Despite some major distractions for direct marketers last year, U.S. spending on direct mail rose to $48.6 billion, compared to $46 billion in 2002. Some $29.2 billion was spent marketing to consumers and another $19.5 billion to businesses, according to the Direct Marketing Association (DMA).
Of the 19 promotion tactics listed in the 2004 Industry Trends Report, marketers said they spent the most on direct mail (41.7% of total spending).
Consumers, caught up in the coverage of the war in Iraq, lost interest in what arrived in the mailbox in the early part of the year. The result? Sales for DMers fell off an average 5.4% during that four-week period, with direct mail being one of the most adversely affected marketing channels. Add to the DM “challenge” the legal maneuvering over a national do-not-call list, which resulted in 56 million registered telephone numbers (and counting). And the Can-Spam bill, signed into law in December, encouraged the creation of a similar do-not-e-mail list.
This year, a line up of distractions is already forming, headed by the Olympics and the presidential elections.
Even so, marketers kept dropping dollars into the direct mail bucket, and plan to continue in 2004.
For example, General Motors spent $230 million on advertising last year, and finds direct mail plays a key role in the auto makers’ “purchase funnel” to help prospects hone down their choices, says Jack Bowen, executive direct of customer relationship management at GM.
In January, GM targeted 6 million prospects with direct mail, the third substantial mailing during its 24-Hour Test Drive program that allowed consumers take vehicles overnight. GM also used the January mailing to include a callout for a short-term $50 million give-away promotion aimed to generate traffic in GM showrooms and build awareness.
Despite its lofty costs when compared to say, e-mail, direct mail continues to be valued for its predictable ROI and as a means to communicate in a personal way with a narrow, targeted audience. Industry experts say that even young marketers, who cut their teeth on Internet marketing and considered good ol’ paper junk mail as stuffy and uninteresting as your grandfather’s Oldsmobile, have come to embrace the tactic.
“There is an intimacy and personalization and therefore an impact with direct communication with a customer that you just don’t get anywhere else,” says Mark Siegel, a spokesperson for AT&T Wireless. “It’s very, very effective.”
Like many consumer packaged goods companies, Frito-Lay relies on direct mail to drive trial and awareness of new products. To introduce its new Naturals portfolio, Frito-Lay mailed 500,000 coupons last year and last month dropped 400,000 to tout its Sensible Snacks portfolio.
And, triggered by direct mail offers, people are buying.
Sales generated by direct mail totaled $689.3 billion in 2003 compared to $634.4 billion in 2002. B-to-C sales reached $423.8 and B-to-B totaled $265.5, the DMA found.
PCGs and retailers got some good news about their work with direct mail.
Direct mail produced the highest response rate for packaged goods (5.36%) followed by store retailers (4.35%). The average overall response, including mailings to both house and prospect files was 2.55%, the DMA found.
SNAPSHOT 2003
- Total Spending: $48.6 billion (up 5.6% for year)
- Spending is estimated to hit $51.3 billion in 2004
- Despite do-not-call and Can-Spam restrictions, mail still popular with marketers and consumers
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