Advertisers have been running away from traditional media and towards digital channels like lemmings headed for the nearest cliff. But according to a new Direct Marketing Association (DMA) report, maybe they shouldn’t.
Combining data from an online survey of 481 direct marketers and e-mail data, the DMA study came to a startling conclusion: The older medium is far and away the more effective one.
Snail mail’s more effective
With response rates averaging 3.42%, physical direct mail — snail mail — generates 10 to 30 times the number of results that e-mail does.
“[F]or every 1,000 existing customers receiving a direct-mail piece, 34 will respond on average,” the report says. “For email, the average response — measured by taking the click-through rate and multiplying the conversion per click — is 0.12%.”
So while a 1,000-piece paper mailing could be expected to draw some 34 responses (“responses” here being defined as sales, not just leads), only one e-mail blast recipient out of 1,000 would go from opening the email solicitation to clicking through to buying.
This is because, data mining and behavioral tracking techniques notwithstanding, traditional mailing lists give advertisers exponentially better demographic, psychographic and behavioral targeting, and that targeting leads to a higher percentage of sales.
But e-mail’s more efficient
If you’re counting dollars and cents rather than numbers of responses, though, the proportions are almost reversed. While snail mail outperforms e-mail 30-to-1 in response rate, e-mail outperforms snail mail almost 30-to-1 in return on investment.
Specifically, e-mail ROI was $28.50 for every dollar spent.
According to Yory Wurmser, the DMA’s director of marketing and media insights, e-mail’s edge is even greater when it comes to repeat sales from existing customers. “”The cost is equivalent when we’re talking about getting a new customer,” he explains, “but for an existing customer, email is more efficient, with ROI that’s four times higher than direct mail.”
The elephant in the room
Of course, there’s one glaringly obvious reason for e-mail’s higher return on investment, and the DMA doesn’t talk about it.
It’s not that the return’s so high, but that the investment’s so low.
With physical direct mail, postage and printing are far and away the biggest expenses. With e-mail blasts, you don’t have them. Except for the cost of the list, e-mailing to 100,000,000 addresses costs you exactly the same as e-mailing to 100.
Like remnant cable television time, e-mail is an incredibly inefficient, wasteful medium. But that doesn’t matter, because if your blast (or your commercial running on $5-per-30-seconds cable time) hits enough people, targeting becomes almost irrelevant.
If you’re firing a sniper’s rifle, targeting is crucial. But if you’re dropping a 12-megaton H-bomb, missing by 45 miles will still work fine.
What’s more important?
In the DMA survey, 83% of respondents said they use e-mail in promotional campaigns, while 79% reported using direct mail, so professional direct-marketing opinion’s fairly evenly divided.
Which matters more in your marketing model — the percentage of response you get, or the gross revenue per dollar you spend?
You pay your money and you take your choice.