If direct mail has been a part of your marketing strategy in the past, now may be a good time to seriously evaluate its success versus the potential of marketing on the Internet.

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 Consumers are inundated with messages, direct mail pieces are often trashed before they are even read, and using an outdated database can lead to misdirected mail.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 the rising postage costs (the 2006 postage increase will add billions to business costs annually), compounded by rising costs in paper and declining response rates, and many companies are looking for alternatives to direct mail.

Many have turned to the Internet, which now reaches three-fourths of U.S. households, according to Nielsen/NetRatings. On a typical day at the end of 2004, some 70 million American adults logged onto the Internet, a 37 percent increase over 2000, according to the Pew Research Center. The Internet gives consumers access to endless sources of information and has provided businesses with a possible alternative for reaching consumers.

The Internet has proven to be 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:

Campaigns using eMail 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 eMail 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 eMail, or in a well-written and well-designed eNewsletter. Not only can they read the specific information shared by the company, 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 eMails, the average click-through rate (indicating action taken) is 6 to 8%.

“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 eMail campaigns. “So do eNewsletters that contain informative news and valuable infomation targeted to potential customers.”

“It used to be a company would do an eMail 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 eMail campaign or newsletter, 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, the Internet can be a powerful tool to create contacts and drive sales.”

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

So as you plan for 2006, 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 determine how to get the most impact from your marketing dollars.

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