Brave New Mail: The future of direct mail depends on marketers’ responses to demands for relevant mail and rising costs amidst shrinking budgets

4 Mar

Originally Published in Inside Direct Mail
by Britt Brouse
Feb 1, 2008

For our 20th anniversary issue in 2004, the Inside Direct Mail editors revisited the industry’s biggest trends and evolution with direct mail experts. Remember when AOL mailed the first diskette in 1993, or when National Geographic Travel rolled out with a billboard postcard and a smaller postcard rode along in a plastic pouch? Since then, the direct mail industry has come a long way.

With the rapid increases in technology, new marketing platforms, retiring baby boomers leaving the work force and generations X and Y coming up through the ranks, the industry is adapting. Here, experts reflect on the changes they see in the industry, trends they believe will shape future control mailings and what the next generation of marketers needs to know to keep the industry thriving.

Reaching New Prospects

In the heyday of direct mail, there was less advertising clutter and consumers were more attentive to marketing messages. Now, consumers have shorter attention spans, expect faster turnarounds and are more discerning. The Internet has democratized consumers by offering product reviews and ratings and more corporate transparency. “I think marketers today are approaching probably the most intelligent or best-educated people … they know when they’re being sold and there’s so much skepticism,” said Ted Kikoler, president of Ontario-based Ted Kikoler Design Inc.

Today’s prospects want targeted and valuable messages they can respond to quickly and efficiently. Improved targeting heightens the message value to the customer. “I think what people want is relevance. It’s only junk mail if it’s not relevant to you,” shared Nancy Harhut, SVP and managing director of relationship marketing at Boston-based Hill Holiday Direct.

To make your mailer a keeper, you must hit your target and impart a valuable nugget of information to the recipient. For example, Kikoler suggested a moving company’s direct mail piece, featuring 10 handy tips for movers along with its offer, is more likely to wind up on the refrigerator than in the garbage. Adding online response options to direct mail also helps, as it encourages those prospects looking for a quick turnaround and makes it easier for marketers to collect e-mail addresses.

In the future, we’re sure to see marketers ceding a bit more control to consumers about preferred touchpoints and messaging. “We are in a society now where the consumer is in control, and, in terms of direct mail, that would translate into having different ways to respond, electing how you’re going to be communicated to and how often you’re going to be communicated to,” said Harhut.

The Direct Mail Association’s (DMA) Commitment to Consumer Choice, introduced in October 2007, requires DMA members to notify consumers of the opportunity to modify or eliminate future mail solicitations. This policy is altruistic, but creates a new challenge for direct mailers. “I do know that we want to be good citizens, but the more choices we give people in a mailing, the more we ask them to do, the less likely they are to respond to it. We have to hope that our customers will be good citizens and continue to respond well,” said Simon Aronin, associate publisher for Scientific American.

Testing Today, and Tomorrow

Testing has become tougher in today’s direct mail market, with increased postal rates, higher costs of materials and production and competition from new media revenue streams. Some direct mailers are feeling budgetary and strategic cutbacks. “I think people are being asked to do more with less, both in terms of funding and with actual human resources,” Harhut said.

So what are marketers testing in such an environment? Aronin noted more direct mailers are simply testing overall package wins instead of individual elements. He attributed this trend to a need for better response rates and ROI, which small tests or single-element tests typically don’t deliver. Aronin recommended testing mail dates in an effort to beat the cluttered high-volume times of the year, exploring deeper into expired client databases and trying cross-promotions between families of related products—as all three tests can increase response without inflating budgets.

In terms of format, most mailers are trying to beat the 2007 postal rate increase with new shapes and sizes. The 9×12″ flat, 81⁄2×11″ magalog and other oversized packages used to promise big open rates, and some have been long-standing controls. Now, if companies decide to go bigger, they need to justify the cost of the format with exceptional response and returns. As a result, many marketers are testing what Greg Wolfe, president of Norwalk, Connecticut-based Circulation Specialists, called a letter-sized magalog, or a slim-jim magalog. “It’s about 6×10″, so it still qualifies as letter rate, and we have to tab it on the open side to get the letter rate postage. But, it’s a magalog format and it has the order form and a BRE,” he explained. The Who’s Mailing What! Archive also has received 81⁄2×11″ catalog and magalog mailings that are folded in half and wafer-sealed to achieve lower rates. With the correct design, this quick fix can work, but new shapes and sizes are ultimately necessary to beat the open rates of previous oversized controls.

