Is direct mail dead?
Judging from the cover of “Mail” magazine pictured above, gross expenditures by advertisers are spiraling downward. The causes for this slowdown in direct mail are a weak economy, high costs, long response times, and competition from other advertising alternatives.
Direct mail has followed the trajectory of newspaper and TV advertising expenditures: these traditional media are all experiencing an unprecedented weakness. Some of this weakness is structural and unrelated to the current economy. Classified newspaper advertising, for example, may never rebound even if there is a sharp upturn in the economy. The ability of free online classified advertising (i.e., “Craig’s List”) has greatly reduced the number of classified newspaper ads.
Similarly, online advertising is making a sharp dent in direct mail advertising. Consider some of the advantages of Internet advertising over direct mail:
• Internet advertising can go from idea conception to execution to delivery in a few hours to a few days. Planning and producing materials for a direct mail campaign can take from a week to several months.
• Feedback is almost instantaneous for an Internet campaign. Send out emails and within a couple of days you’ll see your response. Put up a Google Adwords campaign and you may have your first results in a day or two. You can see who is responding to your banner ad in minutes or hours. If your response is not what you want, change your ad! Change your offer! It can all be done with a few clicks of the mouse. In contrast, you have to wait weeks to check the results of a direct mail campaign. Then, changing the campaign can be a lengthy and costly process.
• Costs are probably also lower for Internet advertising. Because feedback is so fast, if an Internet campaign is not working, it can be modified or discontinued on a dime. In contrast, a mail campaign cannot be modified so readily. Sure, you can test direct mail ideas (and we’re a big advocate of testing). But testing does slow down the whole mechanism of getting a campaign in working order. And what if competitive pricings or competitive offerings change while you’re in the midst of planning and designing your creative campaign? It’s not clear how to react to a competitive challenge in the midst of testing or rolling out a direct mail campaign. But on the Internet, a competitor’s offer can be matched right away. A competitor’s new creative thrust can be countered swiftly. If time is money, direct mail is costly.
• The success or failure of a direct mail campaign is based on three factors: the list, the offer, and the creative. Of these three factors, the list is the most important. A responsive direct mail list of current customers is the golden standard. If you send a good offer to that sort of list you will usually have a very profitable mailing. Similar factors apply to Internet marketing to a good email list. If you have a house email list that you advertise to judiciously, that you share information and give good offers to, you will probably achieve the same type of positive response that a good direct mail list brings. Even though Internet advertising does not have an advantage when it comes to customer lists, it can pretty much hold its own with direct mail.
Given these advantages of Internet advertising, are there instances when it is more appropriate or even better to consider direct mail advertising? Yes, but… There is a vicious cycle at work here for direct mail advocates. As Internet advertising becomes more important, consumers and business people tend to rely on it more for making purchasing decisions. However, consider:
• Internet advertising comes with its own set of problems. For instance, we are big fans of Google and Yahoo advertising to reach an audience that cares about your product. However, popular categories can be prohibitively expensive to advertise in. Competitors can try to sabotage your advertising by clicking on your adwords (yes, I know there are built in safeguards, but they don’t always work). The whole process of executing advertising on the Internet (except for large advertisers) can be frustrating: it’s often difficult to talk to a human on the Internet advertising side.
• Competition may be lessening on the mailing side of things. As mailings go down, readership of your direct mail ad may go up. Today, there is not as much clutter in the mailbox: your catalog, your direct mail piece, your postcard, has a much better chance of standing out. And we know from surveys that most mail (85%) is opened. Email marketers salivate at those numbers. How many email ads do people really click and read?
We do have a sense of the answer to this question. Our email newsletter is opened by 70% of people we sent it to on average (because we have weeded out bounced emails, this percentage is now closer to 90%). Yet our emails are sent to a an opt-in list of people who say they want to be contacted by us. We have worked for other companies who have purchased email lists and have open rates of 3 or 4 percent. The bounced rates for some purchased lists (“bounced” means the email never reached the mail box of the intended recipient) can be greater than 35% on some widely distributed purchased lists. From personal experience and my reading of the literature, open rates vary enormously, but a good starting point is around 30 percent. (If any readers have better information, please let me know). This compares unfavorably with direct mail’s 85% penetration.
For those of you who want more information about how direct mail compares with online per click advertising, please click on this interesting article from Todd Butler or Butler Mailing Services.
• Finally, a well-written direct mail article can capture your attention and imagination. It is a tactile sensation: you can hold direct mail in your hands and take it with you. It doesn’t have to compete on a computer screen with other applications, news, mail, work, and projects waiting to be done. Creative copy, art, design, and photography can communicate in a holistic way to enchant, delight, encourage, and convince a reader that he or she wants to buy a particular product or service.
At Raphel Marketing, we still recommend direct mail as one of a number of advertising solutions for our clients. However, we think all our clients should have Internet marketing as part of their marketing mix. What may be more important than the exact percentage of media mix is to make sure the business’ image and brand is consistent: that the customer know the best qualities of the business.
We’d be interested in hearing your perspective on direct mail versus Internet advertising. Send us your comments at neil@raphel.com
Thanks!