Direct mail is more like a crocodile than a dinosaur: it’s adaptive and has staying power. In fact, according to Winterberry Group, direct mail marketing spending increased 2.7% to $45.2 billion in 2014 and is predicted to grow 1% to $45.7 billion in 2015. Winterberry Group Senior Managing Director Bruce Biegel expects direct mail costs to stay steady in 2015 and its projected growth to instead come from volume increases “for the first time in a long time.”
In this roundup of expert insights, 11 direct mail marketing leaders each share a myth about why some marketers think direct mail is on the verge of extinction and the reality about why it’s actually experiencing a slight resurgence.
Dawn Price, Principal Consultant, Cross-channel Marketing, Experian Marketing Services
MYTH: Direct mail is cost-prohibitive.
REALITY: As newer, digital channels emerged over the past decade or so, marketers started reallocating their direct mail budgets because of cost. However, as more marketers pursue cross-channel marketing campaigns, direct mail is increasingly being recognized as an important and effective component of those campaigns, largely because they have the data to prove it. In fact, Experian Marketing Services has found that response rates for campaigns using a combination of channels, such as direct mail and email, typically outperform the results of using either channel independently.
Marketers need to look at a combination of first-party data (response and transactional) and third-party data. By linking those identities to create a single customer view, they can understand how their campaigns perform across channels for specific customers. This will help them to identify opportunities to drive engagement among existing customers based on where they fall in the purchase lifecycle. Using insights from digital channels can help marketers create more personalized, relevant, and cost-efficient direct mailings. Marketers can set up automatic delivery responses, or triggered mailings, within their cross-channel marketing platform so that a personalized direct mail piece is generated to a customer based on their online purchase behavior or social interactions with the brand. This increases relevancy according to where they are in the lifecycle—from the initial opt-in or purchase through reactivation. Once campaigns are executed, marketers should measure results and leverage key learnings to optimize these programs over time.
Debora Haskel, Vice President, Marketing, IWCO Direct
MYTH: One misconception about direct mail is that only traditional industries still rely on it, and that it can’t be used to market today’s exciting digital products and services.
REALITY: In reality, companies in the digital and online space are experiencing tremendous success using direct mail to acquire new customers. While this may seem counterintuitive, what makes today’s direct mail so powerful—delivering a personalized experience using sophisticated data models and robust testing strategies—is second nature to these companies. Many of our telecommunications clients are increasing their direct mail volume and testing even more after seeing double- or triple-digit lift in gross response rates; this is echoed by overall positive signs for the channel. According to the Winterberry Group, direct mail spending is expected to rise 1% in 2015 to $45.7 billion. Direct mail is also highly adaptable, as Winterberry anticipates an increase in retargeting, which involves sending direct mail as the result of a digital action. And because it is targeted, predictable, and measurable, it’s clear that direct mail will always have a commanding presence in the marketing ecosystem.
Kylee Hall, Director, Product Marketing
MYTH: Direct mail has a stigma as old-school marketing.
REALITY: Marketers constantly battle with advertising fatigue and have to come up with ever-more-creative subject lines, assets, and bribery tactics to get customers to engage with them. Despite this struggle, many marketers cringe at the idea of direct mail, as it’s come with a stigma of being ineffective, antiquated, and expensive. Therein lies the myth.
It seems the tides have started to turn as some marketers are now jumping at the opportunity to craft direct mail pieces to get their customers’ attention. On a personal note, I’m at a 100% open rate with the direct mail I receive—as for emails and display ads, I’m closer to an open rate of about 2%.
Whether it’s through direct mail or a digital channel, marketers need tools to help them find the right target audience with the right contact information. Otherwise, all of their marketing efforts will end up as “return to sender.”
Neil O’Keefe, SVP, CRM/Member Engagement, Direct Marketing Association
MYTH: Direct mail is no longer relevant in the digitally focused marketplace.
REALITY: Direct mail and digital channels benefit one another.
