Direct Mail ROI Surpasses Digital Mediums

ANA Direct mail ROI

Direct mail return on investment surpasses top digital mediums, according to findings from the 2023 Association of National Advertisers (ANA) Response Rate Report.

Published February 2024, ANA’s report highlights 2023 benchmark performance and cost data across direct marketing channels including direct mail, paid search, digital display, email, social media, and SMS.

ROI of direct marketing campaigns by medium_23 ANA

The 2023 ANA Response Rate Report shows direct mail return on investment surpasses digital mediums. © Association of National Advertisers

Key Findings from the 2023 Response Rate Report

Direct Mail Return on Investment

Direct mail ROI outperforms all other marketing media, reporting the highest ROI of 161% when sent to house lists. Email-to-house lists follow with an ROI of 44%, while social media advertising rounds out the top three with a 21% ROI.

Most Used Direct Marketing Media

Direct marketers report email marketing (80%) as the most used media type for all campaigns in 2023. Social media advertising (80%), digital display advertising (67%), direct mail (52%), and paid search (51%) are the top five most used direct marketing media. All media types have seen an increase in usage from the 2022 study.

For many businesses, solo direct mail is the most effective way to grow, whether through customer acquisition, retargeting, or retention. Use our Direct Mail Impact and LTV Calculator to determine if direct mail is the right fit for your brand based on your product/service, revenue model, customer lifetime value, and customer acquisition costs.  

Future Direct Marketing Channel Strategy

Half of ANA respondents plan to increase the use of direct mail, showing the second largest projected increase over the next 12 months. SMS/Text is projected to have the greatest increase. Email, paid search, display, and social ad usage will hold steady.

Patrick Carroll, Director of Strategy at SeQuel Response, gave his perspective on the report’s findings, “For another year, direct mail has the highest ROI of any marketing channel for house lists. Even though it’s still underutilized, 50% of respondents said that they will increase usage this year, solidifying its position as a powerful direct marketing channel and signaling its ability to support multi-channel acquisition strategies across media.”

Direct Mail Usage in DTC Campaigns

Used in 64% of campaigns, direct mail marketing is a top three channel for DTC campaigns, trailing slightly behind social media advertising (78%) and email marketing (76%). B2C/B2B campaigns favor email, social media, and digital display advertising equally (85%), with direct mail coming in second (56%).

Overall, the primary purpose of a direct mail campaign is to make a direct sale (35%). Engaging prospects (18%), lead generation (15%), engaging customers (13%), and driving traffic to retail locations (7%) round out the top five objectives of the channel.

Direct Mail Response Tracking

Online tracking, such as QR codes or Personalized URLs (PURLs), is the preferred direct mail response rate tracking method by 82% of respondents. This is a significant jump from 67% in the 2022 survey.

Codes or coupons (64%), via a sales transaction linked to direct mail (54%), matchback (46%), and call center or telephone (39%) follow. List coding (21%), derived or calculated (18%), and other (10%) are the least used response metrics.

Direct Mail List Types

More than half of marketers (56%) surveyed use a mix of house and prospect lists. Sometimes using third-party data, prospect/potential customer lists are used by 31% of marketers. Down by almost half from the 2022 survey, 13% of campaigns are fueled by house/existing customer lists.

Direct mail sent to house lists produced the top ROI of all media at 161%. The ROI of direct mail sent to prospects lists was 34%. The average campaign ROI of all channels in the survey was 35%.

Direct Mail Formats

When mailing to house lists, postcard usage is up 17% from the 2022 study to 76%, making it the most popular direct mail format. Postcards feel more informal for an audience already familiar with a brand or product and use less material than letter packages, resulting in lower printing and production costs. There is also a postage discount because the USPS now accepts 6″ x 9″ postcards at the First-Class Postcard rate, which is double the regular 4.25″ x 6″ size.

In 2023, letter-sized envelopes jumped to the top format choice (67%) when mailing to prospect lists. Postcards are a close second, used in 62% of prospect mailings. Catalog usage in prospecting campaigns almost doubled from last year’s survey, up from 25% to 48%.

Direct Mail Performance Metrics

Response rate is the primary indicator of campaign success, measured by 73% of marketers. The top four methods for tracking response rate  are online tracking (82%), code or coupon (64%), via a sales transaction linked to direct mail (54%), and matchback (46%).

Return on Investment (ROI) is a close second. Cost per Thousand (CPT) and Cost Per Response (CPR) tie as the third favored metric. 20% of marketers use a different metric to measure performance.

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