Pelham company sued by Florida Rival

Westchester County Business Journal, Mar 19, 2007 by Soule, Alexander

Direct-marketing mailer Pennysaver Group Inc. is flipping through leaflets for a good lawyer, after getting sued by a Florida rival over alleged marketing practices.

Color Capitol Mail Inc. has sued Pennysaver for $50 million, claiming the Pelham company's heads of sales and advertising blackballed Capitol Color to potential local advertisers.

Pennysaver malls coupons throughout the metropolitan New York City area, including Westchester and Orange counties and Rockland County, where it has an office in Nanuet. The company boasts a blue chip customer base, including CVS, The Home Depot, Sears and Stop & Shop.

Capitol Color, which is based in Bonita Springs, Fla., relies on local networks of independent agents who solicit businesses for coupons and promotions, with the agents receiving commissions based on the number of advertisers they round up. When the agents achieve critical mass, Capitol Color prints the magazines and mails them to local residents.

Those agencies include a three-person New Rochelle firm called Unlimited Media Solutions hie, Unlimited owns a coupon magazine called Community Buzz that is sent out with Capitol Color's own Westchester County Value Pages to 240,000 local residences an businesses.

Capitol Color claims three Pennysaver employees have been conducting a smear campaign against it and Unlimited, including Stacie Boering, vice president of sales; Pennysaver has yet to respond in court.

Color Capital alleges they contacted four local companies and claimed Unlimited was inflating distribution figures it touts and encountering delays from not paying printers.

At deadline, Pennysaver chief executive officer Larry Weinberger and Boering did not respond to requests for comment.

The direct-marketing industry is intensely competitive, and is becoming all the more so as companies exploit Internet channels.

As quickly as postal mailboxes are filled with an mending stream of coupons, consumers are being offered new ways to "clip" coupons.

Industry leader Valpak Direct Marketing Services, a unit of Cox Enterprises that mails a half-billion coupon packets each year, is working with Google Inc. to serve up online coupons. A Silicon Valley company called PartnerCentric allows Web surfers to register for alerts when a company publishes new coupons online, using "really simple syndication" (RSS) technology. And in January, analysts at JupiterResearch published a report that indicated consumer interest is building for downloading "coupons" on their cell phones.

The intense competition and new technologies are not deterring new market entrants. Valassis Communications Inc., a Michigan company that prints newspaper advertising inserts, got into the direct-mail business this month by acquiring Windsor, Conn.-based ADVO for $1.2 billion. The sale includes ADVO's SuperCoups coupon division whose sales are roughly $20 million annually. In its fiscal year ending Sept. 30, 2006, ADVO had a $21 million profit on $1.4 billion in revenue.