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May 26, 2009

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social media can save mail. Look for the article I'm writing for Mail: The Journal for Communication.

That is an interesting topic - I am curious how social media will save mail. I would think it would further reduce demand for postal mail. I will look forward to your article. Please post a link when it is published.

- Joe


The article talks about email taking share from Direct Mail. Email is so far superior in terms of ROI compared to direct mail. Think about it, with Cost per Action pricing, you only pay for the emails that get you results. Compare that to direct mail and you see that you are spending for about 98 to 99% of your mailings that dont work. Imagine taking that budget and only paying for the emails that worked? It's a no brainer.

The key here is the focus on prospecting. Email is not a viable prospecting or awareness-creation tool in a CAN-SPAM world. It is also much harder to target geographically, which is especially important for marketers targeting a specific demographic profile, or those with brick-and-mortar businesses like retailers and car dealers, law firms, home repair contractors, etc. There is no e-mail equivalent to targeted resident mail, which enables marketers to target a specific neighborhood, carrier route, Zip code, etc. based on demographic profile.

Don't get me wrong - e-mail is a fantastic marketing tool, and social media is just beginning to really flex muscle. But it shouldn't be an either/or equation, especially for marketers with a focus on targeted prospecting. The key, as always, is to identify the media mix that best supports your campaign objectives, and I'd contend that direct mail has an important place in that mix for many types of campaigns.

The ongoing growth of spam continues to erode the credibility of email as a prospecting tool. And frankly, it also affects the impact of emailing to existing customers.

There is definitely a place for email marketing. But it's high ROI also presents a fundamental weakness.

The low cost of email blasts encourages marginal companies and short-sighted marketers to over blast emails. As email volumes increase, we will see ever decreasing response rates just as we saw with the proliferation of excessive direct mail volumes.

The high cost of entry has actually increased the pulling power and credibility of well executed direct mail programs when compared to email.

Knowledgeable direct marketers do not ignore any medium based on single tests. Email, direct mail, social media, mobile selling, DR broadcast, the Internet -- all have a place in our tool chest.

This seems to be an ongoing debate and I believe that anyone who predicts the demise of direct mail is on the wrong path. Both online and off-line will eventually co-exist in the coming years. However, what the function of direct mail is will probably change. I think the current drive for online is because the ROI is supposedly easier to measure. I say supposedly, because people seem to forget that all your off-line advertising helps build the brand which in turn helps the online activity. The same goes for the reverse; the online activity helps the off-line.

I don’t think that anyone will have the answer for everything or be able to discuss this in a few paragraphs. This would be a great discussion for a long weekend away and just talk about all the different scenarios with people from different industries. Ultimately, it comes down to each company’s customer file and their interaction.

Let’s go through some basics that we are all looking for, acquisition, retention and reactivation.

Acquisition:
Online acquisition in the prospecting for will via SEO and PPC. This is mostly due to the fact that the people using the search engines for purchases are ready to buy. E-mail appears to be an unproductive tool to use. You can basically calculate it off line already. Say you rent 100,000 names both postal and e-mail and you have been able to validate that they are targeted.

Off line, 1% response is 1,000 orders. Use your own AOV and you can calculate your ROI at $80-100/M rental cost.

Online, even at open rates of 20% and 12% click through, you are getting 2,400 people to your site. Assume your offer is stellar and that you have a conversion rate of 10%, you end up with 240 orders at your AOV.

The other piece of the puzzle is that the live of an e-mail is shorter than even the smallest catalog.


Retention:
Here I believe is where online and off-line can work hand in hand to maximize the return. We always have known that the real-estate in the catalogs is valuable and you really need to show the best of the best products and new products. With e-mails and other online tools you can alert your customers about the latest products available, even before they make it into the next catalog. You can also highlight entire lines from vendors with the “concern” of real-estate.

Ultimately, I think that the off-line tools are going to drive more and more customers online to explore the wealth of products and content you aren’t able to offer in a catalog. You will however, need to be able to segment customers who are using mostly catalog and don’t go online for additional information. This will be one of the more difficult areas to understand of your file.


Reactivation:
The analysis I have done over the years, using a match-back method, is that the older segments are less likely to use your website to transact. This doesn’t mean that they won’t do the research on your site before the off-line purchase. Understanding this dynamic is ultimately going to be crucial.

You can use e-mail to create additional contact points with your older segments at an affordable rate. It has to be part of your branding strategy.


In my last job, I had just set up a complete matrix of each segment (we used basic RFM) and made a sub-set of each segment of which we had an active e-mail address. The goal was to learn if the segments with e-mail addresses in the long term were more productive, because they receive a weekly e-mail. The results are still pending. The only way we (marketers) eventually will understand the dynamic is by doing more and more long term tests. Which is time consuming and requires commitment from upper management to stay the course.

Sorry for the long post, but these are just some of dynamics in my opinion. As I said, this would be worth a weekend of open discussion.

All the fans of DM should be glad to see everyone else stop using mail. It will make ours more effective... Oh, wait... are you seeing less mail in your mail box? I'm not.

Turn off your direct mail and watch your web traffic go down.

The real trick is effective matchback. Is it even possible.

Ah for the good old days when customers would respond using the methods we told them to use.

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