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Date: 2007
Type of Promotional Material/Activity Tested:
Direct response media vehicles: direct mail-flat (includes letters, postcards, brochures, pamphlets, and flyers), catalog, email, inserts (includes co-op/shared mail, free standing inserts, package inserts, statement stuffers), outbound telephone, and direct response space advertising in newspapers and magazines.
Sample Population:
Over 1,600 DMA member campaigns from 2004 to 2007 covering 19 industries including catalog/retail, computer and electronics, financial products and services, health services, manufacturing, nonprofits, packaged goods, personal and repair services, and travel.
Metrics:
Circulation, campaign cost, orders/leads generated and average order/lead value used to calculate response rates and ROI.
Total Revenue ($) = # of Orders x Average Order Value
Response Rate (%) = # of Orders (or Leads, if applicable) ÷Promotion Quantity
Conversion Rate (%) = # of Orders ÷# of Leads
Revenue per M Contacts ($) = Total Revenue ÷ (Promotion Quantity/1000)
Promotion Cost Per M Contacts ($) = Promotion Cost ÷ (Promotion Quantity/1000)
Promotion Cost Per Order ($) = Promotion Cost ÷# of Orders
Cost Per Lead ($) = Promotion Cost ÷# of Leads
Promotion Cost % = Promotion Cost ÷Revenue
Top Line Results:
Response Trends
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Catalog
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Response Rate
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Cost per Order/Lead
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Direct Orders & Fundraising
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2.24%
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$28.27
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Lead Generation
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6.12%
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$26.00
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Traffic
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10.34%
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$3.65
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Direct Mail
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Response Rate
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Cost per Order/Lead
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Direct Orders & Fundraising
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2.15%
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$19.90
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Lead Generation
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1.61%
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$27.38
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Traffic
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5.35%
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$6.84
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Inserts
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Response Rate
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Cost per Order/Lead
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Direct Orders & Fundraising
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0.11%
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$26.62
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Lead Generation
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0.57%
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$20.06
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Traffic
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0.12%
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$34.50
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Email
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Response Rate
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Cost per Order/Lead
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Direct Orders & Fundraising
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0.48%
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$3.88
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Lead Generation
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4.09%
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$4.16
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Traffic
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0.21%
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$21.08
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Telemarketing
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Response Rate
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Cost per Order/Lead
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Direct Orders & Fundraising
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2.53%
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$43.70
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Lead Generation
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2.46%
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$67.97
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Traffic
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N/A
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N/A
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Take Aways:
Direct Order and Fundraising: Though telemarketing had the highest average response rate, it also had the highest costs per order -- roughly double that of catalogs, three times more than direct mail and 10 to 20 times more than the costs of inserts, print and email campaigns.
Lead Generation: While catalogs rated highest in lead generating response rates, email had a decidedly lower cost per lead (1/5th that of catalogs) making it a more efficient lead generating medium.
Traffic Building: Catalog had the highest response rate and demonstrated a high revenue value per thousand contacts ($5,540) -- yet it is difficult to draw a firm conclusion on effectiveness due to the study’s small sample. Direct mail and email had a high number of observations to draw from and direct mail considerably outperformed email with response rates more than 25 times greater and the highest revenue per thousand contacts ($8,863 v. email’s $304).
Industry campaigns: For the majority of industries studied, direct mail performed best in soliciting direct order and fundraising. In generating leads email proved most effective with -- with the exception of manufacturing and utilities, where direct mail was the better industry performer.
House and prospect campaigns: direct mail proved the best performer versus other media (email, telephone, catalog) for both house and prospect campaigns focused on direct order and fundraising. Email generated the lowest response rate.
2007 Trends of Note:
Thanks to relatively low costs, email is showing strength as an efficient and effective tool in generating leads for both house and prospect campaigns.
Multichannel marketing--offering customers more than one way to buy something (retail stores, web sites, and catalogs) is commonplace. The meshed lines of different channels have resulted in a successful, synergetic marketing approach.
Complexity rating of source: 1
(Complex statistical analysis scale: 1= none, 2= moderate, 3 = difficult)
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