Belts are being tightened and marketing budgets are feeling the pinch. But it's not all bad news, at least not for the door-to-door sector, which is still growing, thanks to new users and marketing budgets that have been diverted from above-the-line.
Door-to-door is flourishing in these lean times because it is cost-effective, accountable and above all, responsive. Indeed, the accountability of door-to-door is especially appealing at a time when every marketing pound is being scrutinised.
Retailers, in particular, have put door drops at the heart of their marketing strategies. Safeway has been using door-to-door for the past three years, as part of its commitment to local marketing, delivering its promotional leaflets to nearly nine million households every week and supporting more than 450 store catchments.
"Three years ago, the national advertising budget was redirected to a local level with the majority of spend focused on door-to-door distribution of our weekly deals flyer," said Carl Nield, head of marketing services at Safeway.
The results are astonishing. Since the start of the door-to-door programme, Safeway has attracted more than one million new customers to its stores.
Much of this leaflet delivery is being tackled by local stores, with the rest of the distribution being handled by Circular Distributors.
"Our flyers are a shop window for our weekly deals programme, aimed to attract new shoppers to our stores" says Nield. "The content varies to reflect any change in the local competitive situation and any specific local customer requirements. "Door-to-door provides a good return on investment, providing it is used appropriately," he adds. "For us that means communicating locally targeted product and price. I also believe that its success depends greatly on the planning and quality of the distribution operation."
What makes door drops so effective is that they are intrusive, says Nick Wells, managing director, Circular Distributors. "Door-to-door has more impact because it cannot be ignored. Even if you are not interested, you have got to pick it up before you put it in the bin."
In fact, research by BMRB Omnibus reveals that 79% of people keep, pass on, read or glance at door drops. Moreover, 48% of consumers respond to door drops, compared with 47% that respond to direct mail. And, it seems that consumers cannot get enough of the offers and promotions that retailers are popping through their letterboxes.
"The effect on sales when a retailer does a door-to-door campaign is immediate," says Wells. "If a DIY store, for example, is doing a leaflet that features a special promotion on the cover, then sales of that product will soar."
Response levels to retail door drops are high, confirms Steve Thompson, director of Stepcheck, which checks coverage of door-to-door campaigns and measures recall and response levels. "The highest recalled leaflets are the heavily discounted supermarket leaflets - sometimes more than 80% of recipients remember receiving them," he says. "Large Christmas catalogues achieve similar scores and the big DIY catalogues are next, typically achieving recall levels of 65% to 70%. FMCG flyers are most often in the 60% to 70% band while telecoms and financials tend to get 45% to 55 % recall."
"Our reports focus on delivery levels," explains Thompson. "We measure recall in blocks of 50 households and list every street we have visited where we believe delivery did not take place." When it comes to delivery levels, the industry average is 82% of items delivered on target and on time, reveals Thompson. But that level is higher among regular users.
"Several more experienced users of door-to-door sign up for year-long contracts linking the price paid to distributors with their performance," says Thompson. "For 2002, these large users averaged 90% delivery on target and on time."
But delivery levels are no longer the biggest concern facing users of door-to-door, according to Thompson. "Over the past five years we've seen a marked decrease in average recall levels of leaflets largely because of the increasing volumes being ploughed into door-to-door," he says.
Stepcheck has found that there are many variables that affect recall levels, from item size and pagination to advertiser category."There is a linear relationship between pagination and recall between 16 and 64 pages," says Thompson.
In other words, when it comes to catalogues, it's a case of the bigger the better. Also effective are replica pack samples, which can achieve recall levels well in excess of 90% among recipients with trial rates as high as 50%.
"During a recent beverage sample validation, we asked householders what they had done with the sample," says Thompson. "Less than 2% had thrown it away within two weeks of the distribution. Those that hadn't already tried it had given it to somebody that would, or were waiting to try it."
Door-to-door consultancy The Front Door is doing a similar job for the industry. "We find out how many items hit the door mat and how many people have responded," says managing director, Colin Keywood. "One FMCG campaign, which expected to boost sales by about 5%, succeeded in sparking a sales rise of 16%. And that campaign was backed by just two days of TV support."
Door-to-door has one of the highest returns on investment of any media, says Keywood, but acceptable response rates differ from one sector to another. "A financial services marketer would be happy with response rates of 0.1% while a retailer would expect rates of 2% or 3%," he says.
The Leaflet Company works with several of the large grocery stores and managing director, Mark Young, says: "Most of our retailers run some sort of monitoring to evaluate return on investment. Retail clients are often getting £6 or £7 for every pound spent."
So how do door-to-door advertisers measure response? "It depends on the sector," says Young. "If it's a financial piece, then there is a mechanism such as a phone number or reply paid form that can be tracked. Also, consumers have begun to log on to web sites as a means of response, which allows advertisers to calculate response levels.
Money-off coupons carry codes that provide accurate redemption figures.
Retailers often measure uplift in sales, which reveals the power of door-to-door if all other marketing is constant. Sampling always gives you the highest recall. If you put a sample into someone's hands, it creates trial whether it is a bar of soap, or a chocolate bar.
"There is a perception that door-to-door does not appeal to more upmarket audiences but Young disputes this. "Lexus has used door-to-door, Waitrose is using door-to-door and we have done a job for Marriott Hotels," he says.
Indeed, Waitrose is using door-to-door marketing to launch its Ocado home delivery service in London. "Ocado uses state-of-the-art logistics and guarantees high levels of service," says Adam Clark, director of agency, Brand Connection. Circular Distributors is providing Ocado with the door-to-door element of its marketing campaign, which is supported by outdoor advertising and direct mail.
