Direct Mail Rolls With the Punches

As materials and postage costs increase, publishers are retooling a favored marketing tactic.

By Chandra Johnson-Greene
Monday, March 3, 2008

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With the rising cost of postage and paper and most of the spotlight on the Web, the accountability of direct mail as a primary tool for acquiring subscriptions is under pressure. Consumer marketers, however, say that its relevance is as strong as ever.

The recent 2007 Industry Survey in Capell’s Circulation Report highlights the conflict over direct mail’s ultimate utility. Overall gross direct-mail response rates in 2006 were up 3.48 percent (from 3.12 percent in 2005) and overall industry net response rates in 2006 were up 2.10 percent (from 1.80 percent in 2005). Direct mail pay-up rates were also up 2 percent. This was all accomplished while most circulators were lowering their mailing volumes.

However, in the same survey, about half of respondents reported worse overall direct mail results that the previous year. So is direct mail dead? Or is it alive and well?

CM spoke with consumer marketers from National Geographic, Reader’s Digest, Interweave Press and The Taunton Press, as well as industry consultants, to discuss what’s working, what’s not, the importance of targeting the right audience and what’s ahead for the future.


WHAT STILL WORKS, AND WHY


“The voucher package is still front and center,” says Shira Linden, a freelance copywriter and consultant who specializes in circulation marketing. “But they’ve gotten longer, with more enclosures. It’s a sort of a morphing between the traditional package and a voucher.”

You may be not surprised to hear that the voucher—along with a few bells and whistles—is still king. But its relevance is even more evident now that paper and postage prices are climbing steadily.

Richard Brown, director, new business, at National Geographic, says the death of the voucher is nowhere in sight. “We’re currently using a voucher package that contains one small colored sheet with a premium offer,” says Brown. “Like everyone else, we moved to this type of package when things were getting expensive to mail. The response we get with these vouchers equals the rate we get with better glossy packages. By using this package, we can continue to increase response rates while seriously reducing expenses.”

Not everyone is completely bullish on vouchers. Special-interest publisher The Taunton Press, which publishes titles such as Fine Cooking and Fine Woodworking, is using #10 packages, 6x9 packages—and even cover wraps have resulted in a higher response rate than vouchers.

“We’re trying test into voucher with limited success, “ says Dennis O’Brien, VP, circulation, “but we have been using a sample wrap, which includes an envelope to respond with. It’s worked like gangbusters.”


DOUBLE POSTCARDS: MARKETING’S DRIVE-BY SHOOTING


One package that seems to be the scourge of the litter right now—for various reasons— is the double postcard. In his “Ideas in Circulation” blog, Richard Riccelli wrote that double postcards are “the marketing equivalent of a drive-by shooting—they induce quick sampling, but depress future pay-up.”

“Double postcards have high net response, but weak payments,” agrees Bob Kaslik, VP, consumer marketer, Interweave Press, which publishes Beadwork and Creative Jewelry. “The purpose of a double post card is to get a free trial issue into the hands of the prospect. Because there isn’t much promotional copy on the card—the prospect doesn’t really know what they are getting—it’s just a free no-risk copy.”

According to James Sullivan, project director at Optic Nerve Direct Marketing, double postcards can sometimes be even more trouble than they’re worth. “A lot of magazines used to use double postcards very often,” he says. “They’re personalized on both cards, so you tear one off and send it back. But it’s expensive to pay for the cards to be sent back.”


RACHAEL RAY’S  STATEMENT OF BENEFITS

Other consumer marketers are finding success in a statement-of-benefits package with lots of color and relatable images. Every Day With Rachael Ray uses a benefits-driven form along with a four-color brochure with Rachael’s face all over it.

“Our package espouses Rachael’s core strengths—her ‘30-Minute Meals’ TV show, her accessibility, the idea of ‘fun’ and how to ‘take a bit outta life’ in and out of the kitchen,” says Christopher Gaydos, circ director, Reader’s Digest.
 
Gaydos adds that the company won’t be curtailing mailings despite postage and paper costs because demand is still strong and the goal is to maintain growth.

“We are constantly tweaking the package though, looking for ways to reduce cost and keep response high,” he says. “Things like a smaller brochure help, and redesigning the outer envelope helped pull 10-15 percent of material costs out of the package without reducing response. ”


REACHING THE RIGHT AUDIENCE


Because of rising costs and decreasing budgets, “test more, mail less” seems to be the current motto for consumer marketers. This means the packages have to have the right message in order to reach the right consumer.

“In terms of packages, it’s always good to test if the budget allows,” says direct marketing consultant Karen Weinstein. “Sometimes, but not all time, by testing you can find who’s responding to what. As far as the rising costs, people are just going to see what happens and go with it. Certainly, this will impact the amount of testing and mailing that’s done, and whether the right message is getting to the right person. That will heighten the need.”

O’Brien explains that the reason the sample wrap works so well for Taunton’s titles in reaching the right audience is because it plays to the sensibilities of the potential subscribers, who are already devoted enthusiasts.

“We’re at a higher price point than our competitors,” he says. “We don’t discount our subs, which forces us to narrow our mailings. We need lots of room to sell ourselves in order to get people to fork over the money. That’s why the sample wrap works so well.”

It’s also important to inject the same personality in the package as the magazine itself.. “The package is fun, just like Rachael Ray, but gets to the point, telling the prospect exactly what they’re going to get—a lot of recipes, tips, and insight and inspiration from Rachael Ray,” says Every Day With Rachael Ray’s Gaydos.


