Direct mail data not clean enough yet

LONDON - Despite an upswing in the use of data cleansing, too much mail is still being sent with name and address errors.

By The public relations battering the direct-mail industry has taken in recent years has generated a good deal of debate. With so many organisations striving to raise standards, plenty have argued that the 'junk mail' tag is undeserved.

But, according to the latest report by Nielsen Media Research, there is still work to be done. An exclusive study for Marketing based on a panel of 10,000 consumers shows that in the 12 months to June, the public binned more than 21% of the mailings they received without even opening the envelope. That is only 1% lower than the previous year, when the survey was first carried out.

'It is a sad indictment of our industry that, in this apparently sophisticated age, such a huge percentage of direct mail is headed directly for landfill,' says Mark Roy, chief executive of The Read Group, adding that waste is a perfect excuse for government legislation.

Read's own research through YouGov shows that 72% of consumers want between 50% and 90% of their junk mail stopped, amounting to a staggering 1.8bn items a year. This equates to about 140,000 tonnes of wasted paper, or 900,000 trees.

A likely reason for this is that too many mailers are failing to get consumers' details right. The proportions of mailings with name or address errors are unchanged on last year at 4% and 1% respectively.

The members of the survey panel logged all the direct mail they received with Nielsen. 'We know exactly who our panellists are and where they live, so we can easily spot where companies get their details wrong,' says Paul Dunn, head of media insights at Nielsen Media Research.

In terms of unopened mail, charities continue to be among the worst offenders. A third of their mail is unopened, accounting for nearly a third of all unopened mail across all sectors. Mail order fares little better, and high levels of binned mail are also evident in gardening and agriculture (where 34% of direct mail is binned), leisure equipment (28.5%), and online retail (38%).

However, financial services companies, the biggest mailers, have reduced their level of unopened envelopes to 12%, representing less than 20% of the mailing industry total. This relative success may reflect the greater resources available to banks, lenders and credit-card companies for data cleansing and segmenting, though it should be noted that financial services remains one of the worst offenders for getting names and addresses wrong.

The sector's improvement could also be attributed to a shift by several brands toward mailing existing customers rather than prospects. Consumers are, after all, more likely to open mail if they know it will be relevant. Also, Dunn suggests, better targeting means people are being bombarded less with loan and credit-card offers, so are more willing to open any that hit their doormat.

Some specialists believe the 10% fall in mailing spend revealed by the survey is likely to be due in part to this better targeting. Tash Whitmey, managing partner at direct marketing agency EHS Brann, says the value of customer insight is widely recognised, and most of the problems with scatter-bombing are caused by an irresponsible minority.

Encouragingly, there has been a marked jump in the use of suppression products that weed out 'goneaways' and the deceased; Read reports a 15% year-on-year increase, suggesting that the data-hygiene message is slowly getting through.

Agencies maintain that the quality of 'de-duplication', suppression and customer profiling have all improved, and are beginning to have a beneficial impact. Response analysis is further helping refine models used for future campaigns.

Financial services company First Direct has shown what can be done by improving its data processing and cutting its current mortgage campaign mailing by 55%. It claims the result has been a 'dramatic' improvement in its response figures. 'There is naturally a great environmental benefit to these reductions. We will continue to get smarter in our customer contacts, sending less but becoming even more targeted,' says head of direct marketing Colette Nugent.

But if the industry is tightening up its act, why is there so little change in levels of unopened mail? One possibility is that, for all those brands and agencies concerned about data hygiene and targeting, there are far too many that have not caught on.

The way the industry is structured may positively encourage waste. As long as creative agencies are paid by volume, they arguably have little incentive to do anything that will reduce the size of clients' mailing lists, as to do so would cut their revenue.

An example of this is cited by consultancy Rocket Science, which recently processed data for a direct marketing agency handling a campaign for an international drinks brand. 'We identified a number of gone-aways, but the agency wanted to mail them anyway, on the grounds that the new house occupants fitted the target consumer profile. It wasn't true, and insulted our intelligence,' says chief executive Alan Timothy.

Only with a greater understanding of the benefits will more advertisers make suppression a standard process. Response One head of direct solutions Ben Daly says he still comes across clients who assume that suppression tools won't work for their campaign, effectively signing up to waste.

'An unclean list can contain as many as 20% of names who are duplicate or existing customers, or who have died or are no longer at the address,' Daly explains. 'On a typical 300,000-strong mailing, that means wasting 45,000 envelopes, letterheads and brochures, enough to fill more than 100 standard household recycling bins.'

What's more, he adds, this estimate of waste does not take into account the energy needed to print, personalise, enclose and deliver all those unwanted packs.

The problem is that even when name and address errors are greatly reduced, the misdirected mailings stand out. 'In an average week, a household can receive 10 pieces of well-targeted mail, but it's the one item addressed to the previous occupiers who moved two years ago that they will mention to friends and family,' Daly says.

Some organisations are reluctant to carry out data-hygiene activity because of the expense. Data prices have remained steady, with the average list costing £100 per 1000 names (or 10p a name), and in some areas, such as lifestyle, prices have fallen. Yet it costs about 20p to remove a deceased or a gone-away, and this is an upfront cost that has to be factored into budgets.

Time is another constraint. Running suppression files can typically add up to five working days to a mailing schedule, and will seem an obvious place to cut corners when deadlines are tight.

But suppression is not the only answer - companies need to be more sophisticated in their choice of data to ensure effective targeting. Demographic and geographic data should be used to refine the target

market, and the results combined with niche and sector-specific data, says Adam Leslie, propositions director at Experian Integrated Marketing. It is also important to have robust modelling technology, capable of analysing thousands of variables.

Darron Gregory, head of analytics at agency Celerity, says brands are moving beyond mere personalising, in which the recipient is addressed by name, toward full 'individualisation', where the message is clearly anchored to their known interests.

Another trend has been the emergence of large prospect data pools, which bring together sources into a single database. Merging lists provides a source of rich data and vastly improves targeting, says Jed Moony, managing director of agency Datahold. 'The Americans have been creating prospect pools for years, and no wonder. It looks like the UK is following suit,' he adds. 

Brands are also being creative to encourage recipients to open their mail. One technique is to print the logo on the envelope, but, while this might work for customer mail, it could turn off prospects unwilling to engage with an unknown brand. Some agencies believe in going further, making the envelope part of the creative concept.

'So much can be conveyed on the outside to surprise and engage the consumer,' says Ashley Patterson, European planning director at Wunderman.

Patterson adds that the envelope should not merely mirror the contents inside. 'If the envelope contains a message that the consumer has already read, why would they open it?' he asks.

To help launch the Ford S-MAX in 2006 Wunderman sent out a mailing with 'Think life's too short?' printed on the envelope and no branding. This was designed to intrigue the target audience of ambitious and sociable individuals, and it worked. The result was a 19% response rate, almost double the predicted rate.

A campaign run by the agency last year for a household security specialist featured an envelope that had already been ripped open, giving recipients a sense of what it feels like to have their privacy violated. It generated a  response rate of 37% above expectations.

So, the means exist for the direct-mail industry to clean up its act. The challenge for direct mailers is to make best practice the rule rather than the exception, and so minimise waste and, perhaps most importantly for the industry, public disaffection.

 

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