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Companies Make Room For Advertising On Bills

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By CHRISTOPHER LAWTON The Wall Street Journal

Published: October 22, 2007

Companies such as banks and credit-card vendors have long included paper ads and offers with their statements or bills. Customers usually have trashed the inserts.

Now, these companies are trying a new tactic to get their customers' attention: placing the ads and promotional offers directly on the bill or statement. Using database software and sophisticated digital printers from Hewlett-Packard Co., Eastman Kodak Co. and Xerox Corp., companies can tailor statements, ads and offers printed on the bills to each customer.

Such 'transpromotional marketing' makes it more likely a customer will see promotions because roughly 95 percent of people open and look at their bills and statements, according to research firm InfoTrends Inc. Marketers say that consumers prefer to receive marketing messages that are more personalized and targeted to their needs.

This kind of specialized direct mail, while costly, is becoming more common as digital full-color printing gets less expensive and the speed and quality improve. The cost to print a color page using H-P Indigo printer products dropped to as low as three cents a page in 2006 from almost 10 cents a page in 1996, InfoTrends says.

Analysts say transpromotional marketing helps companies not only target customers better, but it can also offset printing costs by selling ads on statements. Barbara Pellow, an InfoTrends analyst, adds that companies also can track a return on investment better because they can glean a greater understanding of their customers' interests.

InfoTrends says the share of transactional documents in the United States printed in full digital color rose to 22.9 percent in 2005 from 10.6 percent in 2002. That number is expected to increase to 33 percent by 2010, the company says.

Ford Motor Co.'s Ford Motor Credit automotive-finance unit is one division using the new marketing tactic. Dennis McClure, Ford Motor Credit's invoice marketing manager in Dearborn, Mich., says the declining cost of color printing and the increasing speed and quality of the printouts influenced his division's switch last year from preprinted, company-branded paper for its customer invoices to full-color invoices designed around what car brand a customer drives.

Ford Motor Credit works with DST Systems Inc.'s DST Output subsidiary, a print- and electronic-billing provider, which uses Kodak digital printing presses and its own technology to produce invoices.

Using information it collects on its customers, Ford Motor Credit now includes tailored service reminders, bonus cash offers or lower financing, and deals on new cars on the 200,000 invoices it prints a day. McClure declined to discuss how effective this marketing has been but says the company plans to continue its transpromotional efforts. A company spokeswoman declined to reveal the cost of the specialized marketing but called it 'a good investment' even though it is costlier than using pre-printed forms.

Through these digital presses and new invoices, 'we're making sure that we protect and value the customer relationship so we are not inundating them with meaningless communication,' McClure says.

Printer makers such as H-P, Xerox and Kodak are pushing sophisticated digital printers to tap into this growing market. Xerox's iGen3 digital printers, which start at $580,000, print in black and white, full color or a mix of the two. With a starting price of about $800,000, H-P's Indigo w3250 systems use ink to print 272 double-sided pages a minute in one or two colors and 136 double-sided pages a minute in full color. Kodak's Versamark line of digital printers, which start at $800,000, come in 11 configurations that print from only black and white to full color. Many of these machines are often leased on a cost-per-page basis for three to five years.

According to InfoTrends, placements of color printing systems that print 60 pages a minutes or more are expected to grow to 7,411 in 2011 from 1,923 in 2006. Xerox leads the production-color-printer segment, with a 52.8 percent share of units in 2006. H-P and Kodak rank third and fourth by market share, respectively.

The large printer vendors also sell or partner with companies such as GMC Software Technology Inc. to sell software and services that can help quickly and accurately mine customer data and select the best offers for each customer.

One of the biggest challenges companies have is manning and mining their growing database of customer information, says Deborah Cantabene, a marketing vice president for Xerox's production systems group, which sells to graphic-communications businesses and large enterprises. 'You do have to get the right thing to the right person,' she says.

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