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A Contrarian’s View … Let’s Dominate!  [PostCom]

January 5, 2007

Todd Butler

Published on PostCom.org (1/05/07)
Interactive multimedia is the future of advertising. Studies attempting to justify direct mail’s value won’t change this reality. Increasing the use of personalization won’t either, neither will adding more colors or improving analytics. Broadcast TV and the movie industry know that interactive multimedia is the future, which is why they have aggressively moved their brands on line.
And the Postal Service?
Unfortunately an institutional lack of vision keeps the Postal Service from showing current and future customers how interactive multimedia, delivered by the USPS, can elicit substantially higher response rates for less money than advertising delivered over the Internet.
Myth One: Direct Mail can not deliver interactive multimedia.
Interactive multimedia delivered over the Internet is called rich media. Interactive multimedia delivered by the Postal Service is called Multimedia Mail. Multimedia Mail is the integration of print advertising, interactive optical disks, and the Internet. It carries the same programming, has the same functionality and delivers the same impact as on line rich media. With its ability to be proactive in targeting specific consumers Multimedia Mail is superior to advertising delivered over the Internet.
Myth Two: On line advertising is more responsive than direct mail.
In on line advertising everyone focuses on the click or click rate. A click is when a consumer intentionally or inadvertently opens an ad for more information. The ad that is opened may remain open a tenth of a second or for a substantial amount of time. But a click is a click and it costs the advertiser money. You will never here Goggle, MSN or Yahoo talk about purchase rates and why should they when advertisers are willing to buy clicks?
A click in direct mail is exactly the same thing as a click on line. It is when a consumer opens an ad for more information. On line a static banner ad is clicked on 0.27% of the time it is viewed. A rich media ad (interactive multimedia) is clicked 1.17% of the time and the best advertising on the net, search engine marketing, delivers a click rate of 2 – 5%. The average click rate for all on line advertising is 0.62% (DoubleClick)
And the click rate for direct mail? If you scour through the Household Diary Study (published by the USPS), you will find that 16% of recipients of mail do not read, partially read or scan their mail. That means 84% of recipients do read, partially read or scan their mail. If an inadvertent click, lasting a tenth of a second, is a click worth paying for then the reading, partially reading or scanning of a mail piece (which is functionally superior to a click) can be called a click. Again, the average click rate on line is 0.62%; the average click rate for traditional (paper based) direct mail is 84%.
Myth Three: On line advertising is much cheaper than direct mail.
Advertising Age released their Search Marketing Fact Pack 11/05/06. In the Fact Pack they have a chart showing the top tier search properties and average click cost. When averaged together, the average click cost for search engine marketing was $1.83. Search engine marketing is considered the best on line has to offer advertisers. It is also the only on line advertising to publish its click costs.
Knowing the cost per click on line and the click rate for direct mail (with Multimedia Mail providing an equivalent functionality) it is possible to calculate an In-Mail-Equivalency cost. The IME cost is the amount a marketer can spend per piece on direct mail to equal a stated click cost. The cost per piece for direct mail includes printing, replication, list costs, fulfillment, mail prep, shipping and postage. Programming and design costs are considered constant since these costs would be the same whether the ad is delivered over the Internet or distributed through the Postal Service.
The IME cost is the tool marketers have needed to make a head to head comparison of direct mail costs with the cost per click charged by on line advertisers based on common terminology and functionality.
So, let’s sell clicks!
The IME cost is 84% (the click rate for direct mail) of the actual or estimated click cost for on line advertising. If the average click cost for search engine marketing is $1.83, then the in-mail-equivalent (IME) cost would be $1.54. Audi mailed 200,000 Multimedia Mail pieces in 2004 for an in mail cost of less than a dollar per piece with 18% of the recipients signing up for a test drive. Audi’s calculated click cost would be $1.20, substantially less than the average search engine click cost of $1.83. Greater functionality, greater response, lower costs; Multimedia Mail does it all.
Myth Four: They will never play the disk!
Wharton found that video presentations were viewed by 90% of the recipients with 89% of the presentations passed along to family and friends. Forrester found in 2002 that 87% of recipients played the enhanced CDs they received in the mail.
DMNews (July 2006) reported that Wynn Casinos dropped 205,000 Multimedia Mail pieces in June. By July, Wynn had tracked 164,000 unique IP addresses playing the CD-Rom. That is an 80%; take it out of the mail box, take the disk out of the package, put the disk in the computer and play it, rate. Marketers need to compare Wynn’s 80% play rate with on line advertisings’ average click rate of 0.62%!
Postal management has taken the view that direct mail has a (declining) future playing a supporting role to the Internet. Not surprising, I’ve taken a contrarian view…Let’s Dominate!

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