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Spineless Slugs!   [Mailing Systems]

January 1, 2013

Todd Butler

Published by Mailing Systems Technology

The direct mail industry’s senseless capitulation to on-line advertisers!
 
It’s been fifteen years since a good customer of mine told me that soon, he wouldn’t need our mailing services any more as he was taking his two catalogs on-line. Even though in 1995 he was ahead of the market (and available technology), he no longer mails 200,000 catalogs every six weeks.
The hype continues from on-line advertisers that only the Internet can deliver digital, interactive marketing, and that their advertising is delivered faster and cheaper than advertising delivered by the United States Postal Service. As our customers and marketing dollars shift to on-line vendors, the direct mail industry has never raised a challenge to the on-line hype and has been cowered by the medium’s supposed superiority. And yet Internet based advertising is an inferior, more costly marketing channel than direct mail. 
On-line advertising lacks direct mail’s ability to tactilely interact with a targeted consumer and can not deliver the same depth of engagement possible with a physical mail piece. Through the inclusion of digital media (CD/DVDs, thumb drives, web keys), a direct mail campaign can deliver the same interactive multimedia and web connectivity provided by on-line advertising. Functionally there is nothing on-line advertising does better than direct mail! Even so, we continue to let on-line advertisers steal away our customers with lies and falsehoods.
For the spineless slugs working at the US Postal Service and their brethren in the direct mail industry, here are some “facts” that cut through the on-line hype and hopefully energize our industry to begin defending itself in the market place.
Direct mail is the faster more certain delivery channel:
The Internet does not deliver! It can make information instantly available but requires consumers to go on-line for retrieval. The time from posting (measured in minutes, hours, days, and sometimes years) to actual download of content is dependant on when the consumer finds out information is available and then how long (if ever) that consumer takes to go on-line and retrieve the information. The Internet is like a library, full of information maintained by librarians that can’t leave their cubicles.
Instant Availability is not Instant Delivery!
The Postal Service delivers video to homes and offices. YouTube makes video available over the Internet. Posting a YouTube video makes it instantly available to the world but YouTube can not deliver it to specific people. Postal Service distribution of marketing videos is not instantly available, but does place the video (contained on digital media incorporated into a direct mail piece) in the hands of targeted consumers.
Last year Western States Envelope integrated a disc (containing a video testimonial1 for one of their product lines) into their quarterly newsletter. It took the USPS fourteen days to deliver the newsletter to Western States’ customers. On the day the enhanced newsletter was mailed, the video was also posted on YouTube.
During the fourteen day delivery window, the USPS placed the Western States’ newsletter into the hands of 26,800 customers. During the same fourteen days, YouTube provided the video to thirty (30) people that found and requested it on-line. Most of those thirty views were people from Western States admiring their handy work. In the thirty days after posting, YouTube delivered a total of 103 videos. Twelve months after posting, YouTube has delivered a total of 622 videos. At this pace YouTube will take 43 years to deliver the same number of videos the USPS did in fourteen days. Obviously postal delivery of video is faster than on-line.
Direct mail is less expensive than on-line advertising:
Using Email Marketing for Acquisitions
The simplest comparison to make in evaluating the relative costs of direct mail and email marketing is to compare the associated costs of delivering a fully functional (graphics included) marketing message to consumers. Some background information is necessary to make this comparison.
Listpriceindex.com2 tracks the average cost of BtoB and BtoC email lists. The current cost for BtoB is $273/m (thousand) with BtoC being $109/m. The V12 group3 has a handout, “Email Marketing Overview”, which they use for shows. On this piece of literature they have a chart that “depicts 2010 campaign results for acquisition email marketing.” This chart lists 16 industries that in total averaged a 2.48% email “open” rate in 2010. In one of their blogs on email open rates4, Lyris defined an “open” as the rendering (downloading) of a graphic element.
