By Todd Wasserman
Boxed.com has built a business promising consumers that they can avoid brick-and-mortar warehouse clubs and have items shipped in bulk to their homes. The upstart online retailer, however, has tapped a seemingly old-school method of communicating that proposition to customers: direct mail.
But there’s nothing antiquated about direct mail, at least not the way Boxed is using it, said Nitasha Mehta, Boxed’s associate director of re-engagement marketing.
The company has partnered with PebblePost, a startup programmatic direct mail platform. In practice, if a consumer visits a website, PebblePost alerts its advertising partners within 24 hours. Then the company can target those customers for direct mail.
“There was a black box of customers who were either disengaged from or opted-out of email, had not yet installed the Boxed app, or had turned push notifications off,” Mehta explained to CMO.com. “There was no way for us to message them using the channels in our marketing mix. Programmatic direct mail digital gave us a fresh, respectful way to message to these customers.”
Though adding a layer of online targeting to traditional direct mail is a new idea, even standard direct mail has surprisingly retained a niche with marketers in this digital age. Newish technologies, including virtual reality and QR codes, that also help close the loop between analog and digital are prompting some marketers to give the channel another look.
Direct mail, as a whole, has been flat over the past few years. The Winterberry Group predicted that spending will hit $47 billion this year, which is up 0.4%.
Direct mail tends to find higher use among industries including financial services, consumer packaged goods, and retail, while rates for B2B services and technology are a lot lower. That said, Google is a big user of direct mail for outreach, a Google rep confirmed.
For those industries, direct mail is still often the most efficient way to get their messages across. Bobby Ritterbeck, CMO at Marlette Funding, said the company has acquired about 90% of new borrowers via offline channels. Direct mail was the biggest component of those channels.
Marlette markets to consumers looking to consolidate their debt. Since that’s a fairly narrow target, Ritterbeck said, direct mail works very well. “Direct mail is an accepted way to make a firm offer of credit,” he told CMO.com. “Online, it’s not as clear that you’re connecting with the person that you’ve prescreened. There are ways to do it, but not as developed as the way the direct mail channel is.”
For its part, JCPenney brought its catalog back in 2015 after a five-year hiatus. “We found that our customers, particularly when it comes to home items, still like flipping through a traditional print piece, but then they go to jcp.com to order the item or go into our store. The catalog serves as a traffic driving piece,” JCPenney rep Kate Coultas told CMO.com.
Not everyone is as bullish about catalogs. Catalog volume dropped to 10.6 million last year, according to the Data & Marketing Association (DMA). That’s the lowest level yet and about half the figure from 2007. One notable defector is Victoria’s Secret. The lingerie maker announced in April that it would stop mailing out its catalogs. Previously, the company had sent as many as 350 million catalogs as often as 22 times a year. Analysts reckoned the move would save the brand $100 million a year.
The Evolution Of Direct Mail
Before the internet, direct mail response rates were about double what they are now. But those rates still compare favorably to other types of media. According to the DMA, the average response rate for direct mail in 2016 is 5.3%. That stacks up against 0.6% for email, 0.5% for paid search ads, 0.9% for online display, and 0.6% for social media.
However, when it comes to ROI, nothing beats email’s 122%. For ROI, direct mail is in third place, with 27%, behind social media (28%.) The reason is that direct mail is still pretty expensive compared to other channels. Because of postage rates, campaigns start at $0.40 per prospect and can run into a few dollars each for slick catalogs. The median monthly mailing is 125,000 per month, according to the DMA, meaning $50,000 a month, minimum.
Comparatively, it’s free to send email, though most companies use a third-party company for mass mailings. MailChimp, for example, lets organizations with 1,000 to 1,500 subscribers send an unlimited amount of email for $20 a month.
Proponents of direct mail point out that studies show that 77% of consumers sort through their mail as soon as they get it. Some 98% of consumers check their snail mail daily, according to the U.S. Postal Service.
Meanwhile, direct mail is finally catching up to the digital age. Traditional direct mail is based on lists, which companies compile and sell. Consumers get on lists by making purchases through credit cards, signing up for magazine subscriptions, or filling out warrantee cards. While such methods can be effective, PebblePost CEO Lewis Gersh argued that pulling in online data adds more immediacy to a pitch.
PebblePost basically uses the methodology for digital ad targeting and adds an analog component. If a consumer visits Boxed.com’s website, for instance, PebblePost is able to link the consumer to her address. Within 48 hours, that consumer will receive a 4.75-by-6-inch card from the company.
“The power here is you’re marrying the best of the web with the best of direct mail,” he said. “The power of digital is real-time interest and intent and behavior. But instead of an ephemeral digital ad, we take that real-time intent data and we’re able to get physical media in a consumer’s hand.”
This approach has netted Boxed a six-fold increase in conversion rates and 35x return on ad spend, Metha said. PebblePost isn’t the only company linking direct mail and internet use. Marketing services firm Harte Hanks uses direct mail as part of an omnichannel outreach program, said Christine Warwick, the company’s marketing director.
“Everyone has been focused on digital marketing for the last 10 years, and digital marketing has gone by the wayside,” she told CMO.com. “Marketers are looking for new channels, and there are all of these opportunities to bridge what’s happening in the digital space and the direct mail space.”
Employing on-demand printing, Harte-Hanks can use online data to turn around a targeted direct mail campaign in “a week or a couple of weeks,” Warwick said. In addition, Warwick said marketers are also now able to use cross-device targeting to connect exposure to direct mail with an in-store visit or purchase as proof of ROI. Other new innovations include QR codes and print images that activate an augmented reality environment on a consumer’s phone. (Ikea, for one, has done this.)
“They’re doing the best of both worlds,” said Neil O’Keefe, the DMA’s SVP of CRM and member engagement, of PebblePost and Harte-Hanks. “They’re taking digital capability and using a very integrated, omnichannel approach.”
That said, O’Keefe acknowledged that the relatively high costs of direct mail have scared many marketers away, as has the “perception of whether or not it’s a relevant channel.”
Adding a layer of online targeting may help soothe such fears, especially if it can help boost response rates. “You really only need one out of 100 or, in some cases, one out of 200 to respond to make the math work,” Marlette’s Ritterbeck said.
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