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. Last Updated: 07/27/2016

Direct Mail Reaches Out and Touches Russians

What has President Boris Yeltsin learned from U.S. retail chains such as Sears and Victoria's Secret? Answer: savvy marketing techniques.

In the early stages of the presidential campaign, when Communist candidate Gennady Zyuganov was still trouncing Yeltsin in the polls, the president's campaign mailed out more than 3 million personalized letters to World War II veterans on Victory Day, in an attempt to woo the elderly. The strategy worked: Thousands of pensioners wrote back to Yeltsin, thanking him for his concern and ultimately switching their loyalties to the incumbent's camp.

Poster Publicity, the company that helped mastermind Yeltsin's and Moscow Mayor Yury Luzhkov's direct-mail campaigns, is now targeting big business.

"The direct-mail market has almost tripled in the past year," said Tatyana Bakalets, Poster Publicity's marketing manager. "Soon it's going to go through the roof."

With the increasing fragmentation and sophistication of the Russian market and the prohibitive costs of advertising on television, companies are scrambling for more aggressive and cost-effective ways of soliciting customers. Many are turning to mail solicitations as the marketing wave of the future.

Virtually non-existent three years ago, direct-mail companies are a growing presence in Russia's big-bucks advertising industry. Their clients now include major Western companies such as Hewlett Packard, IBM and Coca-Cola, as well as top Russian banks and retail concerns that want to target their core customers directly.

"Direct mail is like using a sniper rifle instead of firing a machine gun," said Victor Shikin, sales director of The Direct Marketing Co., a Western-run direct-mail company.

Market surveys have indeed found that response rates to direct mailings are as high as 10 percent to 20 percent, compared to only 3 percent to 4 percent for radio or television spots, said Nikolai Cherneshov, the marketing director of DMS, a Russian postal publicity company.

Direct marketing succeeds here partly because Russians aren't as jaded to the technique as their Western counterparts, and are more likely to be flattered than turned off by direct-mail marketing.

But focusing on a specific group and sending out personalized mailings can be expensive. Full direct-mail services can cost up to $1 per letter, said Tatyana Suprin of the direct-mail agency Third Point.

Although the Russian postal system is often viewed with scorn, direct-mail sources said it is fairly reliable. Its downside, they said, is price: The cost of bulk-mailing in Russia is about 1,500 rubles ($0.27) for a 20-gram letter, similar to rates in the United States.

Some companies are pursuing a cheaper option -- skirting the postal service altogether and placing advertising flyers and papers directly in residential mailboxes or on customers' doorsteps.

Moscow-based Global USA superstore launched an aggressive direct campaign earlier this year, and has distributed more than 3 million full-color flyers directly to Moscow residents each month since January.

James Dwyer, promotions manager for Global USA, said response was tremendous. "Russians like being solicited," he said.

Although Global USA was one of the first to use such a mass-coverage approach, other stores are now playing catch-up, Dwyer said. He declined to name the cost of the campaign, but said Global USA uses an in-house staff to design and distribute the brochures.

Other advertisers have had similar success in catching people where they live. The Rosinter Group shunned more expensive newspaper advertising and turned to direct mail to promote the sale of luxury condos outside Moscow. Shikin of The Direct Marketing Co., which handled the campaign, said Rosinter was surprised by the unexpectedly high response: The apartments were snapped up within a month.

The Direct Marketing Co., which began operations two years ago, is one of the more successful Western-run direct-mail companies operating in the Russian marketplace. Started by a consortium of British companies, including the Framlington Investment Fund, the company has seen its client base grow to over 40 in the past few years as the idea has caught on.

Although 75 percent to 80 percent of The Direct Marketing Co.'s clients are Western-run businesses, it has begun to work more with Russian clients. Shikin said the company has an edge over other direct-marketing outfits because of its Western management techniques and attention to detail.

More than 90 percent of its letters are personalized, with each addressee's name on the envelope and letter. "Russian companies often don't realize how effective such personal touches can be," Shikin said.

The company also uses direct mail as a way to advertise new products to a wide network of distributors and wholesalers spread across the country. The company also contracts itself out to firms wanting to create customer lists through mail-in advertising campaigns.

"While Western companies are easier to work with, we need Russian clients in order to expand," said Shikin. He said the company is considering going into the increasingly lucrative catalog business, and is ambitious enough to contemplate creating databases of customers in the West for Russian companies seeking to sell abroad.

But a major stumbling block to the growth of the junk-mail industry is the lack of adequate databases of Russian consumers, which companies can use to target a potential customer base. Because the Russian market has only begun to fragment in the past few years, there is still little information on different consumer groups, and a market in mailing lists -- commonplace in the West -- is in its infancy here.

Some companies, however, are beginning to access subscriber lists of emerging magazines such as the weekly Dengy, or Money, or the car magazine Avtopilot.

Other companies rely on a host of database companies, such as one started by physicists at Moscow State University, that provide everything from a Moscow apartment list to a database of Russian pensioners.

Simultaneously, the quality of junk mail has improved. Xeroxed letters have given way to brightly colored pitches printed on expensive paper. The company Ekstra-Press distributes more than 2.9 million copies of its color weekly, Ekstra-M, an exhaustive yellow pages of paid advertisements placed by various Moscow businesses.

However, companies better get in before the market becomes too sophisticated.

"Muscovites might begin throwing away their junk mail soon," says Katya Rossi, promotions manager at Moscow's Saatchi & Saatchi. Advertisers might then have to spread their tentacles out to the regions, where direct mail is still in its infancy.