Direct Mail Survives Web Advertising

With online advertising rates plummeting in the past year, there is no doubt that direct mail is still the darling of the direct marketing community. The average click-through rate for standard 468-pixel-by-60-pixel banners hovers around 0.6 percent.

Direct e-mail registers terrific response but hasn’t gained critical mass. Rich media has flopped as Internet users have ignored the technology to make it work. Rich media may have a bright future, but the future isn’t now. Even with the hullabaloo over the Internet, direct mail is still marketing’s most versatile tool.

Is Internet marketing really making sense? For most marketers, there are three choices when it comes to online advertising: sponsorships; banners or buttons; and direct e-mail. Each has its own benefits but also exhibits major deficiencies for savvy marketers.

Though click-through rates for Web site sponsorships may have slightly higher returns overall, in many situations the costs also are much higher and the return on investment does not warrant the expense.

E-mail marketing, the latest craze in the online advertising trio, is reaping the greatest benefits compared with the other online venues. Response rates average from 2 percent to 30 percent compared with direct mail’s traditional 1 percent to 2 percent, but it’s not all roses.

Though the number of qualified e-mail lists is steadily increasing, the lists are still difficult to obtain and monitor. And when you finally think you have a winner, replicating the successful strategy is often impossible because similar list types simply do not exist for a rollout. Also, these lists are expensive, ranging from $250 per thousand to $400/M.

Quality control? Privacy plays a large part in a marketer’s decision to incorporate e-mail into the marketing mix. Web sites are doing a fabulous job of collecting information, but unless consumers understand what the box they are checking actually means – or, conversely, that they have to uncheck a box giving the Web site permission to use their information – they are not opting in of their own free will. If users aren’t reading the fine print, any message they receive will be considered spam and will do more harm than good.

As a former e-mail list broker, I’ve been through the grueling scenario of working with e-mail list managers who have extremely finite requirements on e-mail message formats and lengths. Let’s also not forget that most e-mail list managers protect their e-mail addresses as though they were guarding the U.S. Mint. In most cases, the e-mail copy must be sent to the e-mail list manager, who then blasts the message to the target audience.

This is all fine and dandy except when you’re renting e-mail lists from more than one source. In these cases there is no way to identify or eliminate duplicate names from similarly targeted lists. At $400/M, duplicates can add up quickly and erase any cost savings you may have recognized from the elimination of postage and creative costs.

Not only is the cost of duplicates high, but what about the effect it has on the person receiving five e-mails from you just because his name resides on five chosen e-mail lists? This alone has the potential to cause a loss in response.

Direct marketing returns to its roots. What are marketers doing to counteract some of these problems? They are turning to direct mail to drive qualified traffic to Web sites and shifting their budgets to increase the direct portion of their initiatives. Several dot-com and click-and-mortar companies are doing this and having great success.

According to NetRatings, “Internet penetration has reached critical mass for 21 of the top 35 Internet local markets during … September 2000. Seven months ago … only six Internet local markets had more than 50 percent Internet penetration.” IntelliQuest predicts that nearly 100 million adults will access the Internet this year.

What does this mean? Computer owners and Internet-enabled households are no longer elitist groups. It is much easier to find a robust postal address mailing list that can identify computer ownership along with a number of additional powerful demographic and psychographic variables than it is to find a similar e-mail list. Postal addresses also give you the flexibility of conducting an efficient merge/purge and, in most cases, you can negotiate aggressive net name arrangements when incorporating multiple files. All of these attributes add to your bottom line.

Dot-coms boost direct mail. According to a study conducted by Pitney Bowes Mailing Systems Division, 59 percent of e-commerce companies surveyed increased their mail volume as a result of e-commerce activity. Nearly 70 percent of respondents use direct mail. Direct mail also was cited as the most effective tool for getting customers to go to a Web site and place an order.

On the consumer side, 57 percent of consumers surveyed said that mail, including catalogs, targeted to their tastes and interests would have “some impact” or “very high impact” on their relationships with companies.

The information available today continues to support the conclusion that using direct mail for prospecting and establishing customer relationships is the way to go. Once these relationships are established, e-mail communication will step in and play a major role in keeping customers informed and do a portion of the cross-selling and upselling for you.

• Lori Collins is manager of business development at Focus USA, Hackensack, NJ.

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