March 2009

Print is not a dinosaur
Direct mail is alive and kicking. By Frank McPherson

Targeted e-mail. Social media. Online advertising. Wireless. Forget print. It’s all about electronic media these days. Especially as marketers continue to batten down the hatches in today’s challenging global economy.

Sound good? Of course it does. Too bad it’s not true. Direct mail is alive and kicking. Not only this but many of the “cool” media aren’t doing as well as many people think they are. Let’s look at some recent statistics that tell the real story.

E-mail limitations
E-mail is cheap and so far, its marketing metrics have stayed steady over the past couple of years. According to Epsilon, deliverability rates were nearly the same in Q3 2008 as they were two years earlier, although open rates and click through rates dipped slightly.

Today, e-mail is a quick, inexpensive budget staple, but it may not stay that way for long. Increasingly, marketers are finding the need to move to segmentation and personalization in e-mail as well as print so as to stay relevant to their customer base. In case you hadn’t noticed, targeting isn’t free.

According to ChoiceStream’s Personalization Survey, for example, retailers’ most attractive prospects (those who spend the most money and shop most frequently) are more likely to click on personalized ads than non-personalized ones. In addition, the survey found that 39 percent of consumers are more likely to click on an ad if it is personalized. Of those who shop online at least several times a month, that total climbs to 58 percent. Finding: the bigger the spender, the greater the interest in personalized ads.

As e-mail marketing moves toward targeting, more investment in database development and strategic campaign planning will be required. This means e-mail won’t be as cheap as it once was.

Bring in the government
Of course, the government can’t keep its fingers out of anything. (So what’s new?) Watch for more regulation in this area, too. The US Federal Trade Commission has already issued a 48-page report outlining a series of principles designed to serve as the foundation for industry self-regulation in online advertising.

The principles stress openness and transparency regarding data collection and targeted advertising. Commenting on these principles, FTC commissioner Jon Liebowitz said, “If the industry doesn’t do a better job at explaining what they are doing with consumers’ information and giving them a choice, then it could easily move to a more regulatory approach.”

Certainly, here in Canada as well as Europe, the governments are monitoring the situation and you can bet they won’t be left behind.

Then there are the factors outside marketers’ control. According to a recent Goodmail sponsored survey conducted by JupiterResearch, increased spam, phishing attacks, and further e-mail and image blocking by ISPs top the list of marketers’ concerns for 2009. In fact, they even surpassed concerns about slowing consumer spending!

Other forms of online advertising
The list doesn’t stop here. Search engine marketing is still growing, but its growth is slowing dramatically. The “Search Ad Spending Report” from eMarketer estimates that search ad spending growth will remain positive through 2011, but annual growth rates will steadily decline over the next four years— from 29.5 percent in 2007, to 10.4 percent in 2013.

What about social network marketing? In the US, social network ad spending (banners, search ads and new ad formats) fell short of the $1.4 billion eMarketer had projected earlier for this category—reaching only $1.2 billion in 2008. By 2010, growth is expected to drop to 3.8 percent.
What do you know? eMarketer has made yet another revision. In its Internet ad spending projections, it now estimates that US advertisers will spend $23.6 billion online this year. That estimate is lower than the one the research firm published in August, which said that this market would spend $24.9 billion (although this still represents an increase of 11.3 percent over 2007 spending).

Direct mail still lives
Even as the Internet marketing world remains uncertain, direct mail is thriving. Volumes may be down in hard-hit industries such as banking but across the spectrum, direct mail—especially targeted direct mail—is still widely considered to be the rock of many marketers’ programs.
While they aren’t rocket science, the reasons are worth revisiting:

• People like the tangible nature of print.
• Images and personalized messages have more impact in print.
• Print (especially personalized print) hangs around. It’s not unusual for people to hang on to personalized print offers for a year or more before acting on them. (Try that with e-mail!)

Print gets delivered. With spam blockers and other Internet hurdles, e-mail deliverability is always suspect. Plus, people change physical addresses a lot less often than they change e-mail addresses!
Print is more credible—people trust it.

Adding to its appeal, response rates for personalized mail are becoming more consistent. Good 1:1 print shops that have been doing variable data printing (VDP) for awhile have come to understand what works and what doesn’t. Response rates are becoming more predictable. ROI is increasing. Plus, smart printers can help marketers actually reduce their costs while bringing in more revenues.
A lot of people have predicted that the Internet, e-mail, Blackberries, blueberries, and any number of other phenomena would eliminate the role of direct mail and personalization. But the fact is, print remains the bedrock of any good marketing program.

Frank McPherson is president and h.d.m. of Custom Data Imaging Corporation (CDIC) which specializes in leading edge applications of high-speed colour variable data printing and “on demand” digital printing, finishing and mail services for 1:1 marketing and direct response mail programs. He can be reached at 905.415.2342 or by e-mail at: hdm@customdataimaging.com.