As innovations in the data-driven marketplace continue to expand, and marketers look toward digital, mobile, social, and even wearable technology to power-drive their campaigns, it’s easy to assume that direct mail may no longer be relevant or viable. But recent research is demonstrating that this is not the case. In fact, we’re seeing evidence that direct mail continues to be both powerful and relevant. According to research by Winterberry Group, the direct mail channel outperformed expectations in 2014, with spend of $45.2 billion—an increase of 2.7% over the previous year. While total volume fell as retention mail (CRM) declined, acquisition campaigns in the channel increased, helping to drive the growth of spend. And 2013 saw the first uptick in catalog mailings since 2007, according to DMA’s 2014 Statistical Fact Book.
“While there’s no question that there’s been a monumental shift in focus to all things digital, direct mail continues to perform because it is targetable, predictable, and measureable,” says Bruce Biegel, senior managing director, Winterberry Group and a DMA Board member. “In 2014 we saw a rise in digital-to-offline retargeting—[that is,] sending direct mail as a result of digital action—showing that, contrary to popular opinion, direct mail and digital channels can work hand-in-hand to each other’s mutual benefit.”
Chuck McLeester, Owner, Measured Marketing
MYTH: Some marketers view direct mail as an expensive, old-school medium to reach a nearly extinct base of hard-copy-loving consumers.
REALITY: There are three reasons why direct mail remains viable.
First, it’s immune to media fragmentation. I have several hundred TV channels, three Gmail accounts with Primary, Social, and (the oft-ignored) Promotions tabs, and multiscreen access to everything on the Web. I listen to five or six radio stations and switch around during commercial breaks. But I only have one mailbox, and it’s 99% certain that I’ll see and touch everything that gets delivered to it.
Second, it has catalog value. There are many emails I intend to explore further before they drop forever to the nether regions of the inbox. But that direct mail piece I’m interested in stays on the dining room table until I decide to dispose of it—touching it once again.
Third, it’s highly targetable. Want to reach prospects for a retirement community who are age 70+, have appropriate income, home value, net worth, and live within 20 miles of a specific location? Want to reach specialty physicians who have certain prescribing patterns with an information-packed dimensional package? Direct mail is the way.
Paulette Oliva, Executive VP, Manager, MeritDirect LLC
MYTH: Cutting costs by eliminating catalogs and ramping up email and digital will surely make for a better bottom line.
REALITY: Not so fast. Short term—perhaps. But likely because there were catalog buyers in the pipeline already.
Faced with that nasty recession in 2009, catalogers were forced to rethink their strategies. Overall, sales were down and couldn’t support conventional and long-established catalog mailing patterns. Challenged by these circumstances, cutting direct mail catalog efforts had an immediate effect on budgets.
But whether B2B or B2C, we’re all “consumers”—and as such, subject to very human traits when it comes to buying behaviors. Catalogs inspire and attract the most profitable and enduring customers. MeritDirect has conducted analysis on B2B catalog customers, and while more expensive to acquire, the downstream dollars associated with carefully executed catalog prospecting almost always pays off. Compared to the often one-and-done nature of email prospects, catalog customers generate better average order value overall, and provide the opportunity for physically passing along a catalog to the next logical buyer at an organization. Digital is the future, but a healthy balance of both email and print is strategic and necessary for a typical catalog marketer.
Mike Savage, VP, Marketing Solutions, DirectMail.com
MYTH: Direct mail is dying—again.
REALITY: Some might say that the fear that direct mail is dying is older than many of the readers of this article. Over 35 years ago, long before there was the Internet and email, there were discussions on how “in five years direct mail would be dead.” There were fears of overreaching regulatory compliance, ever-increasing postage costs, USPS bankruptcy, environmental issues, Do Not Mail restrictions, demographic changes, new technology, and media bias and inaccurate reports from competing media outlets—TV, newspapers, radio—all directed toward the direct marketing industry. But, many others might say there continues to be a renewed optimism and groundswell of excitement about how direct marketing is growing in combination with other channels and medias. It’s about maximizing a portfolio of marketing assets and driving value for clients. One proof point that direct mail is showing signs of a resurgence [is] JCPenney Co.’s decision to bring back its print catalog; research has shown that JCPenny customers still prefer to browse the traditional print piece rather than go online to order. Direct mail marketing has certainly withstood the test of time and its effectiveness is on the rise once again in this new era of data-driven marketing.
Angelo Anagnostopoulos, Vice President of Postal Affairs, GrayHair Software Inc.
