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Direct Mail Marketing: Is It Worth the Cost?

ByBusiness.com Editorial Staff,
business.com writer
| Last Modified
Jul 18, 2012
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> Marketing
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With so many of the us depending on the internet to stay tuned into what's going on in our lives and in the world, it's no wonder that direct mail, or "direct classic" as the industry sometimes refers to it, has become an afterthought for small business marketing strategies.

Postage is getting more and more expensive. Plus, email delivery and online communications are near immediate compared to the time it takes to go through the production, proofing, printing, and mailing process.

Still, many marketers have high hopes for printed direct mail, with intentions to use it in the coming years. Direct mail spending grew 4.6% in 2011 according to the Direct Marketers Association, and forecasts suggest that mail sales will continue to rise at a rate of 2.3% in the next two years.

Benefits of Direct Mail Marketing

Much of this increase can be attributed to the ability to couple physical mail pieces with mobile and online marketing efforts, resulting in a sound multichannel marketing program. Think of how many pieces of mail you've seen recently sporting QR codes, URLs to social media sites, and SMS short codes. Mail affords marketers greater reach, allows more information to be communicated than most online advertising efforts, and gives buyers the opportunity to respond to a call to action in the way that they want, on their own time.

Further, today's consumer is connected 24/7 and attention spans are divided across multiple mediums -- web, email, mobile apps, texts, TV, radio, etc. Direct mail pieces received directly to homes or businesses break through marketing silos and require a dedicated pause to consider compared to the many thousands of on-screen messages we receive any given hour. Consider how unaffected you are as a consumer when you receive spam emails -- it's a quick click to delete without a second thought. But we're receiving less physical mail than before, and are therefore less likely to dismiss mail as quickly as we used to.

Research studies have found that 85% of consumers sort through and read selected pieces of mail every day, according to Mail Print. Consumers' increased usage of coupons over the past few years has driven much of this attentive behavior.

Cost of Direct Mail vs. Email

Let's compare 10,000 direct mailings vs. one email sent to a list of 10,000 people.

Design & Production

Direct Mail Design / Production: This is usually the cost of a designer's time (let's say a freelancer at $100/hour) and the software necessary to create the piece (around $525).

Cost: $925 (assuming 4 hours of work and revisions)

Email Design / Production: Again, this would involve a designer's time (let's say a freelancer at $100/hour) and the email marketing software necessary to create the piece (around $100 for a month).

Cost: $300 (assumes 2 hours of work and revisions; most email marketing software have templates you can use as a jumping off point in the design).

Printing & Addressing

Direct Mail Printing and Addressing: Depending on which printer -- online or local -- that you work with, costs will vary. There are also other variables that will impact cost, including size of your direct mail piece, as will your use of color vs. black & white, type of paper used, whether your marketing list will need to be cleaned up, and other caveats.

Cost: We found quotes online for roughly $600 for a standard postcard with color on one side; you'll likely spend more working with a local printer. This price does not including any variable processing costs

Email Printing and Addressing: The most you might do is print one copy for proofing, but in general, there's no cost for printing. "Addressing" in email terms might mean acquiring a targeted email list of 10,000 email addresses. This price can be much lower if you've built your own list of 10,000 prospects over time.

Cost: $60-1,000 (which will depend on whether you're sending to consumers or businesses and in which state or location).

Mailing

Direct Mail Mailing: This price usually includes postage which, for a postcard, would cost $0.32, and perhaps a handling fee if you're getting a third party printer to ship it out for you.

Cost: $3,200 (without a handling fee)

Email Mailing: This is generally included in the email marketing software pricing, which was quoted above. Many small business email marketing companies price their software based on number of subscribers you have in your list. A threshold of 10,000 is usually in the middle of their pricing range.

Cost: $100

There are certainly more arrows pointing toward email than direct mail in terms of cost effectiveness, but depending on your goals and the type of information you want to communicate to prospects, it's worth doing the math to estimate your potential return.

Best Industries for Direct Mail Marketing

Non-profits would do well to continue their use of direct mail marketing to reach donors, volunteers, and other important constituencies. A 2010 study by Dunham+Company found that 14% of online donors were prompted to give an online gift through a direct mail piece versus only 6% who acted in response to an email.

Grocery retailers are another business type that see incredible returns on direct mail pieces. According to a recent study done by Valassis, 90% of grocery retailers cite weekly circulars as their primary way of promoting products, and believe it's the most measurable form of marketing.

Direct mail, in general, remains relevant for local businesses of any kind -- home improvement, financial services, and retailers looking to drive sales are competitive when they use direct mail to offer discounts and other generous benefits for new customers.

Business.com Editorial Staff
Business.com Editorial Staff
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