2015 DMA study: Direct mail response rates leave digital in the dust
Median direct mail response rates to house-file lists were 3.7 percent, survey respondents reported. Email, social media, paid search, mobile and internet display together tallied only a 0.52 percent median response. Direct mail’s overall prospect-file response rates were 10 times that of email, which came in at just 0.1 percent.
“The report is clear,” said SeQuel's Co-Founder & Chief Operating Officer, Jay Carroll, “in spite of all of the noise about direct mail being a non-relevant channel, it is unquestionably still a potent marketing tool.”
The return on investment in the direct mail channel was between 15 and 17 percent, on par with social media, and topping mobile, paid search and internet display. Email’s median ROI was between 21 and 23 percent.
Direct mail’s median cost per response of $19 was less than half of the cost per acquisition for internet display, which was between $41 and $50. DM’s CPR was competitive with CPA in social media and mobile ads ($16 to $18), while email was $11 to $15. The study did not track CPA for direct mail.
“One of the most interesting takeaways from the study,” said SeQuel's Chief Marketing Officer, Erik Koenig, “was the breakdown of CPR among different mail formats. A lot of marketers get hung up on cost per piece, prematurely ruling out more expensive concepts that turn out to be more viable than many think.”
Dimensional prospect mailings had median response rates of 2.8 percent, beating oversized envelopes (2 percent), letters (1 percent) and postcards (1 percent). CPR was $43 for dimensional mailings, but $105 for oversized, $58 for letters and $59 for postcards.
The study also found that 44 percent of respondents use three or more marketing channels. When that’s the case, those channels are most likely to be email, social media and direct mail.
Eighty-two percent of respondents said they expect their direct mail usage to grow or stay the same in the coming year. Half of respondents reported using direct mail in 2015, higher than social media (34 percent), paid search (30 percent), online display (29 percent), and mobile (5 percent). Email is used by 83 percent of respondents.
So if direct mail is so effective, why is usage down from 79 percent of respondents in 2012 to 50 percent in 2015? The challenge with direct mail, according to the study, is the cost, effort to deploy and the difficulty of tracking it.
“This is consistent with what we often see in the marketplace,” Carroll said. “Many companies have either given up on mail or not tested mail because of a lack of internal resources, a lack of budget or a lack of an effective DM testing method. It’s in these circumstances where SeQuel can step in and resurrect or launch a successful campaign that will thrive for years.”