To all the social media consultants out there who downplay the role of direct mail and direct marketing, there are two standout points that they should be considering very closely from the DMA’s latest economic impact study:

• As an industry, the amount spent on direct mail will rise by $1.1 billion this coming year (to $45.5 billion)
• 2009 will mark the fifth year in which direct marketing has captured more than half of all advertising spend nationwide

To be clear, I’m not arguing that there are not rates of increased use of the newer marketing vehicles (commercial email,  online advertising and social media) – certainly marketers everywhere are finding the best ways to use these mediums.  What is happening is that firms, small and large, are realizing the effectiveness and special role direct marketing has in a firm’s overall marketing efforts.  When asking ourselves the question “Why is direct marketing spending increasing?” there are a couple of main drivers that come into play (and because of time constraints, I’m going to quote the latest Wall Street Journal article about direct mail mostly for anecdotal evidence):

Emotional Appeal

This is probably the most important aspect, and it’s hard to quantify the impact of emotion. In the book, “How We Decide”, Jonah Lehner outlines the massive importance of emotions in any decision making process (and for us that means the buying process), and direct marketing often uses emotion as a way to build trust and a relationship with clients.  A fun example from the WSJ:

To save money, Peter Taffae, founder of ExecutivePerils, a Los Angeles wholesale insurance broker, stopped his small firm’s humorous [movie themed] postcard mailings last year.  …

“We would visit some clients and notice they were hanging the postcards on the wall, collecting them,” says Mr. Taffae, who says he secured $270,000 from a new client who chose to do business with the firm in late 2008 after receiving the postcards.  “After two or three months [of no postcards], we got a lot of emails and phone calls asking us, ‘Did you take me off your list?’” says Mr. Taffae, who restarted the postcard mailings in November.

ExecutivePerils is a stand-out company in that they use the medium effectively to entertain their clients, and by doing so increases clients’ emotional attachment to the company.  Successful direct marketing often uses this as a call out – and when it comes across in a physical medium that people can hold in their hands , it ends up being a higher value piece, so much so that people may start collecting them and sharing them with friends.  It’s true that emails have the “forward to a friend” feature designed into them, however with direct mail that friend will not get a barrage of emails thereafter.  So in that sense it creates a sense of ultra-private information sharing.

The Exclusivity of Postal Mail

A few years ago it was easy to make the case that a business should start emailing their customers because of the low cost of email – and the fact that not many businesses were taking advantage of commerical email.  Now, as every business uses email in some form or another, the volume of email that people receive has diminished the effectiveness of one particular email from one particular company.  Here’s a relevant anecdote:

William Kapas, president of J.C. Kapas Real Estate Co. in Rochelle Park, N.J., says he has secured clients as a result of his high-gloss, four-color monthly mailings that list who has bought or sold restaurant properties though the firm.

“Our clients look forward to knowing, and it’s a little bit of gossip, too,” says Mr. Kapas, who exclusively uses traditional mail to reach clients. “I think it’s easier to delete the electronic junk mail without taking a second look.”

Mr. Kapas spends about $1 a piece for the monthly mailings, sent to about 2,200 current and prospective customers.

Email will always be a component of how you communicate to customers.  However, brands have to consider *when* to send an email.  For certain communication, especially loyalty, relationship & acquisition customer campaigns, email isn’t necessarily the best option.

Targeting a Message for Relevance

Personalization (including a recipient’s name or identity somehow) on a message is just one way of creating relevance.  Equally important aspects are creating the marketing list in the first place.  Demographics, customer profiles, customer segments will always apply differently to  different companies.  It was refreshing to hear this reiterated by Kellogg’s professor of marketing – again from the WSJ:

Many entrepreneurs find that the boiler-plate methods of the past—such as purchasing mailing lists and sending fliers or coupons to a mass audience—often aren’t cost-effective. Instead, business owners are creating personalized mailings, which may include special offers or other valuable information, and sending them to a hand-picked list of current and prospective customers. The idea is to send something that’s more appealing than “junk” mail and potentially more noticeable than an email message, says Eric Anderson, a professor of marketing at Northwestern University’s Kellogg School of Management.

MBA’s should take note that the new tools of relevancy are now getting to be more mainstream.  These tools will only get better with time, and it increases the value of a direct marketing message & campaign.  In general, 2010 will bear out whether these trends will stick, improve or change – but one thing is certain – if the recession has forced us to go “back to basics” , direct marketing is certainly one of these.