Direct Mails Place in the Media Mix & Critical Success Factors

Warren Paull
01.07.11

Summary

Direct Mail competes in the decision market within the advertising sector. This can be described as including all personalised marketing communications, where personalisation is defined by the ability to target (and in turn customise) via (but not limited to) nonmodelled data (namely behavioural and/or consumervolunteered data), Its is this data which defines the market. This is a growing market and although the channel suffers from weaknesses in some areas, it has a unique role to play in persuading the consumer. This unique role is derived from its ability to simultaneously leverage the rational and emotional decision drivers in the recipient, which in turns makes for an efficient persuasion mechanism.

The Market

Business Communications Cost (Transactional) Investment (Marketing Communications) Need: Primarily Awareness Press Inserts Television Outdoor Need: Primarily Decision Internet Search Direct Mail Telemarketing

SMS/MMS
Mobile Apps Field Marketing Digital Publishing Email Social Media Internet Display

Radio
Door Drop Cinema Experiential In-Game

Business Communications Cost (Transactional) Investment (Marketing Communications) Need: Primarily Awareness Press Inserts Television Need: Primarily Decision Internet Search Direct Mail

Telemarketing
SMS/MMS Mobile Apps Field Marketing Digital Publishing Email Social Media Internet Display

Outdoor
Radio Door Drop Cinema Experiential In-Game

Critical Success Factors

Decision Channels Product Performance Targeting Data Behavioural Recent Granular Consumer-Disclosed Recent Granular Modelled Recent Granular Speed of Comms Deployment Capacity to Mass Customise Comms Measurability Granularity Time Taken to Generate Ease of Collection Speed of Collection Ease of Interpretation Speed of Interpretation Bandwidth Communicative Leverage Speed of Solution Monetary Cost Image Product Price Place Expertise Knowledge of Product Knowledge of Customer Customer Support Contact Channels Number Available Speed of Use Ease of Use Time Period Operational Product Features Cost Return on Investment Risk of Investment Minimum Order Minimum Outlay per Order Set-up Cost

Visual Information Audible Information Aromatic Information Taste Information Tactile Information
Emotional Leverage Consumer Channel Preference Channel Environment Interactivity Speed of Response Ease of Response Bandwidth of Response Visual Information Audible Information Aromatic Information Taste Information Tactile Information Monetary Cost of Responding Access

Promotion

Ease of Purchase Access to Order Mechanism Knowledge Needed to Order Reliability of Order Mechanism Payment Methods Accepted Speed of Purchase Time to Complete Order Process Time for Order to be Confirmed

The Detail

In defining the market for direct mail, Postcomm first segments the business communications market, isolating the advertising sector[1]. I agree; in seeking to understand direct Mails place in the media mix, we should first isolate the business communications market. We should then divide this into cost and investment; where cost is transactional communications and investment is marketing communications. I have presumed that it is these marketing communications which Postcomm has termed advertising. Postcomm then segments advertising into brand and direct response activity[2]. It is my view that this is an unhelpful definition, based on somewhat outdated notions of brand and direct channels, which were developed when the advertising sector was very different from today (i.e., there has since been proliferation/fragmentation of media, along with technological developments which blur the aforementioned notions of brand and direct, leading to the convergence of tactics). We should instead (and always) attempt to segment the market on the basis of customer need. I submit that the advertising market can in fact be segmented on the basis of whether the advertisers objective/metric is primarily awareness (i.e., know me, like me includes attitudinal objectives, as one cannot be aware of something without also feeling something about it (even if this is indifference)) or persuasion ( i.e., persuading the consumer to make a decision to perform an action, or to not perform an action (e.g., loyalty do not buy someone elses product)). Indeed, my view is supported by Postcomm later in their report, where they talk of the convergence of brand and response[3][4]. Postcomm then characterise the market for direct mail as being defined by the ability to contact a named individual (with media capable of this, acting as potential competitors to direct mail)[5]. My view is that the only useful way to segment a market is based upon customer need. I do not accept that the fundamental customer need is to contact a named individual. I contend that this is, in fact, a mere by-product of the fundamental customer need that is being pursued. The customer need is to induce a decision The mechanism employed to achieve this is persuasion, and persuasion is of course best achieved via customising the communication/persuasion as much as possible to its recipient (which is in turn fed by targeting). An individuals name may or may not be deemed an important part of this personalisation but, in any case, is only ever one element the fundamental driver is customising the persuasion to the individual in order to most efficiently induce a decision.
The building blocks for a sustainable postal service, Analysis of Markets (March 2011) 2.63 Ibid. 2.64 [3] Ibid. 2.81 [4] This analysis is further supported by Regulatory and economic challenges in the postal and delivery sector By Michael A. Crew, Paul R. Kleindorfer Chapter 17 [5] Ibid. 2.115
[1] [2]

