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E-mail vs. Direct Mail
By Sharon Neuenfeldt and Scott Spencer, Decision Intelligence
A controversy is brewing within the marketing community. Depending on who you talk to or which articles you read, people have strong opinions on what is more effective—direct mail or e-mail.
There are valid points to be made on both sides of the argument. Some in the marketing industry think direct mail is dead due to rising postage costs and the assumption that Americans today rarely read direct mail. Other marketing professionals disagree saying it is e-mail marketing that cannot survive due to spam filters, impatient consumers and inept email marketing practices.
With the evolution of internet marketing and advanced, personalized landing pages, an increased number of marketers are beginning to reallocate advertising dollars in favor of sending more marketing messages via e-mail. This is aided by the perception that e-mail marketing is less expensive and more relative to today’s lifestyles.
The reality is that a successful campaign encompasses both marketing vehicles. Combining efforts by using direct mail to support e-mail and vice versa will result in a positive return on investment (ROI). That being said, there are multiple factors marketers need to consider when choosing one method over another.
By examining the most important factors considering both email and direct mail, marketers can better asses how to correctly allocate funding and distribute their marketing messages.
There are obvious delivery issues with both direct mail and email messages. When using either method marketers have to be aware of filters that may prohibit their message from reaching desired recipients. Consumers can opt out of receiving direct mail through the Direct Mail Association (DMA) by using the Mail Preference System and/or the DMA Commitment to Consumer Choice program. Mailers who are DMA members must comply with “Do Not Mail” requests or risk being penalized. Additionally, non-compliance can be detrimental to maintaining positive customer relations.
Many marketers prefer to use e-mail because it is an easy way to send a broadcast message to a large audience. At the same time, there also are easy ways for consumers to opt out of receiving such messages. Overburdened consumers can report mailers as spammers, which can lead to internet service providers (ISP) blocking all e-mails if a mailer exceeds the spam threshold.
Mailings often contain time sensitive messages, so it is important to make sure customers are receiving them within the desired time window. The United States Postal Service (USPS) does not offer the same flexibility and quickness that e-mails offer, with its six-day per week mail service and 1-3 day delivery time. E-mail allows mailers to distribute their messages 24-7 and much of the time the message is delivered almost immediately. Sometimes there may be a longer lag time depending on ISP rules and traffic.
It seems like everybody in the U.S. uses e-mail and the Internet in some way, shape or form. According to a study completed by Mediamark Research in spring 2008, approximately 70 percent of adults had accessed the Internet within the past 30 days. Of that group just over 60 percent of users had went online at home. The remaining population accessed the Internet at work or via public Internet connection in places such as libraries or cafés.
Theoretically everyone in the U.S. can receive direct mail for free, while people with home access have to pay for Internet service.
The majority of success that results from a mail campaign is derived from the campaign’s mailing methodology and tactics. However, there are some factors can affect the success of a direct mail campaign that marketers have no control over. For example, approximately 15 percent U.S. residents move each year and only 85 percent file a change of address with the USPS. So although the number of new and unaccounted for mailing addresses seems high, marketers have the ability to routinely update their mailing lists to remain accurate with the USPS database.
On the other hand, 35 percent of people change their e-mail address each year and there is no reliable way to find new/changed e-mail addresses. There are products that claim they can direct marketers to new addresses but they have not proven themselves to be reliable.
An obvious component of determining a campaign’s ROI is the amount of funding invested to execute the campaign. What is not so obvious are the opportunity costs associated with using e-mail, which are greater because of consumer activity such as changing e-mail and blocking messages. Direct mail’s higher immediate costs, including postage and production, should not be the only costs taken into account.
Marketers perform endless research to examine how they are perceived by consumers. Sometimes the results do not indicate a clear-cut answer to what consumers want to see. Many consumers place high value on being environmentally conscious and associate e-mail as being good to the environment. Other consumers value their privacy and think that e-mail marketing is intrusive.
When using either method it is important to gauge whether the chosen delivery method obtained the desired results. Direct mail is generally easier to measure when comparing profits versus costs and response rates, which are still higher than e-mail response rates. Measuring e-mail results is difficult because the various tangibles associated with this method are not very well defined.
Both delivery methods offer marketers different options for driving consumers to the point of purchase. Some consumers prefer the tactile value and longer shelf life that direct mail presents. These consumers find certain pieces of mail interesting and even though they may not buy right away, they hang on to the piece to look at later. Direct mail tends to achieve higher average order volumes, especially when a call center is available to consumers.
E-mail messages generate a more immediate response and often times provokes impulse buying. The flipside is that e-mail has a very short shelf life and people also can choose to delete the e-mail quickly. E-mails can generate higher order volume as more products can be found on Web sites. Websites can then offer add-on buying suggestions but response rates still tend to be only one-tenth of rates achieved by direct mail.
What marketers should do
The best advice for marketers is to be aware of the pros and cons of each channel and use each method’s strengths to drive business growth.
Tailoring messages to fit customer’s preferences is important to getting favorable responses from consumers. Companies can allow consumers to set specific preferences by using direct mail to steer them to the company Web site. Once the customer is on the Web site, an e-mail address can be collected or confirmed and a channel preference can be established.
By implementing both methods, marketers can capitalize on consumers’ immediate and long term preferences by offering consumers the different shopping experiences e-mail and direct mail present. It is important to carry the same brand and messages throughout both mediums. Mismatched messages can confuse consumers and have an adverse affect on the process.
A well thought out campaign that conveys the intended message will achieve maximum revenue but attributing revenue to a specific channel is a daunting task. Revenue attribution is the number one problem marketers have yet to solve. This is an area where marketing analysts have been working feverishly to develop tools to assist marketers in gauging the revenue driven by each specific method.
After examining the many different facets of a marketing campaign, the conclusion that sensible marketers have drawn is that the winning formula is to use both e-mail and direct mail. Marketers may be very surprised to see how much direct mail and e-mail support each other. There are clear-cut advantages to utilizing a strategic mix will and the result is much higher total profit for the company.
Sharon Neuenfeldt and Scott Spencer are both managing principals at Decision Intelligence, Inc., a Minnesota-based analytical database marketing company. Comprised of industry leading experts, Decision Intelligence offers one of the most experienced, highly trained and well-respected staffs in the analytical community. Decision Intelligence provides innovative products and services for companies that house large databases used for marketing purposes. It specializes in analyzing vast quantities of consumer data to help companies market more efficiently.
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