ADVO, Inc. - Direct Mail -  Category Directory

860-285-6100

One Targeting Centre
Windsor, CT 06095

www.advo.com

Sales

$1.2 billion

Business Description 

ADVO, Inc. is a full service targeted in-home print advertising company primarily

engaged in soliciting and processing printed advertising from retailers, manufacturers

and service companies for targeted distribution by both shared and solo mail, as well

as private carrier delivery, to consumer households in the United States and Canada

on a national, regional and local basis. The Company's shared mail advertising

programs reach on average, approximately 67 million U.S. households on a weekly

basis and 105 million on a monthly basis.

The Company satisfies clients of all types and sizes with customized
targeting solutions for their marketing communication needs. Founded in 1929 as
a hand delivery company, the Company entered the direct mail industry as a solo
mailer in 1946 and began its shared mail program in 1980. The Company currently
is the largest commercial user of standard mail (formerly third-class mail) in
the United States.

ADVO competes primarily with newspapers, direct mail companies, periodicals
and other local distribution entities for retail advertising expenditures. The
Company believes that direct mail, which enables advertisers to target
advertisements to specific customers or geographic areas, is the most efficient
vehicle for delivering printed advertising on a saturation or full market
coverage basis, as well as an effective means of targeted coverage.

ADVO's principal executive offices are located at One Targeting Centre,
Windsor, Connecticut 06095.

PRODUCTS AND SERVICES

ADVO's direct mail marketing products and services include shared mail and
solo mail. ADVO provides ancillary services to complement its direct mail
marketing programs and also provides private carrier delivery in certain
markets. In addition, the Company provides direct mail advertising solutions for
local neighborhood businesses. The Company's consumer web-site, ShopWise.com,
allows retailers to electronically target promotions and values to subscribers.

SHARED MAIL

In the Company's branded shared mail program, ShopWise(TM), the individual
advertisements of various businesses within a mailing radius are combined into a
single mail package. Because the cost of the postage is flat up to a certain
level, the clients share the savings of combining their advertisements.

The Company customizes shared mail packages by targeting levels selected by
the customer. In most instances, each household within the predetermined
targeting level will receive a mail package. The Company offers various
targeting levels for the customer's designated mailing area based on the level
of geo-demographic precision that is requested by the customer. Individual
customers can choose predetermined clusters of ZIP Code zones, all ZIP Codes
covered by a program, or ADVO Targeting Zones ("ATZs"). ATZs enable advertisers
to target their ads to consumer clusters of about 3,500 households. ATZs are
neighboring postal carrier delivery routes within a ZIP Code that are clustered
together based on shared demographic characteristics and proximity to key retail
shopping areas.

The flexibility and targeting capabilities of the ATZ platform enable
customers, such as retail store chains, to select areas serviced by their retail
stores and, at the same time, distribute different versions to reach their
choice consumers. The Company uses geographic, demographic and psychographic
data to tailor the customers' advertisements to their targeted audience.
 
The Company's shared mail program offers the features of penetration and
targeted marketing at a significant cost reduction when compared to mailing on
an individual or solo mail basis. This cost advantage is available because the
Company pays the total postage expense, and advertisers are generally charged a
selling price based on, among other factors, the incremental weight of their
promotional piece.

As a part of its shared mail program, the Company provides the addresses of
the households receiving the mail packages, sorts, processes and transports the
advertising material for ultimate delivery through the United States Postal
Service ("USPS"). Generally, larger businesses, such as grocery chains and mass
merchandisers, will provide the Company with preprinted advertising materials in
predetermined quantities. In the case of manufacturers and small retail
customers, the Company may perform graphics services and/or act as a broker for
the required printing. The Company also offers shared mail customers numerous
standard turnkey advertising products in a variety of sizes and colors.

The Company believes its shared mail program is the largest program of its
kind.

SOLO MAIL

Solo mail services include addressing and processing brochures and
circulars for an individual customer for distribution through the USPS. Each
customer bears the full cost of postage and handling for each mailing. Customers
choosing this form of direct mail are generally those who wish to maintain an
exclusive image and complete control over the timing and the target of their
mailings, or who want to mail to areas where the Company does not have a shared
mail program.

The Company processes solo mail using its own mailing list or lists
supplied by the customer. The Company charges a processing fee based on the solo
mail services rendered.

OTHER PRODUCTS AND SERVICES

The Company rents portions of its mailing list, through a specialized firm
hired by the Company, to organizations interested in distributing their own
mailings. The Company may or may not perform the associated distribution
services for the customer.

MailCoups, Inc. ("MailCoups"), a wholly owned subsidiary of ADVO, is a
franchise-based cooperative coupon mail company headquartered in Avon,
Massachusetts. This company, operating under the trade name of SuperCoups,
creates and distributes attractive, cost-effective targeted coupons in a
distinctive envelope format for local neighborhood merchants via an extended
network of franchise owners. At the end of fiscal year 2003, MailCoups had
approximately 65 franchisees including 225 franchise units in 23 states.

DISTRIBUTION NETWORK

ADVO's distribution network offers a diversified approach to delivering its
clients' messages.

The Company's core distribution network is represented by the weekly
ShopWise(TM) program. ShopWise(TM) is a weekly distribution program covering, on
average, approximately 67 million households in approximately 130 markets, in
essentially all major metropolitan markets. This program is used by local and
national retailers. The zone configuration selected for each market is normally
determined by population density and by proximity to retail outlets. Retailers
with multiple locations and weekly mailing frequency are a key determinate of
the zones chosen by the Company for its weekly distribution. The Company derives
most of its revenues from the ShopWise(TM) shared mail program.

The Company is part of a network, known as ADVO National Network Extension
("A.N.N.E."), comprising of regional shared mail companies, which provides its
clients with extended coverage outside the markets already served by the
Company. Approximately 33 million additional households can be reached on a
shared mail basis through A.N.N.E. The Company handles the clients' orders
directly and manages distribution of their advertising through A.N.N.E.'s
members. Conversely, A.N.N.E. enables participating members (shared mail companies) to offer
their clients extended marketplace reach using the Company's household coverage.

The Company extended its core shared mail advertising program by
establishing its rural expansion program. Once a month, the Company reaches
approximately five million rural U.S. households and provides targeted shared
mail advertising coverage to areas that previously were only served via solo
mail.

These programs, along with the additional-in-home distributions and
newspaper alliances, comprise the Company's vast distribution network reaching
over 105 million homes.

MAILING LIST

ADVO's management believes its computerized mailing list is the largest
residential/household mailing list in the country. It contains over 128 million
addresses (constituting nearly all of the households in the United States). The
Company has enhanced the list by acquiring 12 million business addresses, which
have been integrated into the household file in walk sequence order. The
Company's management believes that the list is particularly valuable and that
replication in its entirety by competitors would be extremely difficult and
costly. The list enables the Company to target mailings to best serve its
customers.

CUSTOMER BASE

Typically, the Company's customers are those businesses whose products and
services are used by the general population. These businesses (including
supermarkets, quick serve restaurants, drug stores, discount and department
stores and home furnishing retailers) require continuous advertising to a mass
audience. The enhanced targeting capabilities of the Company's distribution
system have led to the development of opportunities for new customer categories,
such as telecommunications, insurance, financial services, and entertainment
companies. The Company's targeting capabilities can also provide additional
opportunities for more effective advertising to existing customers who advertise
to a mass audience.

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