October 19, 2017

Is Direct Mail Dead?

Jeff Giordano

Jeff Giordano
CEO/IR Holdings International, LLC

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At the outset, it's probably a good idea to define "Direct Mail". For the purposes of this article, it means Solo Direct Mail, a piece mailed on its own and not a ride-along [e.g. Package Insert, etc.] promotion. The format is irrelevant in that it could have an outer envelope or it may simply be a self-mailer.

In a world of omni-channel marketing, what's most important is that marketers' remain channel agnostic. Therefore, just because I'm focusing on Direct Mail [DM], doesn't mean I'm advocating anything other than a multi-channel approach.  With that said, DM brings certain unique benefits: 1. It's hyper-targeted and personal; 2. it allows you to be brand-impressive; 3. it's tactile and resides in the physical world; and 4. it provides robust response metrics.

Not just for Boomers:  With 75M Baby Boomers accounting for 1/3 of our population it's easy to understand why DM is often focused on this demographic. Historically, we know they respond to and trust this medium.  But, what about Millenials? You might be surprised by the data:

  • In a recent survey Millenials saw DM as more TRUSTWORTHY than Digital Ads and email;
  • In various Recall Rate studies Millenials have demonstrated a 70% greater RECALL RATE when exposed to DM vs. Digital Ads;
  • Over the course of a year, 23% of Millenials exposed to DM will PURCHASE or ORDER as a result of the promotion.

Scale of the Medium: Yes, in spite of certain annual decreases [at least in the U.S.] marketers' continue to use DM. More than 55% of all mail sent is DM. DM as a medium still accounts for approximately $50B not including the approximately $9B in data costs directly attributed to DM campaigns.

Impact & Clutter: In 2008, the average American could expect to see 25 pieces or so of DM.  Today, that number has been reduced to approximately 19 pieces.  This coupled with less regular mail means each DM piece enjoys less clutter and is therefore more impactful. When we think about email, social and/or online display, I'm not sure we can say the same.

Response Rates and Costs: All good marketers seek to surround their targeted consumer using a layered, omni-channel approach.  Therefore, when comparing response rates it's important to remain channel neutral—if the channel in question is returning an acceptable ROI then it should continue. Also, without discussing Attribution, what often happens is that each channel is driven by the cumulative effect of all others. Run a significant TV-campaign and see the lift it provides to other channels to know that this is correct.

Response rates for DM vary widely depending on format, list, product and offer. Certainly, you'll find different response rates when mailing to your House File than you will likely find in an acquisition campaign.  Given this caveat, and based on my experience, you can expect DM response rates to run between 1% and 5%. Ten to 50 orders per thousand is extremely favorable when compared to email, Digital Display and Social.  

Costs, like Response Rates, can also vary widely.  What type of format and production quality do you desire? What type of mailing list [Compiled, etc.] are you using?  The list goes on-and-on...  For the purposes of this article, however, it's enough to say the DM is expensive and can range between $500 CPM and $1,500 CPM.

DM Marketers: DM will not work for every product and/or service offering. There is also significant complexity in developing a successful DM campaign. What DM will provide is a permanent way to deeply and, in some cases, elegantly tell your brand story. Of course, there are clear and historic rules and categories that dictate whether it's a testable medium for your brand. With that said, marketers like: Peloton Cycles, Hello Fresh, Victoria Secret, Ikea, Nautilus and many others are successfully using DM.

On the Horizon: Most marketers understand the importance of coordinating their traditional and digital campaigns. DM is no different and can, in a variety of ways, be connected to your digital efforts. There are also some interesting and new DM technologies that can close the re-marketing loop based upon your online campaign. Think of these as re-marketing in the physical rather than digital world. Still not fully tested, but certainly exciting.

In conclusion, the answer to the question "Is Direct Mail dead?" is "no".  Whether DM is right for your brand is an entirely different question. Trust an experienced CMO, Advisor or Agency to know whether it is a channel you should add into your omni-channel mix.

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