Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, April 10, 1993 TAG: 9304100119
SECTION: BUSINESS PAGE: A6 EDITION: METRO
SOURCE: SANDRA BROWN KELLY STAFF WRITER
DATELINE: LENGTH: Long
PINPOINT DELIVERS ADS RIGHT ON TARGET
The companies go by names such as Pinpoint Target Marketing, RADS and Home Express. Each is a delivery system affiliated with major newspapers. And all of them were started to compete with the U.S. Postal Service.Now, as their business grows, the delivery services are finding themselves competing for advertising, sometimes directly with the newspaper companies that created them.
"We're sort of in competition with the newspaper," said Ed Scott, manager of Pinpoint, a division of the Roanoke Times & World-News.
Pinpoint in recent weeks hired its first full-time sales representative, to solicit advertising that would be placed in the plastic bags that the service uses to deliver magazines and other items.
However, Scott said, the business Pinpoint wants most is advertising that now goes through the mail.
Pinpoint, for example, recently delivered promotional materials for the Society for the Prevention of Cruelty to Animals and Goodwill Industries. It also distributed 10,000 copies of Boone & Co.'s real estate magazine, which in the past has been mailed to prospective customers.
Operations such as Pinpoint are part of what's called the alternative delivery industry. It dates from the early 1970s, when the federal Postal Board of Commissioners ruled that postage fees for second- and third-class mail could be changed periodically.
That means the greatest growth in alternative delivery systems comes when postal rates rise.
For many newspaper companies, the services were an outgrowth of attempts to publish and circulate publications that could reach all the households in their markets. In Roanoke, for example, the Roanoke Times & World-News already was delivering Express Line, a weekly entertainment tabloid.
As they delivered the so-called total-market speciality publications to households that were not subscribers of their daily papers, the publishers found they could deliver other advertising and publications at the same time.
When Pinpoint started in May 1991, it had nine routes in the Vinton area and delivered 1,500 copies of Express Line each week.
By last month, Pinpoint had grown to 206 routes covering the entire Roanoke metro area and was delivering 30,000 copies of Express Line each week, plus copies of three national catalogs and 23 magazines. The service employs 133 carriers, mostly homemakers and students, who earn from $20 to $140 per week depending on the size of their routes. An average route has 350 households.
Advertisers and magazine publishers pay Pinpoint a minimum of $80 per 1,000 pieces for delivery. The rate rises with the weight of the materials to be delivered.
"It's grown much faster than I expected," said Scott, who worked 25 years in the Roanoke Times & World-News circulation department before heading Pinpoint.
He directs a full-time staff of three and each week hires six to 20 part-time workers who stuff plastic bags with publications that are left on subscribers' doorknobs. Pinpoint is not far from outgrowing its offices in Roanoke's former Trailways bus station on Salem Avenue, Scott said.
Companies such as Pinpoint contract with national delivery networks for their magazine and catalog business. The largest two systems are Alternate Postal Delivery Inc. in Grand Rapids, Mich., and Publishers Express in Atlanta. The national networks act as brokers between the delivery systems and the magazine publishers and direct mailers.
Delivering magazines is the key to soliciting advertising, said Scott.
That's because a service delivering titles such as Field & Stream and Outdoor Life, for example, has an appeal to an advertiser who wants to reach local people with outdoor interests for less than the cost of buing space inside those magazines. The local advertiser would put its ads in the same plastic bag as the magazines.
Such "ride-along" advertising offers the greatest business potential for the alternate delivery systems, said Richard Neely, metro manager for the Times-Dispatch in Richmond.
Neely also oversees Richmond Alternative Delivery Systems, a division of Richmond Newspapers Inc., which publishes the Richmond Times-Dispatch.
Home Express, the service run by The (Norfolk) Virginian-Pilot and The Ledger-Star, had three magazine titles when it started three years ago. Now it has 33 titles and its 350 carriers delivering 800,000 pieces of material a month.
Last year, more than 50 million magazines were delivered nationwide by alternative delivery systems, still only a fraction of magazines delivered. There are no statistics on how many catalogs the systems carried, but it's probably a fraction of the 13 billion catalogs the Postal Service delivers yearly.
The delivery companies also tout their records of good customer service, saying complaints are few, especially when compared with the There have been confrontations between the alternative carriers and postal workers delivering the mail. In New York, a postal union boycotted a newspaper. post office. The industry's standard is no more than 1.1 complaint per 1,000 deliveries. Pinpoint has kept its complaint ratio to 0.4 percent, Scott said.
One of the main things the alternative systems have going for them is delivery time, Neely said.
"The Post Office cannot be that specific, not even on a first-class letter," he said.
But the Postal Service is not conceding business to the new competition. There have been confrontations between the newspapers' alternative carriers and postal workers delivering the mail. In New York, a postal union boycotted a newspaper over its delivery of second- and third-class mail.
The Postal Service also is trying to become more competitive, trimming rates for commercial customers that agree to presort or bar-code their mail.
And the future growth for operations such as Pinpoint depends on what the Postal Service does.
"The postal governors could decide that magazines should be reclassified and only allow them to be delivered by the post office," said Neely. By law, only the Postal Service can deliver first-class mail and only the Postal Service can use mailboxes for deliveries.