Don't Look Now - ADVO Has Your Ads   

Robert Kamerschen, head of ADVO Inc., is incredulous that he can't sell newspaper publishers on direct mail. After all, ADVO had convinced numerous grocery stores that the postal system is the best way to distribute their weekly food circulars – why aren't ?ewspapers also interested in some kind of joint venture? "We shouldn't be fighting each other," the CEO says, making a fist. "We try to reach out to newspaper companies, but they're afraid to get near us. They're all afraid of what their peers would think."

Wait a second. Is this the same guy who boasts that he's stolen virtually all the newspaper industry's grocery business by "planting the seed of discontent" with advertisers? The same guy whose company cost the Washington Post some $3 million this year by convincing Safeway that mailing most of its midweek circulars was more effective than stuffing them inside the Food section?

Sure is. The 57-year-old Kamerschen, a consummate salesman, is feeling good these days. Over the past five years, he's turned ADVO into the nation's largest direct marketer, reaching 53 million homes each week with packages that contain an average of seven fliers or circulars. This year ADVO's revenues are expected to be $900 million, an increase of 53 percent since 1988.

In several major urban areas, newspapers have watched Kamerschen and other marketers spirit away their major grocery advertisers. In fact, newspapers' share of supermarket dollars has declined 12 percent during the past decade, to 45 percent, while direct mail's has risen 18 percent, to 32 percent.

"Our industry talks about direct mail, but it doesn't really understand it," says Dennis Grant, ad director for the Chicago Tribune. He should know. Two years ago, the Tribune lost a 50-year advertiser, Dominick's, when ADVO landed the chain's weekly account.

Many other newspapers have been riled by Kamerschen's pursuits. Last February, ADVO nearly paralyzed 28 papers in Southern California by convincing Von's markets to mail their fliers. The 28,000-circulation Victorville Daily Press was typical of papers that watched their largest client defect. "If they go with ADVO [long-term], it's going to announce to every supermarket that newspapers are just not a feasible buy anymore," says Ad Manager Art Kurek.

Marketers insist they aren't. "It's a simple equation," says Ray Myers, who runs a Houston-based marketing agency that serves retail and food manufacturers. "Newspapers don't hit every house."

Gerry Wilson, whose San Diego Union-Tribune lost 80 percent of its Von's business, has opted to fight back with a 1,000-person alternate delivery force called Doorstep Delivery. The ad sales director says the newspaper hand-delivers a package of four circulars to 600,000 homes. "ADVO probably did us a big favor in making us speed up what we were already doing," he says.

That kind of hand-to-hand combat may be a sign that newspapers have emerged from a big sleep. According to Leon Levitt, director of circulation for the Newspaper Association of America, about 225 members operate some type of alternate delivery service. And the National Newspaper Association, which represents weeklies and smaller dailies, says many of its members do the same.

But Kamerschen isn't sitting still. He now is taking aim at the catalogs and coupons stuffed inside Sunday papers. And he's launched several Saturday mailers that get Sunday food circulars into shoppers' hands that much quicker.

In the first skirmish, in Chicago, ADVO signed on a marquee Tribune advertiser, the discount retailer Venture, and launched a Saturday mailing last spring to 160,000 households. The company has targeted 2.6 million customers. Such mailings have also been psychologically devastating to the Star chain, a group of 20 papers owned by the rival Sun-Times. "Venture was our oldest insert customer," says Star retail ad manager Jay Fredrickson. "ADVO just kicked our ass."