ZIP+4 +2= ZIP+6

Claritas in the News

Direct Magazine
February 2007
Ray Schultz

How do you get an entire newspaper chain to improve its targeting?

It's not easy when you own 90 papers, ranging from small weeklies to big-town dailies. But Gannett Inc. took on the job last year.

It launched a program called customer acquisition targeting. The purpose: To help its newspapers use Claritas Inc.'s PRIZM clustering system at the ZIP+6 level.

First, Gannett set up a central ZIP+6 directory, allowing newspapers to select the addresses relevant to their markets and then apply Prizm codes to create target groups. It also conducted a Webinar on the process, says Karen Giroux, director for marketing information and assessment for the firm.

But Gannett didn't anticipate the budgetary restraints faced by many newspapers. And it had to concede that the papers knew their markets better than the home office did.

Take the Arizona Republic, the largest paper in the chain, which like most papers had been using the U.S. Postal Service's ZIP+4. “It's the most savvy when it comes to direct mail,” Giroux says. “They didn't just take my word [that ZIP+6 would work].”

To test the new program, Gannett took a small slice of the paper's address database and picked three homes in the same ZIP+4 segment code.

All three were classified as “big fish, small pond,” indicating they're empty nesters, belong to country clubs, have large investment portfolios and spend on computer technology.

But the local managers saw them differently.

“Since they live there and I don't, they made sure to tell me that only one of those homes truly fits that description,” Giroux says. “Using the Prizm code, they found distinct clusters assigned to each home, and confirmed the accuracy of the codes.”

Why the discrepancy? Each ZIP+4 code contains an average of four households, although there's “a boatload that are actually single households,” says Sandra Hamorsky, Claritas' senior product manager for segmentation. ZIP+6 codes are more likely to contain single households, and they allow for more precise profiling, Hamorsky adds.

The paper made quick use of that information. It appended Prizm clusters at the ZIP+6 level, identified those most likely to pay by credit or debit card, and mailed to non-subscribers matching those criteria.

The result? General response improved from the .05% to 2% range to almost 2%. “And it's still improving,” Giroux says.

Then there was the Ithaca (NY) Journal. It used ZIP+6 and demographic data to send a jumbo postcard for Life, its new lifestyle section. It said: “Life. It's all about you.”

And the paper did mailings to increase single-copy sales. That number has jumped by 103 copies per day, or just over 2% – a big boost, Giroux says.

The Journal also used Prizm Z6 to find drop-off locations for Buzz Entertainment, its publication for 18- to 24-year-olds. The magazine's pickup rate increased from 72% to 90.7%.

Another paper to hop on the bandwagon was the Salem (OR) Statesman Journal. That paper was averaging a 1% response with an ongoing sampling and direct mail campaign. Since adding ZIP+6 and target analysis, response has increased to almost 3%.

Not that ZIP+6 can solve everything.

The Pensacola (FL) News Journal split its market into several target groups, then did a mailing to increase Sunday circulation. The headline: “I'll get hooked on what?”

But “results were not as high as they would have liked,” Giroux says.

That may have been due to the sign-up premium: a discount card for a local sports store. The paper will now offer tickets to a brand-new movie theater. “We're hoping the change in the gift will make a difference in the response rate,” she says.

This article is based on a session presented at the National Center for Database Marketing conference in Orlando, FL.

Drilling Down

All neighbors aren't the same. Prizm coding applied to ZIP+4 codes identified these three houses as being in the ’Big Fish, Small Pond’ cluster. Not quite. Two were different under ZIP+6.

House 1:
Traditional Times

House 2:
Big Fish, Small

House 3:
God's Country

Best-case ...

• Single-family homes with unique street addresses.
• Condominiums and apartments with district unit numbers and street addresses.

... and Worst-case Scenarios for ZIP+6

• Post office boxes.
• Non-delivery areas.
• Rural delivery routes (non-street addresses).
• Postal drop points (multi-units with caretaker).
• Oddball addresses (e.g., 201-12 Adams Court).

Source: Claritas Inc.

About Claritas

Since 1971, San Diego-based Claritas has been the pre-eminent source of accurate, up-to-date marketing information about people, households and businesses within any geographic area in the United States. Its target marketing services are aimed at reducing the cost of customer acquisition and growing customer value. Claritas offers industry-leading consumer segmentation systems, consulting services and software applications for site analysis, advertising sales and customer targeting. Claritas is a Nielsen company. The Nielsen Company is a world-leading information and media company that includes ACNielsen, Nielsen Media Research, Spectra Marketing Systems, and Scarborough Research, among others. To learn more about Claritas and Nielsen products and services visit their web sites at www.claritas.com and www.nielsen.com.