Snail Mail Leaves Its Shell

Direct mail is often looked at as the ol’ fuddy duddy, the tri-fold sweeps offer that ends up in the trash without a second glance. And while the tactic frequently gets pooh-poohed by the young marketing guns around the conference table who think that all that clicks is gold, spending — and response — for direct mail is on the rise. It has regained its venerable attributes as a tangible offering that can be held in the hand, laid on the coffee table for reference or passed on to friends.

Of all the tactics listed in PROMO’s 2006 Industry Trends Report, marketers most often cited direct mail (41.9%) as the top spending priority last year, up from 37.5% in the 2005 report.

For Pernod Ricard, direct marketing is a key component of its communications mix and its ongoing hunt for high-valued consumers. Regular communications center on the millions of loyal “society” members who have opted in to receive further offers and information from the spirits maker.

“Right off the bat dollars are focused against consumers who have an inclination to buy your product,” says Pernod Ricard spokesperson Angelo Vassallo.

Recently, invites were sent to members of The Glenlivet Society to attend week-long events in six major U.S. cities where they could play golf on a putting green, learn about the latest Glenlivet products and meet the Master Distiller from Scotland. Members are often communicated with around special occasions, such as birthday’s or Father’s Day with a variety of offers and information.

“People like to be appreciated and direct marketing through membership allows you to award them, to acknowledge them and to appreciate their loyalty to the brand,” Vassallo says.

U.S. spending on direct mail is projected to grow 4.5% from $49.8 billion last year to $59.3 billion in 2009. Spending on consumers will reach $36.6 billion, up 4.4% from $30.8 billion; expenditures to reach businesses will jump 4.6% to $22.7 billion from $19.0 billion, according to the Direct Marketing Association.

“[Direct marketing] is extremely consumer friendly and marketers are able to present their offers in a way that is highly relevant to their current and new customers in a way that those customers want to receive that information,” says Peter Johnson, VP-research and market intelligence for the DMA. “It’s still extraordinarily effective.”

One important finding boosting sales is the use of direct mail to enhance online marketing efforts.

Direct mail and e-mail played a key role for Volkswagen in a campaign to sign up fans to work as advocates for the brand. Last September, VW targeted Passat owners with direct mail and e-mail inviting them to join the Passat Alpha Driver Program. It only took three days to sign up 5,000 advocates, who registered at a dedicated Web site, interacted with the brand and talked up the Passat to friends to earn points to redeem for a host of products including gift cards and iPods.

And if response rates to direct mail are any indication, consumers are increasingly happy with what’s arriving in the mailbox.

Response rates lifted slightly to 2.77% in 2005 from 2.73% in 2004, the DMA found. Rates are up due to marketers growing sophistication and abilities to understand the target audience and deliver value, as well as the overall strength of the economy, Johnson says.

Sales generated by direct mail totaled $617.2 billion in 2005 and are expected to rise to $751.8 billion in 2009. B-to-C sales reached $404.3 billion last year and B-to-B sales totaled $212.9 billion, the DMA found.

PROMO’s 2006 Industry Trends Report also found that the 23% of respondents ranked direct marketing as the discipline they most often plan/execute in conjunction with consumer promotion.

SNAPSHOT 2005

Spending on direct mail grew to $49.8 billion last year

Response rates up slightly to 2.77%

41.9% of marketers cited direct mail as a top spending priority