Yahoo Search's Secret Weapon: Direct Mail

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Yahoo Search Marketing's recent business-to-business push for its Sponsored Search service uses one of the oldest tactics in direct marketing: direct mail.

The Yahoo unit drives sales by sending targeted three-fold pieces with promo codes and business reply cards that direct companies to http://sponsoredsearch.yahoo.com/connectme. The unit tracks conversion rate, cost per acquisition and customer lifetime revenue as well as how direct mail assists its other acquisition campaigns.

"Yahoo Search Marketing leverages direct mail as a key component of its marketing and customer acquisition strategies," said Patrizio Spagnoletto, director of acquisition marketing at Yahoo Search Marketing, Burbank, CA. "[It] tests on a continuous basis multiple creatives, formats and lists with the ultimate objective of increasing overall conversion rates."

Yahoo Search Marketing has used direct mail to acquire customers for the past five years. Mr. Spagnoletto said direct mail aids both direct and indirect customer acquisition, especially with the market the company is targeting.

"Few other channels allow us the ability to reach out to our target audience with actionable messaging that is compelling to the small business owner," he said. "In instances where the business owner is not ready to complete the purchase, direct mail enables us to initiate a dialogue with the customer and provide them with more specific information through e-mail, telesales and additional mailings."

The mail piece highlights the process of the Sponsored Search program. It features graphics of the online search window and potential customers holding up signs indicating their desire to purchase. For example, the exterior fold is headlined, "Connect with customers searching for what you sell. Sign up for Sponsored Search and get a $75 credit." Alongside is an image of a smiling young woman holding up a sign that says, "Sell to Me."

Inside, the second fold is headlined, "Sponsored Search puts your business where interested customers are searching." A man is shown with a sign that reads, "I want to buy what you sell." Finally, the centerfold is headlined, "Your new customers are out there. We'll help them find you." A woman holds aloft a sign that says, "Ready to buy."

The mailer's recipient is offered $75 off the $199 Fast Track starter service if he signs up for Sponsored Search by Sept. 30. The prospect is asked to visit the Connect Me section on Yahoo's Sponsored Search site, call a toll-free number or send in the business reply card.

Yahoo Search Marketing did not disclose quantities mailed or the lists used but said the target was small businesses with an online presence.

"The goal of our creative is to make sure the Yahoo brand is well represented but to also bridge the gap between Yahoo for your personal life and Yahoo for your business," Mr. Spagnoletto said. "We capture the excitement and playfulness that embodies the Yahoo brand and pair it with effective and product-specific messaging and art. These elements ... work together to pull the reader through the package and help to sell our message to any business owner."

Other tactics used by Yahoo Search Marketing include affiliate marketing, graphical online advertising and paid search.

Yahoo Sponsored Search is a pay-per-click service that lets companies bid on keywords. Each new account requires a $5 initial deposit, and the minimum bid per clickthrough is 10 cents. Yahoo Search was the second-most-used engine in June with 23 percent of the search traffic, according to the Nielsen//NetRatings MegaView Search. Google had 49 percent.

Sponsored Search has about 100,000 current advertisers ranging from Fortune 500 companies to small, single-owner-operated businesses. Firms include Citibank, Gap, The New York Times' nytimes.com and Microsoft.

Yahoo Search Marketing will continue its direct mail program to expand that list of advertisers. Mr. Spagnoletto said that testing the campaign leads to customer insights that influence market segmentation and improved creative for subsequent multichannel programs. Continuous testing of the direct mail campaign helps Yahoo Search Marketing overcome the challenges of scalability, he said.

"A key challenge we face is maintaining response rates and CPA while expanding our target universe and mail volume," he said.

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