For this entrepreneur, it’s still the mail
Lia Rain Jensen’s new business is mailing Valpak coupons to 160,000 homes.
Lia Rain Jensen says direct mail advertising is still very much alive — but it does now require a digital presence, too.
Jensen, who has owned a small business before, is banking on her belief in direct mail since she bought the Valpak franchise for the West Michigan area — Kent, Ottawa and Allegan counties — as of October.
Jensen, 42, said she and her small staff at the East Beltline Valpak office are generating 160,000 of the familiar blue envelopes every month, which go to that many homes in 10 districts within her designated territory. But she isn’t mailing to every home in her three counties — just an area centered on Grand Rapids that extends north to Rockford, south to Dorr, east to include Lowell and west to Allendale.
Jensen, born and raised in Grand Rapids, owned and operated a tanning salon in Wyoming from her late 20s to early 30s. Then she worked for a number of real estate firms, including CWD.
Jensen doesn’t reveal the amount of her investment, but Valpak put out a news release about her new contract with the company and mentioned that franchisees should have a minimum liquidity of $75,000 and a minimum net worth of $150,000. The Valpak website states that a typical startup franchise costs about $32,500 for its smallest markets.
The previous owner of the Valpak franchise Jensen now owns was an individual in Detroit who had it for a long term and wanted to retire, she said.
She said one client, who owns an auto repair shop, told her that when he started using Valpak, it increased his revenue by about $30,000 a month.
“The Internet is not a threat to Valpak,” said Jensen, because it participates “quite heavily” in digital advertising. Valpak helps its direct mail advertising clients with their online presence and puts their coupon offers online, according to Jensen. Valpak also has an app with “augmented reality,” she said, that shows all the nearby Valpak advertisers and their coupon offers.
In its news release, Valpak says it has smart phone apps for the Samsung Wallet, iOS Passbook, Google Wallet and Windows Phone Wallet, as well as QR codes and online coupons.
Cox Target Media of Atlanta, which owns Florida-based Valpak, recently acquired Savings.com.
Valpak said it mails more than 20 billion coupons to more than 40 million “demographically targeted” households per month in more than 100 markets in 45 states and four Canadian provinces.
Jensen said Valpak is the U.S. Postal Service’s largest single commercial customer and has negotiated a special rate.
She said Valpak is “trending more toward digital,” although she added, “Print is still very active and a very important component of our advertising. There is a lot of digital clutter; people are being tracked on the Internet and they will see the same ad several times. They’re kind of catching on to that, and sometimes they just don’t like it.”
She said some people enjoy getting the coupon-stuffed Valpak envelope in the mail because they can thumb through the coupons at their leisure. Businesses that use it to advertise are getting inside potential customers’ homes, and when coupons are redeemed, those businesses have proof people are looking at the ads in the envelope. Some, like Standale Hy-Tone Cleaners in Walker, have been advertising in Valpak for years.
Jensen said the cost to advertise in Valpak is between two and three cents a home per month. Contracts tend to be a minimum of four to six months. If there are 16,000 homes receiving the Valpak envelope, it would indicate a monthly cost of about $320 to $480.
Valpak has direct mail competition in the form of coupon magazines that are also delivered to homes at the low bulk-mail rate. But Jensen said Valpak clients select which of her 16 neighborhood districts they want their coupons mailed to. That way, a small restaurant in Rockford, for example, isn’t paying for ads being delivered in Jenison.
The local Valpak staff sells the ads and helps customers create them. Then the ads are digitized and sent electronically to Largo, Fla., where Valpak is headquartered and has a fully automated printing/envelope stuffing/mailing facility serving the entire U.S.
Jensen said Postal Service rates are a challenge. “We have just had a rate hike in January that raised my rates $70 per area mailed. Mailing 16 areas monthly means my postage just increased over $13,000 for the year.”
She isn’t afraid that Valpak’s direct mail business has an uncertain future, noting a major investment in the Florida distribution center was made just three years ago.
“We believe people still like tangible items, but we are well aware of the digital advertising and marketing online, so we are a part of that, as well,” she said.
Cox Target Media is part of Cox Enterprises in Atlanta, a privately owned conglomerate that also owns the Autotrader.com group; Manheim, a global vehicle auction service; and Cox Media Group. Cox Enterprises employs more than 50,000 people and has annual revenues of almost $15 billion.