Singularity Versus Synergy: A Look At The Costs & Conversion of Direct Mail

From the desk of Craig Workman

As my team of AdWhistle™ Data Scientists develop and test new direct mail products, we expect new data to come from a variety of unforeseen directions.  More often than not, that data ends up proving out theories we had already established, but with a brighter light focused on them.  Case in point, does being on a direct mail piece alone, produce better or worse results than being part of a “synergistic” group of advertisers?

Of course, there are certainly a number of factors to consider when addressing this question, but for now…we’ll fly up to 35,000 ft….and try to put everything in perspective.

Looking down from a plane cruising at 35,000 ft., has always given me a sense of calm, peace, and reflection.  Flying over the plains of Nebraska, I can look down and see how the roads, waterways, topography, and croplands appear all interconnected in a highly organized fashion.  It’s like nothing can function without everything else around it, and it all just seems to make perfect sense.  Perfect sense that tends to disappear over time, as I land back on earth and become mortal again.

On the ground, the things we think are important, can tend to overwhelm us and produce distractions that keep us from making the most optimal decisions.  In the case of direct mail advertising, the tendency is to believe that a single marketing piece promoting our business only, is somehow more effective than a marketing piece with other businesses on it.  But, is this true?  Actually, yes AND no!

Yes, because most research and conversion modeling that’s ever been done on direct mail, has given us a great number of numerical data factors which we rely upon for determining ROI.  Following this data alone, can and does produce a certain amount of reliable sales conversions, and so we feel comfortable with that.  We believe we can “scale” from knowing that data.

But also No, because people, our economies, our environments, our knowledge, our technology, our attitudes, our everything is changing constantly.  And like Galileo’s Theory of Falling Objects says, the farther an object falls…the faster it picks up speed.  So it’s more than safe to say, that those older data models for direct mail ROI, can and should be challenged, based on how far and how fast we’ve come since the data was published.  This “challenging the status quo” for research, is exactly what we are doing for AdWhistle™ every day, and I believe we have some very compelling ideas for you to consider.

So by now, you might be thinking that we like the idea of “synergy” over the idea of “singularity” (as it pertains to DM), and for the most part…you’d be right.  With one significant caveat:  In order for synergy to truly work, you HAVE TO UNDERSTAND the relationships that make synergy work in the first place!

Here’s an example:  If you had a direct mail marketing piece that allowed room for 12 advertisers, and all those advertisers ended up being “food related” vendors, then synergy would be fairly strong.  Not its strongest, but strong nonetheless.

Now let’s say half of the advertisers on the piece were food related, and the other half ended up being a mixture of insurance or financial service related advertisers.  What would happen?  Well, based on our data modeling knowledge, the insurance and financial service related advertisers would see little to no ROI, and the food related advertisers would see approximately 30% Less ROI…just because the two “data verticals” ARE NOT WELL MATCHED!  At the end of the day, neither set of advertisers fully capitalized on the potential, simply because their pairings were haphazard and misguided.  This is exactly how most advertising is sold today.  Who cares, as long as the client wants to pay!

Well, this isn’t the attitude we take at SwitcHHat & AdWhistle™.  In fact, we can’t!  Our system is too well designed to allow those mistakes, because mathematical certainties and proprietary algorithmic processes won’t allow for conflicting outputs.

But we can’t forget about the solo flyer.  The company that sends out their own complete piece, and pays the entire cost of the design, mailing piece production, mailing list parsing and addressing, and finally postage.  Costs for flying solo are as follows (based on the latest prices from USPS & major commercial printing firms):

  • Graphic Design can run from $25 per hour for amateurs, to over $85 per hour for professionals.
  • High Impact Postcards in 6 x 11, 8.5 x 7, 6 x 9, etc…will run from $.07 to over $.22 based on volume (usually 2500 qty or more).
  • Addressing, whether done by staff & labels, or professionally printed can cost $.04 to $.10 each piece.
  • Postage for Standard Bulk USPS (depending on postcard size) is from $.24 to $.309 each address delivered.  Better than 1st Class at $.49, but still costly!

Under this example, and if the company does everything internal with staff, costs per address delivered is easily $.49 at its best…to well over $.65 per home!  And we still haven’t determined yet if flying solo produces a GREATER ROI, simply because we’re the SINGULAR ADVERTISER on the piece?

In the next segment, I will address how we determine if flying solo is worth it, and when it pays to do so.  And I am sure you’ll learn some things you didn’t know….some might even blow your mind!

But for now, and looking at how the math adds up….SYNERGY is the best recipe for capturing Higher ROI on your direct mail pieces.  And wouldn’t you know…we have an opportunity available right now for certain business types.  Check it out here >>

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