As a direct response marketer, I love hearing about direct response campaigns that worked on a massive scale.
If you're roughly 18 or older, you probably remember seeing those amazing AOL CD's that came in the mail... like EVERY DAY during the 1990's.
It's amazing to me that sending so many was ever profitable. I mean, I can't even remember how many of these discs I threw away, used as a frisbee, used with firecrackers. In fact, when my dad built his 1,000,000+ volt tesla coil in the garage, we had a lot of fun using the CD's as targets of the 4-5 foot sparks that shot out of the top.
(This is the Tesla Coil that my dad rebuilt for my little sister's 21st birthday party - Fun times!)
Back... to AOL.
In an interesting article about AOL's cost of those CD's, the CEO (at the time) revealed a very interesting tid bit of information.
They aimed to spend about 10% of the lifetime value of the customer. In other words, they aimed to have an ROI of 1000% from sending those CD's! Impressive ROI in just about any market.
The lifetime value of the customer was roughly $350 which meant that they spent around $35 per customer on average.
Simply amazing! With that kind of ROI (and a LARGE demographic of... just about every household in America), it makes sense when you hear that at one time 50% of all CD's being produced had an AOL logo on them.
It's really these CD's that caused AOL to grow from a 70 million dollar company to a $150 BILLION company (market cap).
Imagine being able to spend roughly $300 million dollars (the estimated cost of the CD's) and generating 1000% ROI on it! Phew... That translated to one subscriber every 6 seconds.
I always smile when I tell friends I advertise on Facebook, Google, Yahoo, MSN, and email. I almost always get the response, "Do people even click on those ads?!"
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