Email has a functional advantage over paper based direct mail in that it can provide clickable links to the Internet. If digital media such as a DVD is integrated in the direct mail piece, direct mail can not only carry live links but flash programming, video, music, and anything else digital. This enhanced piece can be entered into the postal mailstream for as little as $1.00 each, programming not included.
Direct mail has a functional advantage over email in that 100% of direct mail pieces are fully functional (readable) at the time they are delivered by the USPS. On average, only 2.48% of email messages (according to V123) have their graphic elements downloaded. Since the graphics in 97.52% of acquisition emails are not downloaded, these emails do not deliver a functional (readable) marketing message. The only thing these emails deliver are blank boxes with an “x” in them.
If the cost of sending 1,000 emails is $273, and 24.8 emails (2.48%) deliver their intended marketing message, the cost per readable message is $11.00 each ($273/24.8). If the list cost is $109, the cost per functional message is $4.40 each. The cost of delivering the same number of readable messages (graphics included) using a digitally enhanced direct mail piece would be $25 for the delivery of 25 messages. Or, as stated earlier, $1.00 for each message delivered in a superior, fully integrated, and functional marketing package!
Clearly, direct mail is substantially less expensive than acquisition emails!
Comparing Click Costs
The USPS has been measuring consumer reaction to advertising direct mail for more than 25 years in their annual Household Diary Study. This study, averaged over the last five years, says that 82% of recipients of advertising mail read or scan advertising pieces.
A click on-line is when a consumer clicks on a link that then opens a new page containing more information. This page is then displayed for viewing on their monitor. A direct mail piece that is opened also displays a new page(s) with more information, just like on-line. If direct mail delivers a comparable consumer action, intentionally displaying a new page with more information, then this action can also be defined as a click. Since 82% of direct mail is read or scanned, direct mail has a click rate of 82%. Click here5 for more information and a graphical depiction of this concept.
Banner Ads
Double Click6 in June of 2009 reported that for every 1,000 views of ads displayed across their ad network, one person would register a click. Adify, another banner ad provider, posted a chart7 of various industries showing that the average cost per thousand views in the first quarter of 2010 ranged from $3.65 to $10.97. This chart therefore provides a cost per click for banner ads based on the response rate reported by DoubleClick6 of one click per thousand views.
Disc based direct mail can be generated for as little as $1.00 each. With an 82% click rate, the click cost for this enhanced mail piece is $1.22 ($1.00/82%). Current Banner Ad click costs range from $3.65 to $10.97. Obviously, direct mail is substantially less expensive than banner ads.
Search Engine Marketing
Click costs for SEM are whatever the marketer bids for a 111 character ad with no graphics but does contain a hyper link. With SEM, the bid cost has to be adjusted for the 22.3% fraudulent clicks8 that are endemic in search engine and other forms of on-line, cost-per-click marketing. A $1.00 bid adjusted for click fraud delivers an actual cost of $1.29 ($1.00/77.7%) per click. It’s easy to see that anyone paying more than $1.22 per click (the click cost for disc based mail) for search ads is paying too much for their digital advertising. 
Direct mail can be as simple as a postcard or as complex as a multipage mailer containing digital media such as discs, thumb drives, and web keys. It can incorporate QR Codes for mobile advertising. It can be personalized from the printed piece to the content on the digital media, which can contain links to personalized content on the web. Because it’s physical it can interact with all five of consumers’ senses, including taste and smell, and it can carry a return envelope for donations. It is time for the direct mail industry to grow a spine and compete with the more expensive, inferior product being sold by on-line advertisers.
 
1.       eKEY® Video Testimonial http://www.youtube.com/user/WStatesEnvandLabel
2.       Average cost of email lists http://www.listpriceindex.com/currentlpi.htm
3.       V12 group, Email Marketing Overview (printed ad piece) http://www.v12groupinc.com/
5.       DiscMail vs. On-line Advertising: A Cost Analysis http://www.butlermail.com/Impatica%20Files/DiscMail-Cost-Analysis.html
 
Todd Butler
Butler Mailing Services
eKEY® Technologies
513-870-5060
 
Making postal delivery, an interactive multimedia experience!
 


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