do all the time is work out the best way to feature them on our envelope, create a very bespoke type engagement, whether it's a cash giveaway, a free ticket to a theme park, putting gift cards in the envelope so that people could take them and go shop. So how do we create even more fantastic engagements using Valpak and now Clipper as well, to use that scale to drive really exciting promotions that keep consumers coming back advertise with getting great response and making sure that we're truly connecting to our brand promise, which is driving neighborhood and local values and making sure consumers are consistently saving money. So a lot of really exciting things on the horizon as we continue to build out our data stack, our promotions and the integration of Clipper and Valpak into really the world's largest shared mailer.
Nicole Ovadia:Amazing and I cannot wait to have you and Chris on again in a couple of months just to talk about the insights from all of these amazing endeavors and everything that you're working on in 2024. But before I let you go, this time I did not forget and I don't think our listeners did either. You teased a little bit about a survey, a consumer survey, that you've recently finished I believe it was a survey of local business owners, and that you've got some interesting insights talking about what they're thinking about and what they're planning for 2024. So can you share maybe one insight or something that might have surprised you from this report and, most importantly, can you tell us where to get it?
Jay Loeffler, Chief Revenue Officer, Valpak:Sure no problem, so made it super easy. It's valpak. com/bia and if you go there you can download the full report no charge. I really think nothing really surprised me. I think the thing I was most encouraged about was the level of understanding, where advertisers are not getting scared, because in the past, when economic downturns were forecasted, you would typically have advertisers immediately pull back on spend and say this is where I'm going to save first.
Jay Loeffler, Chief Revenue Officer, Valpak:I think, going through a couple of different economic challenges, from the housing crisis to COVID to this Unfortunately, the frequency but I think the conditioning of this is an opportunity where, if I could increase my spend during this period of time and my competitor pulls back, I have the chance to connect and provide meaningful value for consumers when they need it most. So this is a shared shift opportunity for me, not a time for me to be pulling back, and it's really the first time in our survey that I've seen the statistics proving out that trend, that advertisers are understanding strategically the value of continuing to spend even if the economy is looking a little shaky, and I think it's going to be really good for the ones that do in the long term because it really is providing value for the consumers when they need it most.
Nicole Ovadia:So interesting and thank you so much for making that as easy as possible. Valpak. com/bia even I can handle that. And, Jay, thank you so much for being here today and for sharing your thoughts and insights. This has been very educational and eye-opening for me. I'm just blown away by the trustworthiness of Valpak for both advertisers and consumers and, as I mentioned, I look forward to following your progress this year and into the future, and I do sincerely hope that you'll come back and speak with us again very soon about all these exciting tools being built and the synergies between direct mail and all the other media and for everyone out there listening. Thank you, thank you. Thank you for joining us as well. Don't forget to head over to Valpak. com/ BIA to get your copy of the 2024 Consumer Survey ebook and if you have any questions, please don't hesitate to reach out to us at podcast@bia. com. We look forward to bringing you more insightful conversations on local media throughout the year ahead and until then, have a fantastic day.