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Direct mail prospects are increasingly targeted with CD-ROMs as an introduction to new products and services.

According to data reported in The DMA Insider from Simba Information, a market forecasting company, electronic transaction revenue from CD-ROMs is growing by 66% annually and is estimated to reach $206.3 million by the end of the year.

Proliferation of the Internet makes CD-ROMs a more plausible direct marketing tool. That's because when CD-ROM content is developed in HTML and encrypted, users can access it by calling a toll-free phone number or entering a special code after loading the CD-ROM onto their computers. The content is actually tapped via a Web browser and launched when the CD-ROM is inserted into the computer.

Consumers can respond immediately to offers through the Internet if they so choose.


The immediacy of response is one of CD-ROMs' biggest advantages to marketers.

"It allows you to put Web-like content into people's hands immediately instead of waiting for them to respond," says Steve Franklin, director of account services for FusionDM, a San Francisco-based direct marketing agency.

Internet service provider America Online is the biggest example of CD direct marketing. AOL, with 18 million members, has added five million subscribers in the last year via an aggressive direct marketing campaign first launched in 1993. That's when the company began giving away free trial memberships to its service, first on floppy discs and then on CD-ROMs. AOL in recent years has implemented additional direct marketing tactics-including radio spots with toll-free phone numbers to call-but its CD-ROMs have become ubiquitous in mailboxes across the country as a way to attract subscribers.

Still, a "relative few" marketers are using CD direct marketing, says Mr. Franklin, despite industrywide data from market researcher Dataquest that shows more than 71 million CD-ROMs shipped in 1997, with 89 million expected to be shipped in 1999.


"It costs 40 cents more to send a CD in the mail rather than the comparable package with no CD," he says. "That's an expensive proposition. It must generate a lot more response than a piece of paper."

Online supermarket Peapod tested CD direct marketing in select markets this summer to see if the tactic is worth the expense. Results have not yet been tabulated, says Peapod Senior Marketing Manager Dennis Wencel, but it is clear to the company that "having an interactive portion [of your direct marketing efforts] is more sticky and more valuable."

Peapod also employs radio, e-mail and paper mailers as additional direct marketing tools.

Successful CD direct marketing depends on the simplicity of a CD's message, Mr. Wencel says.

"It's easy to make them too complicated. And people can be turned off by the medium if it is not accessible to all computers [regardless of the sophistication level]," he notes.

Indeed, CD direct marketing may not be a solution for every company.

"The company has to lend itself to that kind of marketing," Mr. Franklin says, adding that he has seen fewer traditional marketers and more Internet companies,

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