Two recent news items combined to present a bleak outlook for those in the direct mail industry. First, the U.S. Postal Service announced that, pending approval, the price of first class postage will rise by 3 cents, to 37 cents, as early as June 30. Secondly, a study by GartnerG2, a research arm of the consulting firm, Gartner, Inc., concluded emphatically that "direct mail is on the decline," quoting the enormous rise in e-mail advertising revenue (from $948 million in 2001 to $1.26 billion in 2002).
For those of us in the direct marketing trade, this shift has meant a radical change in our businesses. Case in point: three years ago, our agency produced ninety percent of its work as direct mail campaigns. Today, eighty percent of our campaigns are delivered online.
For marketers in the trenches, however, these trends pose equally important questions, namely: given the (growing) cost advantage of electronic media, does it make sense to consider direct mail as an ongoing part of your marketing mix?
The answer is less black-and-white than you might assume. And marketers would do well to ask some hard questions before they jettison direct mail altogether. Before we tackle those questions, however, let's look at the hard facts:
* Direct mail is more expensive, and getting more so. Broadcast e-mail alone is typically half the cost (or less) compared to its print counterpart. (The Gartner report quoted direct mail as 10 times more expensive, but this appeared to be based on production costs only, and failed to take into account other, fixed costs like creative.)
* All things equal, direct mail is not significantly more effective. The Gartner report maintained that response rates for both types of media hover at around 1 percent. Any seasoned direct marketer knows that such an "industry standard" response rate is a myth, and that response varies widely based on a thousand variables, but our experience shows that in similar campaigns for similar (or the same) clients, direct mail is only marginally more effective (and not enough to outweigh the additional cost).
* E-mail is quicker to produce, and quicker to yield results. Roughly speaking, e-mail campaigns take half the time to deploy compared to direct mail programs, and marketers can expect up to 90 percent of their results within as few as 48 hours.
* The audience for e-mail is growing. Only a short time ago, we are advising our clients that non-technical prospects were best reached through direct mail. Today, you don't have to be selling to software developers in order for e-mail to be an appropriate choice. In addition, the proliferation of e-mail newsletters and the associated sponsorship opportunities have broadened the online media landscape considerably.
Surely then, e-mail is a marketing juggernaut that can't be stopped, and direct mail is simply roadkill on the information superhighway. Yet other factors suggest otherwise:
* A growing (and vocal) percentage of the population hates commercial e-mail with such passion that even if you were to acquire their e-mail address through nefarious means, they are for all intents "unreachable" via the electronic medium.
* The legislative future of e-mail is murky at best. Several states are poised to enact "do not spam" lists similar to the "do not call" files maintained by the DMA (Direct Marketing Association) lists. Though not yet mandated to do so, ISPs are under pressure to filter or block unsolicited e-mail. Inevitably, this will impact the effectiveness of "legitimate" (i.e., permission-based) commercial e-mail, if it doesn't already.
Marketers, therefore, would do well to consider two basic questions before deciding to go "cold turkey" on direct mail strategies:
1. Is my target audience one that can readily be reached online?
Direct mail lists have one distinct advantage: they enable you to "drill down" with much more specificity than is currently possible with most e-mail lists. That's not an issue for some companies, but if you're targeting a particular B2B niche or narrow consumer demographic, the relative effectiveness of direct mail is likely to be increased substantially. (Note: just because individuals in your target audience are likely to have e-mail addresses, don't assume they're automatically an appropriate target for an e-mail campaign. Fortune 1000 executives are almost all online, but try finding a quality, opt-in e-mail list that enables you to target this group with any precision or reliability.)
2. Is the universe of qualified, opt-in e-mail addresses that meet my criteria sufficient to drive my entire marketing plan?
Here again, the more narrow your audience, the more likely direct mail will play a role in your marketing mix. Though the overall universe of opt-in e-mail names is growing, companies often need to integrate direct mail with electronic media simply because there isn't (yet) the "critical mass" of either e-mail names or e-mail publications sufficient for them to meet their overall marketing objectives.
Twenty years ago, around the dawn of the personal computer, technologists were proclaiming the imminent arrival of the "paperless office." Needless to say, those prognostications fell short of their mark. Similarly, the rumored demise of direct mail may also prove to be (in Mark Twain's words) "greatly exaggerated." In sum, marketers would do well to take advantage of all options open to them, mix-and-match as necessary, and continue to choose those tools and strategies that provide the best fit for their specific audience.