April 26, 2011

Royal Mail hits direct mail with yet another curve ball

Well Royal Mail certainly isn’t making it easy for us. Its recent price hike of four times the rate of inflation for a first-class stamp will undoubtedly lead many marketers and clients using direct mail (DM) as a marketing channel to question its ROI.

Now 46p a pop just to post – plus design fees and print costs on top of that – DM is fast becoming one of the most expensive marketing routes out there. Emails, display and banner advertising are arguably cheaper and are as, if not more, effective. So what’s an integrated agency such as ours supposed to do? Write it off and stop providing the service, or argue here why DM is still valid?

Clearly we’re opting for the latter – and we think we have a pretty convincing argument. Those working in the DM industry have, over the last few years, been working hard to reduce the costs associated with the sector as well as promoting its positives. While Royal Mail is potentially sending advertisers straight into the arms of a willing digital marketing industry, you can’t escape the fact that DM is still, despite this increase, one of the most effective ways to acquire new customers. Especially now the channel is significantly less noisy.

DM allows a business to test its marketing strategy by targeting a representative sample of its audience to see what delivers the best response rate before developing a full campaign. It also provides the opportunity to generate a specific response from a targeted group of customers. From relationship building, increasing sales to existing customers, building customer loyalty, re-establishing lapsed customer relationships and generating new business, there’s not much a DM campaign can’t, with the right expertise, be designed to do.

And let’s not, in Royal Mail’s defence, forget the incentives it has put in place to counter the increase. Service offers as well as alternate price offers, such as payment by results, are designed to give advertisers a reason to stick with DM.

Celotex, Bayer Animal Health and CEVA Animal Health are three clients of ours who have in the past experienced great success from DM with a significant ROI. Celotex in particular smashed the average DM response rate by 14 and 15 percent within a month for two campaigns we implemented for them.