Special Report: Direct marketing

The direct mailer remains a powerful marketing tool, but it has had to reinvent itself by integrating and working in tandem with digital channels to continue to reap rewards

Not so long ago, direct mail was the most powerful medium around for clinching a sale, cross-selling products and hanging on to existing customers. With the explosion of digital channels, though, the mail pack has become just one option among many.

Set against the low cost of email marketing, physical mail-outs are an expensive option and direct mail volumes have fallen steeply over the past five years. In 2006, 2.2bn direct mail packs were sent out in the UK, according to the Royal Mail's Mail Media Centre. This plummeted to 1.5bn packs in 2009, although in 2010 this rallied slightly to 1.73bn.

Brands are seeking to discover the ideal mix of search, email, TV, mobile and printed communications to get their messages across. The future of direct mail will depend on its ability to work in partnership with these rival advertising media.

For some brands, direct mail's effectiveness still outstrips all other forms of advertising. Chris Bibby, direct marketing director at Virgin Media, says the business sends out 100m mail packs a year and is one of the biggest users of direct mail in the UK. 'It is our most efficient acquisition channel and we continue to get good results,' he adds.

The cable TV and telephony company uses direct mail at every step of the customer journey, from acquiring users to selling them new services and creating loyalty. Bibby accepts, though, that to maintain its persuasive power, direct mail must work in tandem with digital and other channels, while adding greater levels of personalisation.

He cites the example of Virgin Media's launch of personal video recorder TiVo.

It mailed TiVo remote controls to 2000 of its best customers. Each remote bore the recipient's name and it directed them, via the TV, to a bespoke web area where they were offered a free TiVo box. The campaign achieved a 99% response rate. 'The challenge is making personalisation relevant,' says Bibby. 'It is all too easy to put a name on a piece of creative and model it around the person you think they are. But to do something really personalised you need a more in-depth understanding. It is easy to stereotype people and be crass in how you use data.'

However, other brands have significantly reduced their use of direct mail, although they accept that it still has a role to play in some areas. Pamela Conway, head of acquisition at British Gas, contends that while the correlation that once existed between the volume of letters sent and sales achieved has broken down, there are situations where direct mail is irreplaceable.

'Direct mail will never reach the same dizzy heights of 20 years ago but it will still be part of the mix to achieve a sale and retain a customer. At heart, we are still very physical beings and like to touch and feel stuff,' she says.

Mailers are particularly useful for promoting British Gas' tie-up with the Nectar loyalty card scheme, and for other customer-retention programmes. Conway adds that sending out welcome packs to new customers also conveys a powerful message. Given the expense of such mailings, she explains: 'Direct mail is a message of how much you value your customer.'

Targeted for impact

Meanwhile, in the automotive sector, just 4% of total adspend is accounted for by direct mail - about £30m last year, according to Mail Media Centre figures. One of the biggest players in this sector is Ford. Chris Muers, its internet and CRM manager, says the car manufacturer still uses direct mail in 'quite a major way' in the customer journey, although she adds that it has decreased sharply.

'We still write to our customers and it plays a big part in how we communicate with them. But we want to send it only where we are sure it has the biggest impact,' she explains.

Only a few years ago, direct mail was the main way for Ford to launch new models and run tactical promotions.

This has declined steeply in favour of digital communications, says Muers. Nonetheless, while it is easy to delete emails, a strong piece of direct mail which is engaging and noticeable will probably not be thrown away. Ford uses mailers for those customers the company has dealt with before and the ones identified as Ford loyalists, as well as certain prospects.

Muers cites Ford's mail-outs for the launch of the latest Focus last year. The packs included QR codes directing customers to a YouTube video. This is significant as it signals the use of direct mail to drive people to online content that might otherwise go unnoticed.

The Focus campaign sought to promote the new technology of the model such as its 'active park assist' facility. The QR codes highlighted the technically advanced nature of the vehicle.

Indeed, Muers says some groups of customers react better to direct mail than, say, emails. 'We measure the results of sending them the direct mail - then identify groups that are performing well. We are constantly refining our data strategies,' she adds.

Ford UK works with direct agency Wunderman. Its managing partner, Josette James, sums up the complexity of the modern marketing mix. 'What we try to do is not to look at any channel in isolation. When doing the planning, you look at the best channel and the best combinations. You don't just go out with a direct mail strategy.'

In this developing environment, marketers are feeling their way as they adapt to the ever-changing world of fragmented media. They are grappling with new applications of direct mail and trying out innovative uses of the medium.

This inventiveness is breathing fresh interest into it and unleashing excitement among agency creatives. Rik Haslam, chief creative officer at RAPP, has spent the past decade working largely in digital media, but says: 'My interest in physical direct mail has re-ignited. Digital communications were for a while new and shiny, but now people have greater respect for the full marketing mix.'

However, there is little agreement on the role direct mail plays in the customer journey in this new environment. 'We are currently evolving the new rules for direct marketing but no one has agreed how to do it yet,' says Haslam.

