Just as the Internet has given retailers new marketing tools, the technology has stifled two long-time retail stalwarts — print advertising and catalog. Today, more retailers are directing dollars normally earmarked for print toward Google AdWords, e-mail marketing or some type of search-engine-optimization tool.

Print hasn’t died, but the catalog providers have had to become more efficient and targeted to compete with the web. A case in point is the recent merger between marketing and supply chain management company Stochastic Marketing and Catalogixx, which uses artificial intelligence to target consumers with catalogs. Together, their clients include Papa John’s, Goodyear, Nestle and flooring company Pro Source.

Catalogixx owns the patent for software that translates the “personal shopper” concept to direct-marketing materials. It uses artificial intelligence to connect with a company’s customer database, identifying purchase patterns and personal preferences; this information is then matched to the company’s product line or a specific message. The result is direct mail with products, headlines, copy and prices specifically tailored to each individual recipient.

Stochastic brings data analytics to the table, building the data model that identifies which products should be marketed to which customer.

Most retailers use enterprise-wide systems that track customers’ purchase histories. With that raw data, “it takes about 90 days to build a model and thereafter, you can have every printed piece be targeted to the recipient,” says Mike Layton, president of St. Louis-based Stochastic Marketing. “As you mail and get responses, the model gets smarter and smarter.”

And the software is not one-dimensional. “Once you have the [consumer] information it can be set up in a many ways,” says Ron Agronin, CFO of Catalogixx in Owings Mills, Md. “It can go in a catalog or it can be sent out as e-mail, postcard or brochure.”

The description of Catalogixx’s software may seem fairly simple, so it’s difficult for retailers to comprehend the “power of the system, that you can really target,” Agronin says. “It’s not personalization,” he stresses. “It’s not [merely] taking a catalog or a brochure and putting a person’s name on it.”

Agronin compares the system to a personalized shopper, somebody who knows exactly what his client wants and understands his budget parameters. A professional Nordstrom personal shopper, he says, “could build a Nordstrom catalog that would come from them with a personal letter and just the products that he thinks [his client] would be interested in.

Dear Mr. Smith
“Using the Catalogixx software, you can adjust the products, set the pricing on the products and write a letter to the customer” just like the personal shopper.

That capability might be nice for an e-mail marketing program, but the Internet gives retailers the ability to touch a lot of consumers with modest effort in a relatively cost-effective way: why pour more resources into catalogs? Layton argues that retailers should combine web and catalog efforts.

“The most successful, most aggressive direct marketers see maybe 50 percent of their orders coming via the Internet,” he says. “The other 50 percent have to be driven to the store.

“The Internet is great for lower-end transactions,” Layton says. “On the other hand, if [shoppers] sit down in front of the computer with a catalog in their hands, they buy more.”