Direct mail is a traditional marketing strategy that works well for a variety of companies. It allows them to target their message to people in certain demographics: age, gender, household income, geographic location, and so on. As such, it’s a valuable tool, especially at the beginning of a marketing campaign.

However, the effectiveness of direct mail is threatened by outside circumstances. Consumers are inundated with messages, direct mail pieces are often trashed before they are even read, and using an outdated database can lead to misdirected mail.

Add to these challenges a major cost factor – direct mail campaigns have become more expensive due to increasing postage rates. The National Federation of Independent Business did a study on 750 small U.S. businesses and found that the latest postal fee increase will cost small businesses an additional $1.3 billion in mailing costs annually. This increased expense, compounded by declining response rates, has many companies looking for alternatives to direct mail.

Many have turned to the Internet, which now reaches three-fourths of U.S. households, according to Nielsen/Net Rating. Since its debut, the Internet has given consumers access to endless sources of information and has provided business with an inexpensive medium to reach consumers. E-mail costs can be significantly less than a direct mail campaign.

The Internet has proven to be wildly successful because of its inherent characteristics, as defined by John Deighton of Harvard Business School in an article on the American Marketing Association’s Web site:

• On the Internet, the customer initiates contact, not the company.
  
• The Internet is a pull-medium as opposed to television, which is a push-medium –      customers are seeking information rather than having information pushed on them.
  
• The Internet is a high-intensity medium, with people surfing to the Web because
       they want to be there.

E-mail marketing campaigns have another advantage over direct mail campaigns – faster response time. The average response time for direct mail is three to six weeks, while the average response time for e-mail is three days.

As businesses tune into the advantages of Internet marketing, they are finding that customers are more receptive to receiving their information by e-mail. Not only can they read the specific information shared by the company in the e-mail, but they also can connect to the company’s Web site or to a specific area of interest. Consumers appreciate this option and it gives the company valuable tracking information, which leads to more precise cost-versus-return analysis.

GartnerG2 reports that permission-based (or opt-in) strategies can greatly increase response rates from consumers. The service estimates response rates measured by action taken from direct mail to be about 1%. On permission-based e-mails, the average click-through rate (indicating action taken) is 6 to 8%.

A more recent study, this one by Bigfoot Interactive reported by the Center for Media Research, found click-through rates increasing by as much as 27% in just one quarter on promotional e-mails sent by retail, consumer packaged goods, automobile, media and financial services companies.

“Relevant and timely on-line offers do drive customer response,” said Bill White of MillerWhite LLC, an integrated marketing company with experience in developing targeted e-mail campaigns.

“It used to be a company would do an e-mail blast without really considering whether the message was relevant or whether the database was the right one to receive the message,” White explained. “When you design an e-mail campaign, you have to respect the fact that you are coming into that person’s home or place of work with his or her permission, and you have to have a relevant message. When you’re successful at that, e-mail can be a powerful tool to create contacts and drive sales.”

Retailers like Honey Creek Mall in Terre Haute, Indiana, are turning more heavily to Internet marketing. In surveys conducted at this regional shopping mall, shoppers indicated they would prefer to receive information about mall sales, events and promotions via e-mail.

When the survey was first conducted in early 2002, 33% of those surveyed indicated this preference and volunteered their e-mail addresses. Within six months when the survey was repeated, the percentage of shoppers preferring news via e-mail had increased to almost 51%. Being able to track this type of response is key to the success of a marketing campaign.

While most experts don't claim that traditional direct mail will be totally replaced by electronic alternatives – and some marketers continue to be quite successful with direct mail – database development is reaching the point that e-mail messages can be targeted nearly as precisely as direct mail.

In your search for new customers, value is key, so it’s a good idea to consult with an integrated marketing firm that can help you evaluate your product, your message and your audience to get the most from your marketing dollars.

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