Direct mail: Charities retain faith

Despite declining returns, charities' spend on direct mail has grown as they seek to stand out in a cluttered market.

Charities have been hit hard by declining response rates from their direct mail in recent years, particularly when prospecting for new donors. To try to make up lost ground, many have invested in alternatives, such as digital, door-drop and face-to-face promotional activity.

'Interest in charity seems to be depleting, indicative of a market affected strongly by headlines and what is top of mind,' says Tim Bonnet, chief executive of integrated marketing agency Tequila\London. He adds that the decline in responses may also point to an increasingly crowded territory.

Perhaps surprisingly, the pressures appear to be resulting in greater volumes of mail from charities, not less. The sector's direct mail spend in the 12 months to June was up by 7%, according to Nielsen Media Research. So it is clear that charities still rely heavily on the medium, and some may prefer to boost volumes rather than switch to other channels. The research also shows charities are still more likely than other organisations to put their entire marketing budget into mail.

The biggest spender in the 12 months to June was animal charity PDSA, which raised its mailing spend by 6% to £6.6m, a sum which accounted for 83% of its total marketing budget. Other charities of similar size boosted their mailing activity to an even greater extent. Age Concern's spend was up by 15%, while the British Heart Foundation and the Salvation Army raised theirs by 37% and 30% respectively.

David Burrows, head of fundraising at direct agency TDA, says that comparatively obscure charities are outspending the big guns to get established. The PDSA, for example, spends twice as much as the RSPCA, and overseas development brands such as Oxfam rub shoulders with less well-known outfits such as Smile Train and Ethiopaid.

Burrows also stresses the effect of new names entering the market, notably the UK offshoots of US charities such as World Cancer Research Fund and World Villages for Children. These have been mounting aggressive donor recruitment campaigns to create a presence quickly.

Derek Humphries, director of Think Consulting Solutions, speculates that some of the increase may be due to a time-lag effect from the Asian tsunami in 2005. 'Many relief and development charities recruited tens of thousands of new donors at that time. They may have been using mail to try to convert those emergency cash-givers to a more ongoing commitment,' he suggests.

Most charities involved in overseas development work have increased their direct mail spend, Humphries notes. One is Red Cross, which gained a big response from its tsunami appeal and has raised its spend by more than a third.

About 71% of Red Cross' mailing budget is used to service existing donors, and a focus on this 'stewardship' is becoming more common. The Leprosy Mission, for example, spent almost all of its £1.75m marketing budget on direct mail specifically aimed at developing and upgrading existing donors. This was an increase in spend of almost a third in the 12 months to June, and reflects a commitment to raise the sophistication of campaigns with more detailed segmentation and personalisation.

This greater focus on nurturing relationships is being carried out largely to offset the falling returns from cold mailing, believes Roger Lawson, strategy and planning director at charity direct specialist Cascaid. The agency was recently appointed by the NSPCC to help improve the donor experience and is focusing on developing long-term relationships. One innovation is the enhancement of traditional segmentation, with analysis that shows a donor's motivation for supporting a particular cause. 'This helps add an emotional level to the relationship,' Lawson says.

Some argue that charities' mailing efforts lack creativity, and Humphries says too much is dull and formulaic. 'Stick your thumb over the logo and one charity mailpack looks pretty much like another.' He predicts charities will shift greater amounts of their marketing budget into interactive television as the medium's costs decrease.

Some have already adopted cheaper digital alternatives. Christian Aid, for example, now spends less than two-thirds of its £4.2m marketing budget on mail. 'We are doing our best to inspire supporters to respond in the way that suits them,' says head of marketing and supporter relations Jeff Dale. The organisation has invested in web and SMS capabilities, and has added 'virtual gift' catalogue schemes to its fundraising methods.

However, in the long term, it is difficult to see charities straying much from a medium that has worked for them so consistently. As Burrows says: 'If charities are not mailing their database, they aren't raising money.'

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