Direct Mail's Resurgence and New Role in Integrated Marketing
Have you noticed anything different about the contents of your postal mailbox lately?
Just by looking in your own mailbox, you might have noticed an increase in the numbers and variety of offers. Direct mail is very much alive today and continues to be the workhorse for many brand marketing efforts. It has been, and continues to be, at the very heart and soul of direct response marketing. The catalog is the oldest form of direct response advertising, dating back to 1872, with the launch of Aaron Montgomery Ward's first mail order catalogue.
No matter the communication channel, the function and objective of direct response remains the same after all these years—a means of commerce allowing businesses and nonprofits to showcase their products, services and needs directly to customers around the globe.
What has changed is the communication and response channels marketers use to make their offers and maintain contact with prospects and loyal customers. Direct response channels continue to evolve, whether they are outbound channels carrying a brand message or response devices for placing one's order. Direct response has grown to include envelopes and selfmailers, postage-paid mail, toll-free numbers, faxing, direct response radio and TV infomercials, as well as a host of new emerging digital technologies, including email, banner ads, search, digital targeting, webcasts and videos, PURLs, and QR and other 2D codes, with many more yet to come.
Survivors of Marketing's 'Perfect Storm'
Unlike in other economic downturns, the most recent had become a marketer's "perfect storm." Starting in 2007, as the US entered its own economic turmoil, marketers were faced with paper cost increases, fuel surcharges and multiple postage rate hikes. Many marketers had become more cost conscious, and, as a result, many made drastic cuts and budget reallocations to new lower cost digital channels. This resulted in significant decreases in direct mail spending, as evidenced by lower mail volumes from 2007-2009. (See Table 1 in the media player.)
The emergence of digital technological advances, as detailed above, has provided marketers with lower cost options to reengage their target audiences As engaging and dynamic an experience as these new channels are, they are not the be-all and end-all for acquiring and retaining customers. They really are a wonderful, new set of tools in the marketer's tool box, whose value needs to be understood through testing and learning and retesting.
However, the extreme pendulum shift from offline to online channels since 2007, and for some even earlier, may have been too severe. Today we read many industry articles, blogs and discussion group postings that speak of the value of a strategic mix—or rather an integration of direct response channels—as the best way to attract and retain customers.
There was a time when marketers had to compete for their targets' attention, designing amongst the clutter to stand out in an overcrowded postal mailbox. History seems to be repeating itself, but this time in our electronic inboxes, both personal and work related, as evidenced by the clutter and overload. Recipients have the power to use the delete key, and within seconds can clear out an overloaded inbox, or worst yet, just leave your message unread.
The greatest lessons marketers obtain come from testing offers, copy, lists, prices and frequency, as well as asking their customers their communication preferences through short surveys.
Epsilon Targeting completed channel preference studies in February 2008, February 2010 and recently in August 2011. The findings reported in The Formula For Success: Preference and Trust show that through economic turmoil, technological advances and channel proliferation, direct mail continues to deliver as consumers' preferred means of receiving marketing messages. The 2011 research shows that despite direct mail's reputation for being "old school" or expensive, it is the top choice of U.S. and Canadian consumers for receipt of brand communications in almost every category, including household products and services, insurance and financial, such as credit cards offers. One of the most interesting findings was the preference for direct mail, especially financial related offers, by the 18-34 year old demographic (see Table 2 in the media player for key findings).
The fact that consumers use and trust certain communication channels over others means marketers need to understand which channels resonate most at various points in the purchase cycle. The Epsilon study suggests that brands should use a variety of media to build relationships, starting with trusted channels such as direct mail. The best approach is to engage the prospect or customer, asking through a quick survey poll for their channel preference(s); listening will only increase your share of wallet over the lifetime of that customer.
Direct mail, not surprisingly, has been staging a resurgence since 2010. Thomas J. Foti, the editor of Deliver Magazine, said in the February 2012 issue, "Last year saw the continuation of some monumental shifts in direct mail." A USPS Household Data Study, 'Mail Use & Attitudes in FY 2010' (pdf), reported that 12 percent of 2010's $171 billion spent on advertising was allocated to direct mail, and total advertising mail volume in 2010 was 83.5 billion pieces. The USPS reported that marketers mailed out 84 billion pieces in 2011, and project standard class mail to increase by 14 percent in 2016 (see Table 3 in the media player).
According to The Direct Marketing Association, direct mail expenditures in 2011 grew to just more than $50 billion, a 4.6 percent increase, and are forecast to rise at least 3.6 percent annually through 2014. A recent Winterberry Group Analysis reports that, between 2010 and 2011, marketers increased direct mail budget allocations by 2.5 percent, and another 2 percent from 2011 to 2012, which nets out to a volume increase of 5.5 percent and 1.7 percent, respectively (see Table 1 for more).
Furthermore, direct mail gets opened—your offers are seen, engaged with, tested and purchased. A 2010 USPS Household Diary Study (pdf) found that in 2010, more than 48 percent of all standard mail addressed to specific household members was read immediately, as opposed to only 39.6 percent of standard mail addressed to "occupant/resident."
In addition, with regards to B-to-C marketing, direct mail, per Target Marketing's 2012 Annual Media Usage Survey, has yielded stronger ROI vs. email for both acquisition and retention. While direct mail and email continue to be the most-used channels, Target Marketing's survey reports that more marketers are planning to focus their budgets on customer acquisition in 2012, with 86 percent planning to use email, and 69 percent using direct mail for acquisition.
Direct marketers are now at the best time and place in the history of our profession. With all the emerging tools at our disposal, marketers can craft effective, engaging and powerful direct mail packages that bridge the offline world to the online and enhance the user experience. PURLS and QR Codes can be added to envelopes, brochures and reply forms, to very effectively link to product videos or webcasts, or to download special white papers, coupons or other product related information. Bridging the offline and online worlds can drive new engagements across audience demographics.
Give your target audience the opportunity to embrace these new technologies within the time-tested direct mail package, and learn from their engagement and sales metrics.
Do your own market research survey and collect the mail that arrives at your home and office each day for the next week or two. Categorize them as nonprofit, subscription, financial (mortgage refinance, credit card), auto insurance and periodicals, and perhaps sub-categorize by package type (envelope vs. self-mailer), and see for yourself. The greatest value of this resurgence is that you once again are able to engage and interact with interesting, valuable offers on your own time and in the privacy of your home.