Amid this environment of discovery, some novel developments are appearing in the drive for innovation. Royal Mail sent a mail pack, created by Proximity, to senior marketers, in which the message was etched in chocolate. A mailer for mint brand Vivil released the scent of the product from a mailed brochure. Mercedes-Benz sent out a letter to businesses last year to promote its Sprinter van, which was actually 'written' by the van itself. The words to the letter were cut into a tyre fitted to a Sprinter van and driven over a piece of paper, with mud from the streets of Hamburg used as 'ink'.

Gift service Notanotherbill.com, set up by former M&C Saatchi art director Ned Corbett-Winder, is a website that charges a £15 monthly subscription to send out a mail-pack with a surprise gift each month. Its tagline is 'no one gets anything good in the post any more', a situation it seeks to remedy.

Narrative medium

As Brian Sassoon, joint head of planning at OgilvyOne, which works with British Gas, British Airways and American Express, says: 'Direct mail is a great storytelling medium. It is expensive, but getting a piece of mail through the door cuts through the clutter.'

This is significant, because the fall in direct mail volumes is not because mailers have become less effective, simply that its price has been undercut by email, says Marc Nohr, chief executive of Kitcatt Nohr Digitas.

'When a brand wants to be taken seriously by customers and wants to make a statement, it chooses direct mail,' he adds.

He points to the medium's effectiveness in targeting young people with certain messages. The agency created a campaign for the National Blood Service to get more 17-year-olds to give blood. Sending out mail packs to the target audience outperformed the organisation's usual response rates by eight to one, says Nohr. 'That age group doesn't receive postal mail,' he says, so when they do, they are likely to open it and pay attention to its content.

In reality, people are tending to take less time from considering a purchase to making one, and the way they research their purchases has become more varied and thorough. So consumers are less likely to be influenced by traditional channels, says Jonathan Sewell, account director on the Nissan account at direct agency TMW.

'As a result, the challenge we have to face is that we influence the purchase decision in the right way at the right time,' he adds.

He points to work the agency has done with Nissan's luxury Infiniti brand. 'We continue to use direct mail for acquisition, not least because postal address data remains a rich source of finding new targeted prospects,' says Sewell. Direct mail is also useful for managing and converting prospects, he adds.

Direct mail may have diminished by a quarter over recent years, but Alex Ricketts, acting head of marketing and communications, MarketReach, says a new world is opening up. He uses the example of a mail-shot by natural cosmetics brand Lass, which featured coupons fashioned from leaves. The coupons had to be redeemed before the leaves decomposed. 'There are opportunities to do things you would never have thought possible five years ago,' he says.

Assessing direct mail's role in triggering a sale has been complicated by the 'last click' mentality that attributes purchases to the last stop on the customer journey - often a Google search.

Customers, though, take many steps before making a purchase. Working out the importance and value of each one to the final sale is vital in deciding how much budget to allocate to each.

'A degree of sophistication is missing,' says Andrew Burgess, managing director of online media agency Equimedia. 'It is not just about Google - brands might be paying £40 to an affiliate site or an aggregator for a sale that may have come from direct mail. Under-standing how direct mail plays a role is critical. Most people don't do that,' he argues.

A variety of means is available for calculating direct mail's contribution to a sale. One method is to run control group tests, sending out direct mail in a single geographical area and measuring the results against another area which received no such mailing. This should indicate the effectiveness of the activity.

Then there is attribution modelling, which seeks to put each part of the journey in its correct place. Lucy Stafford, head of direct at Mindshare, says the agency has amassed case studies of previous campaigns and run econometric tests on them. This can help indicate likely levels of success for future campaigns, though she says each of these and the brand varies greatly.

'If you direct-mail somebody and they turn into a consumer, you may assume the mail has worked. Yet they might not have seen the mail pack, so clients can over-estimate the effectiveness of direct mail. It depends how the client attributes it,' she adds. 'Clients and their data partners have become more savvy in getting better information.'

The proponents of direct mail - agencies, postal services and print houses - believe the medium is on the brink of a renaissance. Overall volumes of physical mail may be declining, but this is all to the good since the packs that are sent out will achieve greater stand-out.

Return to form

As more emails are left unopened or rapidly deleted in the avalanche of digital communications, and questions are raised over the effectiveness of advertising on social media, the mail pack is back.

Direct mail is becoming much better targeted, thanks in part to increased data gleaned from digital sources. With advances in printing technology allowing high degrees of personalisation in printed materials, and innovations such as VideoPak, where wafer-thin video screens are embedded in letters, direct mail is becoming a classy, upmarket form of communication. For the direct mail optimists, even the recent increases in postage costs by Royal Mail have a silver lining. These price rises will confirm direct mail's status as a premium channel for selling big-ticket items from cars to luxury holidays.

As John Townshend, creative partner at advertising agency Now, says: 'The truth is, mail still works. As the culmination of a marketing campaign, a piece of material in the hand that allows you to digest information in your own time is still effective.' He adds that much email marketing, while highly efficient, is often loud and vulgar. Marketers need to make a concerted effort to engage people online. Even so, he says: 'I bet in 10 years' time, we will still be wondering why we have messy doormats when we get home.'

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