MYTH: Direct mail is a hassle that’s not worth the effort.
REALITY: It’s understandable why some marketers believe that direct marketing is on the verge of extinction. The U.S. Postal Service (USPS) recently filed with the Postal Regulatory Commission to raise rates by an average of 1.966% on April 26. The Network Rationalization program will close additional facilities, which has mailers concerned about how their businesses will be impacted by the new service standards. In addition, Congress seems to have a great knack for making it difficult for the USPS to get the financial legislation help that everyone agrees is needed.
However, the reality is that direct mail is still effective, and nothing better exemplifies this than the recent report in The Wall Street Journal that JCPenney is bringing back its print catalog after a five-year hiatus. The data showed that the company’s online sales were actually driven by what shoppers saw in the catalog. In fact, according to the Direct Marketing Association, the response rate for direct mail catalogs to a house list is 4.26%, while the email response rate is a mere .12%.
In addition, new USPS technologies have made direct mail even more effective. The Intelligent Mail Barcode (IMb) allows marketers to better track each individual piece until it reaches its final destination. Knowing when a piece is going to be delivered enables marketers to strategize and coordinate multichannel activities in their marketing campaign. Other technologies, such as delivery geo-fencing, will make direct mail even more powerful.
Despite the challenges with the USPS, direct mail is still an important and effective sales tool. It has a proven track record of achieving the best ROI of any marketing channel.
Laura Marriott, CEO, NeoMedia
MYTH: Direct mail is old and outdated and consumers don’t want “junk mail” in their mailbox.
REALITY: By integrating multiple channels with direct mail (e.g., mobile and Web), delivering a consistent and easy-to-interact-with message, and [providing] response mechanisms that cross multiple channels, consumers will have more options to interact with direct mail. We see mobile elements, like QR codes, increasingly being used in direct mail to bring the media “to life.” With QR codes, brands can help facilitate the dialogue between brand and consumer by providing instant access to more detailed product information, videos, exclusive discounts, and access to instant mobile ordering. As long as it’s used as part of an integrated marketing strategy across multiple channels and includes a clear and consistent message and call-to-action, direct mail will continue to be an important part of the marketing mix.
Hamilton Davison, President and Executive Director, American Catalog Mailers Association
MYTH: The Internet killed the catalog industry.
REALITY: No, the Internet is the best thing that happened to cataloging since the invention of the high-speed printing press. Today, more than 60% of orders come via the Internet, but the mailed catalog is the prompt that drives them. The Internet’s great if you know what you’re looking for, but it’s a lousy browsing vehicle.
Also, marketers cannot make customers open an email, browse a website, or even visit a retail store. But catalogers can send a book that more or less forces customers to—at the very least—pick it up, look at its cover, then decide “read or recycle?” In that 300-millisecond mindshare, customers can be romanced, told a story, and invited inside. Contrary to what some believe, no other media has the welcome invasiveness, effectiveness, or impact of a mailed catalog.
The “extinction” myth has also been fueled by consumer misperceptions. Nowadays, it’s rare to hear an average consumer say “I bought it in the catalog.” More often than not, it’s “I bought it online.” They do buy it online. But what often is overlooked is that receiving a print catalog is what led them to order online.
Dan McDade, President and CEO, PointClear
MYTH: It just doesn’t work.
REALITY: I was in the B2C and B2B direct mail marketing business for close to 20 years before moving over to my current focus on outsourced B2B inside sales support in 1991. Close to 40 years ago, when I was a very active member of the DMA, I was asked to defend direct mail against critics that said things like “it doesn’t work” and “my mailbox is filled with ‘junk mail’ and catalogs I don’t want and didn’t order” and “stop killing trees.” My response then is still true today. Direct marketers would go out of business quickly if they sent too much mail to people who weren’t interested. A recent article in The Wall Street Journal states: “While shoppers are increasingly buying everything from shoes to sofas to cars over the Internet, they still like browsing through the decidedly low-tech artifacts of page and ink.”
Direct mail is in fact making a comeback and that is because the market responds to multitouch, multimedia and multicycle campaigns. I enjoy the printed newspaper, paperback books, and, yes, catalogs and other direct mail. I am not alone.
Looking for the complete PDF? Find it here.