The voucher is another popular solution on the rise in direct mail since it’s inexpensive to produce, simple to design and has a high pay-out. “I think direct marketers are looking at [vouchers] because they are a more economical approach, but I also think they are working and proving themselves in the marketplace,” Harhut said. Vouchers are evolving into more full-blown packages, with tests run on additional bells and whistles. One example is Harhut’s recent test of a #10 voucher package updated with a Kraft-style envelope for a 20 percent increase in response, and retested with a Post-it note for a total 25 percent lift above the control. Josh Manheimer, copywriter and owner of Norwich, Vermont-based J.C. Manheimer & Co., encouraged marketers to push voucher creative even further. “If you put in a little buckslip and it works, why not test it with a two-page letter or a four-page letter? It seems like there’s a threshold that people don’t want to go beyond; they don’t want to increase costs, but they often don’t want to find out if a more expensive package will work,” he said.

Incorporating, Not Ignoring, New Technology

Direct mail has a lot more in common with new media channels than one would think. “Things we’ve seen work well historically in direct mail are also proving themselves to work well in e-mail. There are just certain things that, regardless of channel, trigger interest. We’re applying them to different channels and different media, and it’s still working,” said Harhut. Aronin agreed that there will be continued integration between direct mail and online marketing, as each year he sees his publications’ online responses jump by approximately 1 percent.

E-mail is a good channel for testing direct mail ideas. “With the Internet, you can have an idea about an offer or a headline, you can test it and the same day you can have a pretty good idea about whether it’s working or not. It’s a bit like putting your toe in the water before you jump in—it gives you a rough idea,” said Kikoler.

New technologies, however, are not going to altogether replace direct mail—at least not anytime soon. Wolfe said that due to its low rate of return, an e-mail campaign usually has a much higher cost-per-order than a direct mail campaign—especially in publishing. “As expensive as everybody complains that direct mail is, it’s still less expensive for magazines than almost anything else,” he shared. Wolfe said publishers’ websites are beginning to contribute revenue at reasonable volumes, but not at any level that would allow a cutback in direct mail. “It seems that there’s sort of a gut reaction to run online and do multimedia stuff because it’s so cheap in one way, but I think you end up losing a lot,” Manheimer added.

Wolfe cited a recent mail-to-PURL campaign that seemed rather slick to his team of marketers on the back end, but completely flopped with consumers. They used every Web tactic available, including video and pre-populated customer data, yet the campaign did not provide a desirable response. As PURLs replace the floppy disks and CDs of the past, marketers cannot blindly depend on new technologies. They need to continue testing and applying direct mail rules to succeed. “To keep direct mail alive, people have to balance it against other channels that they’re using. You have to start thinking about how to integrate channels,” Aronin said.

A Look Ahead

The key to future success is to make sure direct mail gets a good portion of the full marketing budget, alongside the other channels. Direct mail marketers also need to educate and apply the science of direct mail across other media. “Direct mail testing teaches you a discipline that you should carry over to other places, and Web marketers, many of them don’t have the discipline for real direct response marketing that direct mailers have,” Aronin observed.

Developing new controls that will succeed in the face of the changing marketplace ultimately depends on marketers’ willingness to test. “The question is: Are people going to continue to be educated and test? Has a piece been challenged by the best? That’s what the control is—just the winning package,” Manheimer stressed.

As for the new formats and future controls, change in direct mail is akin to a slow evolution. It may be years until the next generation of industry professionals develop new long-standing controls.

“It takes decades of practice, experience and training to become very skilled. So, even though a young person might come up with an innovative idea, the problem is, you have to test a thousand innovative ideas before you find one that’s really better than what’s been done before. I think that the next generation will be doing a great job in 10 or 20 years,” Wolfe speculated.

Until then, keep experimenting by mixing old ideas with the new. And, of course, test and wait to see what the next best thing will look like.

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