Get More Multichannel Muscle

Mailers are suffering in the silo with lean budgets, slimmed-down efforts and dwindling response rates. Go multichannel in the right way to re-energize your campaigns

November 1, 2009 by Michael Bloom, direct marketer

singlepage

Direct marketers are a resilient bunch. Since the dawn of the internet, experts have been predicting the demise of direct mail. But like a comic book superhero, direct marketing is hard to kill. Nevertheless, the industry constantly faces an uphill battle for respect. Just a couple of months ago, a new report was published that calculated a quick death for direct mail at the hands of the merciless internet.

According to a report by research firm Borrell Associates, "Direct mail has begun spiraling into what we believe is a precipitous decline from which it will never fully recover." This pessimistic outlook projects a 39 percent decline for direct mail over the next five years, from $49.7 billion in annual ad spending in 2008 to $29.8 billion by the end of 2013. And who will ultimately benefit from this? Borrell believes email marketers will take the crown as the kings of direct.

"Email advertising is indeed skyrocketing while its traditional counterpart plummets," Borrell notes. "In fact, last year, email advertising quietly moved to the number one online ad category spot, surpassing all other forms of interactive advertising."

So does this report suggest email marketing will be the kryptonite that finally brings direct mail to its knees? Not exactly.

As always is the case, no one channel entirely displaces another. In fact, all channels are converging, and marketers need to understand how to integrate and gain value from multichannel strategies based on consumer demand and preference. The smart marketers are the ones paying attention to the value that can be gained from the synergy of complementary channels versus buying into the death of the channel.

Yes
... the Going Is Tough

It's true that email marketing has contributed to a decline in direct mail due to channel financials and the growing acceptance of email as a shopping/transactional channel.

Direct mail has suffered from a perfect storm of postal rate increases, declining consumer response rates, paper cost increases, shrinking target universes and the rapid advance of online targeting capabilities.

Financially speaking, many direct mail organizations in specific marketing verticals are approaching a "tipping point," where the fixed infrastructure costs are making direct mail a growing impossibility.

... Nearly All Direct Mail Buyers Are Transacting Online
Most traditional direct mail consumers now shop online—specifically via email—and the profiles of direct mail vs. email users are heavily overlapped.

This fact is contrary to the decade-long misconception that online users represent a uniquely different consumer segment (younger, more affluent), which was insulated from the traditional direct mail buyer.

The overwhelming majority of traditional direct mail buyers ALSO transact online, and the demographic profiles of direct mail buyers and online buyers are much more alike when it comes to age, income and gender.

All consumer segments are represented among online email buyers.

... Email Will Grow While Direct Mail Will Shrink
Email will grow while direct mail will shrink, especially considering 2009 financial realities and the need to improve ROI.

Compared with direct mail, email benefits from a much lower cost structure and a much faster speed to market.

Creative testing is much less expensive in email, and results often can be read within a week of campaign deployment.

Email is an effective mechanism for testing offers quickly and cost effectively, and winning offers then can be rolled out into direct mail campaigns.

However
... Direct Mail Remains Very Viable
Direct mail is not spiraling into a precipitous decline into oblivion from which it will never recover.

While the postal channel is declining, direct mail is still one of the most significant channels for direct marketing.

Many consumers continue to rely on this "addressable media" of direct mail to give them the trustworthy sense of permanence and terrestrial stability they require to transact.

Under CAN-SPAM, even emails are required to include terrestrial addresses to be compliant.

... Direct Mail's Response Rates and Reach Exceed Email's
Email response rates will never approach, in absolute terms, the response rates for direct mail.

Typical direct mail response rates are quantum levels above email response rates.

Direct mail often has broader reach to everyone with deliverable postal addresses while the subset of consumers with active and deliverable email addresses AND valid postals on file is not nearly as abundant.

The average consumer move rate for postal addresses is in the 15 percent to 18 percent per year range while the average deterioration rate for emails is roughly double that, at 30 percent to 40 percent per year, because consumers more frequently change/expire their email addresses.

... Direct Mail's Foundation Remains Stronger
Email will never be the "iron horse" to fully replace the "horse and carriage" direct mail.

Direct mail buyers tend to be higher-quality than online buyers-higher pay rates, lower bad debt rates and higher conversion rates.

Direct mail targeting capabilities are more precise than email targeting to date because much more is known about consumers based on their postal addresses than on their email addresses.

Finally
... a Successful Future for Mailers Is an Integrated One
Integrated multichannel marketing combining email AND direct mail will prevail as the most powerful driver of high ROI campaigns. It's relatively simple to understand: Campaigns that combine email and direct mail consistently outperform email-only and postal-only campaigns in terms of higher overall response rates and higher average order sizes.

Consistent messaging and consistent offers between channels are critical. Bear in mind that direct mail has a longer shelf life than email, and postal campaigns typically have a longer response curve ("longer tail") than email campaigns, which provide some ongoing benefits.

Consumers will benefit from integrated multichannel marketing through faster, more convenient and more engaging shopping experiences. Integrated multichannel campaigns reinforce brand messages, deliver better-quality consumer experiences and enable consumers to transact most efficiently in the channels they are most comfortable.

In particular, I support "email bookend" campaigns, with emails delivered one week before and after the direct mail in-home dates, and believe they are very effective multichannel strategies. As a part of these campaigns, postal creative pieces should reference inbound telemarketing phone numbers, website URLs and notify consumers about emails-and vice versa.

Companies that focus on building integrated multichannel marketing platforms will become leaders in the direct marketing industry. Eliminating silo databases that are segregated by channel in favor of integrated multichannel platforms combines all 360 degrees of consumer behaviors via email, online, postal and telemarketing-consolidated at a human level.

Along these lines, incentivize so consumers will provide this multichannel information, perform e-appends to add emails to postal addresses and invest in maintaining the accuracy of this data. Properly integrated multichannel platforms also enable multichannel analytics and models to help optimize contact strategies, communications frequencies and channel sequencing.

When glimpsed through the multichannel lens, the future for direct mail looks decidedly better.

Michael Bloom is general manager of Datran Direct at Datran Media, with CRM and eCRM experience, executing online and offline campaigns in email, display, e-commerce, search, postal and telemarketing channels for Fortune 500 and privately held companies including AT&T, Time Warner, Audio Book Club and Sony. For more information, email tfernandez@datranmedia.com or call (512) 857-7353.

• MORE ON
• DIRECT MAIL
• EMAIL