"The service has been rolled out geographically, in blocks of 100,000 houses," explains Clark. "Typically we start with heavy outdoor advertising and then follow up with DM and door-to-door. For the door-to-door activity, we deselect about 30% of households in each area on the basis that they don't match the profile of a Waitrose customer.
"We know door-to-door works because you just don't get such a good response where it isn't used," adds Clark. "It is quite targeted now, down to postcode level, and it works because you can communicate large amounts of information," says Clark.
Other grocery multiples are discovering the power of door-to-door. A promotion by Sainsbury's in June and July 2002 saw it steal share from Safeway and Tesco. Sainsbury's achieved this by running a massive competition, featuring more than £3m worth of prizes, including 25 Peugeot 307's and 50 prizes of a year's free shopping. The objective was to increase sales by driving footfall from both new and lapsed customers and also to increase the average spend.
"We used door-to-door to communicate the proposition to 10 million homes," explains Adrian Thomas, board director of agency, Dynamo. "It was very much targeted at competitors' customers and floating shoppers. The marketing support also included a national radio campaign, direct mail and press ads.
"Sales are up and this promotion had an effect on competitor stores. It was the first time for a long time that Sainsbury's stole some share from Tesco and Safeway," reports Thomas.
The promotion cost £2.5m but achieved a 1% rise in incremental sales, which equates to £15m in incremental sales over six weeks.
Sainsbury's national advertising senior brand manager, Julian Sonego, is delighted with the results. "The strategy generated significant consumer excitement as well as driving incremental sales," he says.
The growth is being experienced by all the door-drop distributors, from independent delivery teams to free newspapers and Royal Mail. "Big brands are giving greater consideration than ever to the role that door-to-door can play for them," says David Higham, publishing and unaddressed director at Royal Mail. "During a year when marketing budgets have been squeezed and marketers have been trying to get as much value as they can, we have seen door-to-door begin to come into its own."
Royal Mail has established a strategic partnership with Thomson Intermedia, setting up a test panel of 6000 individuals in order to analyse door-to-door response. It allows Royal Mail to demonstrate that well-executed campaigns deliver measurable response rates and a return on investment that compares favourably with other elements of the marketing mix.
"This has put door-to-door onto a more scientific and quantifiable footing by providing examples of the most effective campaigns and the relationship between that success and the targeting of recipient households using accurate demographic and socio-economic data," says Higham. The Royal Mail also boasts USPs in terms of door-drop delivery, which, claims Higham, produces better response rates.
"The fact that we deliver only three items a week to each household protects brand integrity and achieves stand-out," says Higham. "The fact that it comes with the morning post, when consumers are expecting mail, means they are more responsive."
Of course, that morning mail could contain any number of direct mailshots all competing for the consumer's attention. So is the rise in door-to-door threatening the direct mail sector? The consensus is that both have their own strengths and are often used to complement each other.
But where door-to-door was once perceived as something of an underdog, the sector is now flexing its muscles. Circular Distributors' Wells reports that one insurance client has just moved from direct mail to door-to-door and is delivering 100 million door drops a year.
"Door-to-door delivers a very effective cost per response," says Wells. "And for direct response clients such as charities and financial companies, the one thing they are interested in is cost per response."
The difference in cost is crucial, agrees Mark Young. "Direct mail typically costs £300 per thousand letters while door-to-door costs a tenth of that." The fact that the door-to-door industry is still growing as marketers reduce their spending is testament to the power of this medium. And taking your marketing message to the homes of your target market ensures you are getting your point across.
As Keith Bradley, managing director of National Letterbox Marketing, points out. "There's only one letterbox compared with the vast number of publications, TV channels and radio stations. You take the message to the letterbox and the job is done."
IKEA'S DOOR-DROP SHOP WINDOW
As an out-of-town retailer with stores that look like giant warehouses, it can be hard to convey what you have to offer inside.
For IKEA, its catalogue serves as a shop window, conveying the breadth and depth of its product range and enticing customers to visit. Getting that catalogue into the hands of 9.7 million people is the job of Circular Distributors.
"Door-to-door distribution takes place between mid-August and mid-September," explains Kate Nicholson, IKEA's catalogue distribution manager. "This is the most important part of our trading year because it's the beginning of our financial year and the run-up to Christmas."
Each of IKEA's 11 stores pays for its own local distribution and so store catchments are carefully worked out.
"Our sales data is postcoded and analysed by Acorn. We also analyse drive times to stores. But some stores have a very wide catchment area. We are looking at specific postcodes that generate the highest sales," she says.
"The catalogue is a fundamental part of Ikea's strategy," adds Nicholson.
"It shows the width and the depth of the range. Our whole ethos is that good design should be affordable and available to everyone, so we have to get the catalogue in front of as many people as possible."
The response to the catalogue can be overwhelming. "The catalogue is the store's principal traffic driver, but you can also see the impact of the catalogue on the sales of individual items.
We always highlight some products in the catalogue and we have to stock great volumes of these in anticipation of the catalogue coming out because it causes massive sales."
SIZE OF THE UK DOOR-TO-DOOR MARKET
Year Items Distribution Market size Yr on yr increase
(mil) revenue (inc print & in revenue/
(pounds m) production) market size
1997 6500 168.4 505.2 15%
1998 7000 191.9 575.7 14%
1999 7950 218 654.1 14%
2000 8470 232.2 696.6 6%
2001 9250 253.6 760.8 9%
Source: AA surveys for 1997/1998, DMA Survey 1999/2000/2001
DOOR-TO-DOOR IN EUROPE
Country Volume items No. of Average no.
per year households of items
billion million per week
Germany 35.4 35.7 19
France 20.5 21.1 16
Netherlands 9.5 6.6 28
UK 9.25 24.8 7
Belgium 5.1 4.6 21
Austria 4 3.1 25
Source: Circular Distributors