Most of us call it “junk mail” while marketers call it “direct mail.”
Advertisers call it the most measurably efficient means of reaching potential customers.
Despite the buzz about e-mail and viral marketing, and the more high-profile print and TV campaigns, direct mail remains the most popular advertising medium in the country. Advertisers spent about $60 billion on so-called junk mail in 2006, an 8.5 percent increase over 2005, according to Robert Coen, senior vice-president at agency Universal McCann.
“It all goes to the largest trend in marketing data driving performance,” said Anders Ekman, chief growth officer at MRM Worldwide, one of the largest direct marketing agencies with an office in L.A. “Direct mail is still a powerful medium and a predictable source of acquisition business and communicating with customers. There’s data aplenty, with 40 years of effort invested in knowing who lives where and their demographics.”
Newspaper advertising brought in about $47 billion, broadcast TV $44 billion and cable TV $23 million in 2005, by contrast.
“Advertisers who throw their money into general campaigns can’t measure the effect, although they build the brand that way,” said Bill Whitney, executive creative director in the El Segundo office of Rapp Collins Worldwide, the largest direct marketing agency in the world. “But direct marketing in particular is test-able and track-able. You can tell what your return on investment looks like.”
Direct mail got a boost in 2006 from a tough election cycle; candidates, parties and interest groups all mailed repeatedly to lists of their supporters. But in his report, Coen predicted direct mail spending would increase another 7.5 percent next year. Nevertheless, even the medium’s advocates foresee an inevitable decline in postal advertising.
“Digital will ultimately overtake mail,” Eckman said, referring to e-mail and other Internet marketing techniques. “Consumers come to find you in digital channels and give you their data voluntarily in exchange for value. Now that customers are in control of the relationship with marketers, they’re becoming better at directing information to their specific interests.”
The big spenders on direct mail include the pharmaceutical and automotive sectors, according to Whitney. Also, financial services and especially credit card issuers depend heavily on the medium, he added.
Direct mail can scale up to the largest advertisers or down to small retailers and service providers. Smaller companies that don’t have the expertise of an agency can utilize what Whitney calls “the discipline of direct marketing test and learn.”
The definition of an acceptable response rate depends on costs and objectives, but according to a study by the Direct Marketing Association (DMA) released in October, for direct mail designed to get immediate sales, the average response rate was 2.2 percent.
Printing technology coupled with high-quality data allows advertisers to personalize messages as never before. Whitney said a mailing list could be divided and matched with different versions of a letter. By personalizing the message beyond the name at the top, the letter can speak to the customer’s geographic, behavioral or demographic particulars.
“The more relevant your message is to each person, the more likely you’ll get a response,” Whitney said. “That’s low-hanging fruit and they’re good customers.”
Currently, direct mail lists still offer the most complete data files on customers. In contrast, most e-mail lists are just that, with little demographic or behavioral metrics attached to them, according to Ekman.
‘Privacy backlash’
Critics of direct mail have long called it an annoyance and money-waster. The increased sophistication of data mining has made it a personal privacy issue as well. Several companies, such as Junkbusters and Orange County-based StopJunkMailNow.com, help customers protect their privacy and cut down on the volume of unwanted mail.
“We didn’t invent the privacy backlash; we are simply a focal point for the attitudes of many online consumers towards direct marketing,” according to Junkbusters. On the junk mail issue, the company recommends that individuals who don’t want to receive direct mail register with the DMA’s Mail Preference Service, a list of people who have asked to be excluded from mass mailers.
In the online future, consumers may need to opt-in to receive messages or offers. Ekman advises every business to head that way by making search engine optimization their top marketing priority.
