Direct Mail Gets Most Responses; Email Highest ROI

Direct Mail

June 14, 2012 — According to the Direct Marketing Association’s 2012 Response Rate Report, telemarketing and direct mail surpsass digital channels in generating the highest conversion while email demonstrates the highest return on investment.

Source: Direct Marketing Association’s 2012 Response Rate Report
The latest report finds, for example, response rates for direct mail to an existing customer average 3.4%, compared with 0.12% for email -- roughly a 30-fold difference. Noting that direct mail costs are higher, cost per lead and cost per sale across direct mail, email, and paid search are roughly equal. 

To quote the report, "for every 1,000 existing customers receiving a direct-mail piece, 34 will respond on average. For email, the average response -- measured by taking the click-through rate and multiplying the conversion per click -- is 0.12%."  Thus, only 1 customer out of 1,000 would follow the email solicitation through to sale.

For the first time, DMA compared direct mail response rates over time. The time series reveals that direct mail response rates have dropped nearly 25 percent over the past nine years. Even so, mail campaigns draw a better overall response than digital channels.
 
Looking at results from a return on investment point of view, email is more cost-effective than direct mail or telemarketing. ROI for email was $28.50 in sales generated for every $1 of spending, compared to $7 in sales for every $1 of direct mail spend. Telephone’s median ROI was $1 in sales generated for $1 spent.
 
The continued effectiveness of direct mail has a lot to do with the quality of data and the ability to target mail more effectively, AdAge notes Yory Wurmser, director-marketing and media insights at the DMA, as sharing "The future of direct mail lies in that [data], but the quality of the response for direct mail also indicates that direct mail is not disappearing."

“Even though direct mail is less effective in driving response than it was a decade ago, it still is among the best media for generating overall response,” says Wurmser.  “This points to its likely continued role as an important medium in the marketing mix, even as the cost effectiveness of digital channels suggests that they will continue to gain budget share.”  

Other findings of the report:

 

• Transactional data show that only 6% of the actions following an online display advertisement occur immediately following a click, which indicates that click-through rate greatly underestimates the impact of online display.

 

• Transactional data show that financial services emails had open rates above 30%, which ranked the highest among industries.  Retail (apparel) had open rates averaging 14.7%, narrowly lower than Publishing & Media (14.9%).  In contrast, data showed Publishing & Media as having the highest action rates per impression (0.013%).

 

• For emails, the highest click rate to open rate is for CPG (46.5%).

 

• Cost per order or lead for acquisition campaigns were roughly equivalent for direct mail ($51.40), post card ($54.10), email ($55.24), and paid search ($52.58).

 

• Email performance went up slightly from the 2010 Response Rate Report.

 

• The highest response rates — nearly 13% to a house list — was produced by telephone marketing. Telephone marketing also had the highest costs: nearly $78 per order or lead for a house list, and $190 for a prospect list.

 

• Costs were generally higher for B-to-B campaigns than for B-to-C campaigns.

 
About: The DMA report is based on a survey conducted in April 2012 with 481 usable responses resulting. Thesurvey data is supplemented by transactional data from Epsilon and Bizo, which adds aggregated data on more than 29 billion emails and more than 2 billion online display ads respectively.

Sources: AdAge Media News, DMA Survey Shows Snail Mail, Phone Beat Digital in Response Rates, June 14, 2012, and Marketing Charts, Direct Mail Tops Email For Response Rates; Costs Per Lead Similar, June 15, 2012.