INTEGRATING WITH ONLINE EFFORTS


Opinions are mixed when it comes to integrating direct mail with online marketing. Some say that it’s best for subscription acquisitions, while others say it’s more suitable for billing and renewals.

“We’ve been sending out two upfront e-renewals prior to the first paper effort,” says O’Brien. The first e-renewal worked—so using tradition paper renewal logic we added the second effort, which was successful as well, meaning that it produced a renewal order at a cost lower than traditional paper effort.”

Kaslik says that because the amount of mailable names is declining as people gravitate to the Internet, a lot of marketers are going online to do both subscription acquisition and retention.

“We’re experiencing increases is subs sold through the Internet in excess of 30 percent year over year for most titles,” he says. “The challenge is to try and track where it’s coming from.”

Gaydos says that Rachael Ray is currently testing drives to the Web within its direct mail and is also working to get people to go online and provide that extra information. “We are looking at ways to incentivize subscribers to give us their email addresses in exchange for digital premiums, or paying online to get their first issue digitally,” he says.

For other titles, integration between online and direct mail didn’t generate much response at all. “We have an online sub program that includes an email component, but haven’t collaborated too much with direct mail, says National Geographic’s Brown. “In the past, we have offered the opportunity to subscribe online from the mail package, but most responses come back through the mail. Still, email is a channel that we are interested in expanding.”

THE FUTURE OF DIRECT MAIL

So as online marketing continues to develop, will it eventually replace direct mail altogether? Consultant Weinstein points out that some audiences are more comfortable with going online than others. “I think it depends on the audience the magazine is trying to reach,” she says. “The Internet certainly provides more ways to keep readers interested, but I certainly don’t think traditional mail will ever go away. It needs to be a part of the mix.”

Linden adds that the tremendous success of newer consumer magazines like Every Day With Rachael Ray proves that people are still into print. “There’s still is a demand for content in print. It’s a format that people want,” she says. “There’s still a demand for great content created by interesting people with something to say.”

Using direct mail as part of a triad of marketing strategies will only lead to higher response rates, according to Sullivan. “A magazine may have a site or email offer, but once they shut down their computer, all of that information is gone from their immediate view. But when that consumer opens up a direct mail package, the phone number is right in front of their face, and it’s not going to go anywhere until they throw it out.”     


DIRECT MAIL AND THE MASS-MARKET PUBLISHER

Meredith sets its sights on better segmentation, personalization and the revival of the sweeps.

By David Ball, VP, consumer marketing, Meredith

The Meredith Magazine Group has always prided itself on its strong direct-to-publisher model and the strength of its direct mail programs. We continue to have profitable direct mail across our magazine and book product lines, but each year brings new challenges.

The current move in many legislatures across the country to enact “Do Not Mail” laws poses the biggest challenge we’ve seen in a while. On the one hand, I do not want to waste time and money promoting to people who are not interested in my products; from that perspective I applaud people letting me know that I should not send them any more mail. On the other hand, purchasing magazines, either by subscription or on the newsstand, tends to be an impulse buy. I don’t believe that most people can anticipate whether they will want to buy a subscription to Better Homes and Gardens a year from now or not. The industry needs to do a better job in educating people about the benefits of direct marketing so we don’t end up with 50 percent of America opted out from receiving our offers.

The highest testing priorities for Meredith over the next 12-24 months will be in the areas of segmentation and personalization. We strongly believe that we need to get better at presenting the right offer to the right person at the right time. We already use sophisticated modeling techniques on a large percentage of the mail we send out. Still, the vast majority of people receiving our offers do not respond. There’s a huge opportunity for us to get better at segmenting our audience.

I also believe that more personalization will result in higher response rates. One of the biggest obstacles to more personalization is a lack of really clean, accurate name and address information both on our house files and on the files we rent. It is unacceptable to send a mailing to D. Ball and have the greeting say “Dear D:”. We have made obtaining better data a high priority for 2008.

Finally, it is time to begin retesting sweepstakes offers in direct mail. Used responsibly, these offers are a great tool for getting people to sample your product. We have seen great success in sweepstakes driving traffic on the Web. We need to develop a sweeps offer to supplement our strong non-sweeps packages so we can get our products into the hands of more readers.


The following data—which was calculated by ParadyszMatera’s MarketRelevance media and promotion tracking tool, and does not include direct mail use during the last quarter of 2007—shows that circulators are increasingly dependent on vouchers and #10 packages to economically pull in new subscribers. The percentages are based on approximately 1,200 consumer publishing direct mail campaigns.


METRICS: DIRECT MAIL USAGE, 2007

The following data—which was calculated by ParadyszMatera’s MarketRelevance media and promotion tracking tool, and does not include direct mail use during the last quarter of 2007—shows that circulators are increasingly dependent on vouchers and #10 packages to economically pull in new subscribers. The percentages are based on approximately 1,200 consumer publishing direct mail campaigns.

• The use of premiums in direct mail packages stayed the same from
   2006 to 2007.
• The use of pure vouchers rose from 48 percent in 2006 to 51 percent in 2007.
• The use of #10 packages rose from 34 percent in 2006 to 37 percent in 2007.
• Monarch package use decreased to 4 percent in 2007 from 7 percent in 2006.
• The use of hard offers increase to 67 percent in 2007 from 64 percent in 2006.
• The use soft offers dropped to 28 percent in 2007 from 30 percent in 2006.

And according to researched conducted by Vertis Communications, the number of Hispanics who responded to direct mail marketing jumped from 38 percent in 2003 to 54 percent in 2007.