Glass Houses: New Replication Vistas
Posted Feb 1, 2004

Do you think it's the end of the line for physical media? Here's a staggering statistic: Last year, less than one percent (0.2%) of the $200+ billion invested in direct marketing was spent on optical media as the method of delivery. Which can be read two ways: lack of interest or room for growth. How can replicators command more marketing dollars? By looking beyond entertainment and pursuing niche markets for their services.

The International Recording Media Association (IRMA), in conjunction with Cambridge Associates, recently took on the task of proving there is a lot of growth potential in recorded media. Perhaps it's the job of the replicator to prove the point to potential customers. Or maybe replicators need to partner with marketing firms to push that potential. Replicators need to think more like freelance journalists writing about a "mature" market. I've been writing about the replication market for years, but that doesn't mean the well of potential stories has run dry. I just need to find new angles. So do replicators.

The IRMA/Cambridge study was presented at IRMA's Annual Management Summit in New York in December and outlined areas where discs can make the difference. Dick Kelly, president of Cambridge Associates, says there are several products well suited to CDs and DVDs, including those that require full demos and immediate links to the web. Also, if someone wants their product to stand out or needs to offer sensory images, optical media is the way to go. Discs, Kelly says, have "a high perceived value."

One of the more interesting statistics was that the best expected response rate for printed direct mail pieces is 3 percent. Adding discs to those mailings increased the response rate to 7 percent. That's not all. According to the study, people who obtain information from discs have 40-50 percent retention of the material, compared to a print retention of around 20 percent. Also, due to the perceived value of a disc, the format has a higher pass-along rate than does a catalog.

Perhaps best of all, discs are cheaper to produce and to mail compared to print catalogs. According to IRMA's study, the total cost of producing a CD-ROM is $1.16 per unit; that's opposed to $2.13 per unit for print media. Mailing a disc is about half the cost of mailing a brochure, depending on the weight of the printed piece. That means someone using CDs for marketing can save as much as 40 percent. While the DVD figure is not as dramatic, you can still save about 9 cents per unit—plus, you get the added prestige of a DVD.

One replicator showing initiative in this area is Denon, which is marketing its CoolDisc. It's basically an optical disc that is not metallized to the outer circumference, allowing for more decoration. Denon president Brian Wilson tells me that they've begun to increasingly market discs to non-traditional industries and niches. "We use selective direct mail, where we can display several combinations. For example, you can marry CoolDisc with graphics and print art that appears through from below. You put a CoolDisc on top of print art and it can morph into something different," he explains.

One factor that the study didn't take into consideration is that replicators are most definitely taking on shorter runs. Perhaps, as a complementary business, a replicator might consider doing disc duplication as a way of breaking into non-traditional markets.

So many applications exist that will continue to contribute to this growth. Plymouth, Minnesota-based Primera Technology Inc. offered a list of some of the vertical markets into which it sells its Bravo Disc Publisher. While many of them are duplicating their own discs, there could be some real potential here for replicators. Radio stations distribute content to syndicated shows and pitch new business on CD. Film studios publish DVDs for shorts and preview copies for investor distribution. Then there are independent filmmakers, educational institutions, advertising agencies, and photographers who place proofs on a disc for viewing. Professional replicators who are accustomed to offering customer service to their clients are in a much better position than a local candy company may be to put together its own marketing program. Imagination is your only limitation.

A La Media Inc.'s Alexandra Gordon is the inventor behind Avecmedia, Inc.'s portfolio of patented disc packaging, including the CD Drink Lid. While Avecmedia is actively licensing its proprietary CD packaging designs, Gordon works independently as a consultant to brands, agencies, multimedia developers, and others interested in such disc distribution. She says that another idea that hasn't begun to show its potential is that brands can be media networks. When a disc is delivered directly to consumers by riding on the products they buy, the brand "owns" the network.

"Brands can deliver high-bandwidth digital media directly onpack. The day will come when a Taster's Choice soap opera will be carried by Taster's Choice coffee, just like Procter and Gamble invented the soap opera in order to connect with its consumers via television," Gordon says. "To work, you have to offer quality programming that will draw audiences, but the model is a lot like commercial television that way." In the future, she expects the lion's share of disc media will be given away for free. But the amount of discs being produced will not go down.

There are opportunities both large and small; you just need to look beyond the old standbys. While some of IRMA's recommendations—such as "concentrate on marketing to industries that are successful"— are obvious, the study is still beneficial for any replicator who wants to grow its business. It's available to all IRMA members free, or it may be purchased for $995 at www.recordingmedia.org.