Perhaps the reason for Postcomms fixation on the individuals name is because this was, in the past, primarily/the only way in which to customise a marketing communication to a targeted individual. This may have led Postcomm to overlook the fundamental customer need that was driving this; concentrating instead on what was previously the only visible evidence of the need. The need is decision which is achieved via customisation/personalisation the consumers name may or may not be part of this customisation/persuasion. Therefore, when we look at all of the channels available in advertising and map their attributes in relation to the advertisers need, we see that there is, in fact, only one unique capability common which separates some channels from others. Only one key attribute which allows us to group channels on the basis of whether they possess this attribute or notThis is the ability to target via nonmodelled data. To clarify; what defines the market, is the ability to target using an individuals behavioural data and/or the individuals consumervolunteered data (modelled data may also be employed of course in addition to these elements). Of course, there may well be numerous examples of campaigns that have, for example, employed only modelled data for a direct mail campaign. However, there are always examples of bad practice (e.g., this is akin to one or two factories that might have carpet put down on the factory floor instead of hard-wearing industrial flooring; theyre just pursuing the fulfilment of their need/objective badly either because of lack of knowledge or lack of capability it is not an accurate reflection of the need itself ). When we examine the customer need to induce decision and in turn the elements which feed this (customisation/personalisation fed by targeting) and then in turn the common characteristics of channels offering this to customers; we then see the ability to target using non-modelled data defines the market for decision. Therefore, it is my view that direct mail operates within what we shall term the decision market, competing against other personalised marketing communications channels, where personalised is defined as the ability to target the consumer via non-modelled data.

Postcomm goes on to list what they see direct mails competitors as being (in order of closest substitute), based on the premise that the market is defined by the ability to contact a named individual[1]: Direct Mail Internet Email Telemarketing SMS Door Drop However, following my view that the market is in fact defined by the ability to target via non-modelled data, I conclude direct mails competitors to be: Paid Search Field marketing Direct Mail Social Networks Email Internet Display Telemarketing Digital Publishing SMS/MMS Mobile applications Postcomm uses the following to score the substitutability of other channels[2]: Tangible Visual Personal Targeted Ease of response via channel I however, based on the premise that decision is the key objective and that this is best achieved by personalisation, which is in turn fed by behavioural and consumer-disclosed data, believe the following are more appropriate: Targeting Complex messaging (degree of persuasion possible) Interactivity Measurability

The building blocks for a sustainable postal service, Analysis of Markets (March 2011) 2.117 Ibid. [3] The building blocks for a sustainable postal service, Analysis of Markets (March 2011) 2.294
[1] [2]

Postcomm then concludes that direct mails key differentiators are therefore[3]; Physical delivery Targeting of named individuals I have to disagree with Postcomm strongly on this point. It is this writers view that physical delivery is not a customer need per se, therefore is not an acceptable characteristic to use in differentiating direct mail from other channels (or products) available to consumers in the market. Additionally, and as previously set out, the targeting of named individuals is not a customer need either, so is also an invalid characteristic to use for this purpose, in my opinion. However, I do conclude that direct mail does, of course, have key differentiating factors as compared to other decision channels Based on my analysis, the differentiating characteristic of direct mail is its ability to combine complex messaging with emotional stimulation. Or to put it another way; it leverages both the rational and the emotional decision drivers. To explain, in common with many competitor channels, direct mail is very capable of complex messaging (as supported by Postcomms report). Also, like some competitor channels, it has the ability to connect with the customer on an emotional level (via its tangibility/physical delivery it is able to communicate with the consumer via that most emotional of the human senses touch, smell and even taste, if so desired), in much the same way as many traditionally perceived brand (awareness) channels do. However, by combining complex messaging with the emotional, or the non-rational element of the decision process, direct mail offers a very powerful decision mechanism. It achieves rational leverage via its capability for long-form copywriting, images and permanent nature of its physicality (i.e., it can be retained by the consumer for consideration, as opposed to the transient nature of many other media). It achieves emotional leverage by virtue of the consumers channel associations (the consumers emotional connection with the physical mailbox, which persists despite (or perhaps because of) a switch to digital communication) and its bandwidth (i.e., in addition to the common capacity to communicate visual and audible information, it is also capable of communicating tactile, aromatic and taste information).

Conclusion The research and analysis summarised in the document leads this writer to believe direct mail competes in the decision market, which sits within the advertising sector. This can be described as including all personalised marketing communications, where personalisation is defined by the ability to target (and in turn customise) via (but not limited to) non-modelled data (namely behavioural and/or consumer-disclosed data). This is a growing market and although direct mail suffers from weaknesses in some areas, it has a unique role to play in persuading the consumer on behalf of marketers. This unique role is derived from its ability to simultaneously leverage the rational and emotional decision drivers in the recipient, which in turns makes for an efficient persuasion mechanism. For direct mail (and other channels within the market for that matter) to be competitive against the alternatives in the marketing mix, it is vital that product development is undertaken in the industry, which addresses the critical success factors (product benefits) outlined in this document; making the product stronger in these areas. It is this writer's view that the decline of direct mail as part of the marketing mix, is in no small part due to the fact that the digital channels which have emerged in recent years are far from being different from direct mail in fact, very similar indeed. This is to say that they use the same mechanisms to achieve the same broad objectives as that which direct mail is/was used for. The fundamental difference however. is that they are far stronger in the critical success factors outlined herein. In particular, they are much stronger in many of those critical success factors which determine the efficiency of these types of communications (notwithstanding other CSFs which have a big impact on channel choice, such product features which play a large role (cost/the risk of investment, etc)). If the direct mail industry is able to develop products which address the aforementioned (as well as working on pricing models etc..) then there is no reason, in my view, why the channel cannot once again shine. Its capacity for complex persuasion, customisation and, most of all, connecting with the consumer via all human senses, provides powerful building blocks for a marketing channel. The latter attribute is indeed one which, I suspect, many of the newer channels would very much like to possess, given the option.