The mistake marketers make is the assumption that online advertising always delivers greater functionality at a much lower cost than direct mail. The mistake the direct mail industry has made over the years is not to challenge this false premise! Contrary to the conventional wisdom, direct mail is capable of delivering greater functionality, at a lower cost than advertising delivered over the Internet.
So what's drawing advertisers online?
Interactive multimedia! Interactive multimedia is digital programming, providing advertisers with an ability to respond instantly to consumer queries with information. It's sound, video, music, pictures, text and graphics. Online advertisers refer to it as rich media and claim only the Internet can deliver such programming.
The Postal Service can also deliver interactive multimedia. It's called multimedia mail. Multimedia mail carries the same digital programming on-line advertisers deliver over the Internet, but adds the functionality of targeted print advertising. The difference between online advertising and multimedia mail is that consumers must initiate the search for on-line advertisers. With multimedia mail, advertisers proactively initiate the search for consumers interested in their products or services.
As an example, an online advertiser in the fall might update their website to run a special for snow removal equipment. The advertiser would need to spend money on search engine marketing and ad placements around the web to lure consumers to their website. Ready to generate sales, the advertiser would then sit and wait, and wait, and wait for consumers to find the website and purchase their snow removal products.
But fall might be warm and sunny with consumers enjoying the great outdoors, without a thought about the coming winter storms. As unfair as it may be, consumers may not initiate an on-line search for the term SNOW until the local weather refocuses their attention.
On the other hand, an advertiser using multimedia mail could make a personalized mailing into
Printed on the mailpiece would be images of the last
Inside the multimedia mail package is a CD-Rom, which when played opens to a 30 second John Deere commercial promoting their line of snow removal equipment. The ad fades to the main page of the disc which talks, verbally or textually, about the coming of winter and the great promotion going on NOW at the local outlet. A menu choice lists all of the various kinds of snow removal equipment that qualify for special discounts and highlights various manufacturers' products. Clicking on a menu choice provides pictures and full screen video explaining the advantages, disadvantages and capabilities of each piece of equipment. Other menu choices promote manufacturers' warranties and the chain's after warranty support.
The disc also acts as a web portal, with links to the Internet for more information, pricing and availability 24/7. A link allows for purchasing online with home delivery or store pickup. This marketer is able to track the use of the disc, collecting information on play rates, page views, length of time spent on the disc, links from the disc, etc. This information can be used for exploring relevant, follow- on marketing opportunities or to fine tune the next marketing campaign. Unlike search engine marketing, this web portal only promotes the marketer that mailed the disc, not their 500 nearest competitors.
The only advantage for delivering advertising over the Internet is speed. The advantages of multimedia mail are that it proactively targets consumers, delivers interactive multimedia (even when consumers are not online), and provides one click access to the web, all contained in a physical package that carries personalized print advertising. It is far easier to deliver timely, targeted advertising to where consumers live or work utilizing direct mail, than trying to determine the surfing habits of a specific demographic or hoping and paying for top placement on a pay per click listing of competitors.
And of course multimedia mail is cheaper than search engine marketing.
A response to online advertising is defined as a click, with the cost for the advertising determined by the cost per click. In direct mail, we have paper, printing, manufacturing, list, mail prep, fulfillment, shipping and postage costs. We have never provided our customers with a simple way to compare these in-mail-costs with a corresponding cost per click. Nor have we defined a consumer response to direct mail that is equivalent to an online click.
Since a click online is when a consumer opens an ad for more information, it is obvious that an equivalent response in direct mail is when a consumer opens an ad for more information. If we want to relate our in-mail-costs to click costs online, we need to know how often direct mailpieces are opened for more information.
As it turns out, the Postal Service, through its annual Household Diary Study, has been measuring click rates for direct mail for over 20 years. The Household Diary Study says that approximately 84% of direct mail is read or scanned. Clearly, reading or scanning a physical mail piece delivers more value to an advertiser than an inadvertent click online, but for this analysis we'll call them equal.
Using a click as the common response and having an established click rate for direct mail, we can convert our in-mail costs to click costs. If an advertiser's in-mail cost of multimedia mail is less than $1.00 each piece mailed (qty of 100,000), the cost per click for multimedia mail would be less than $1.20 ($1.00/84%=$1.20).
It's possible to estimate an in-mail-cost by using an established click cost. In other words, if a customer is paying a click cost of $1.20, they could spend $1.00 on multimedia mail and achieve the same cost per click ($1.20 x 84% = $1.00).
Multimedia mail has to be used in these cost comparisons to provide the same (actually superior) functionality as online advertising. Is multimedia mail always cheaper than online advertising? Well no, but if an advertiser is paying more than $1.20 per click on line, and most are, multimedia mail will deliver greater functionality at a lower cost based on an equivalent cost per response.
The only question remaining is if anyone will play the discs. An article in DMNews July 18, 2006, provides the answer to this question. The article stated that
If the direct mail industry wants to compete with Internet advertising, it needs to incorporate interactive multimedia into direct mail!