The Future of Direct Mail: Dueling Opinions

June 01, 2009

The Future of Direct Mail: Dueling Opinions

Predictions that direct-mail returns will drop by up to 40 percent over the next five years have prompted a spirited debate on Frogloop, a blog about nonprofit online marketing.

Allyson Kapin, a nonprofit marketing consultant, interviewed a handful of charities, including one environmental group that has eliminated its direct mail entirely, to test theories that direct mail is about to disappear.

Her conclusion is that charities should “start preparing now for a younger generation of donors who strongly prefer the online medium — not the mail — for managing their lives, including for donating money to their favorite organizations.”

But not so fast, writes Mal Warwick in a response to Ms. Kapin.

“My, my,” he writes. “Isn’t it curious how people who are young and enthusiastic about online communications are so firmly convinced that direct mail is dead or dying — while professional fund raisers, that is, the people who are responsible for bringing in the bucks, think the young critics are living on another planet?”

Many thousands of charities have raised billions of dollars, year after year — by direct mail — from millions of new donors, notes Mr. Warwick.

His own conclusions about whether direct mail is on the way out? “Hogwash.”

What’s your take on the future of direct mail?

— Holly Hall

Comments

All due respect to Mal, but I list my years as a direct mail fundraiser as one of my former careers that doesn’t exist anymore & I advise anyone not currently in the field to enter it!

We’re still going to need direct mail marketers for awhile yet, just like we still needed people to repair vacuum tube TVs for a long time after all the new sets had transistors, but it’s absolutely a field on a deathwatch.

Mal: it’s time to start teaching your clients about the difference between interruption marketing and just-in-time marketing… and how to add value to the social conversation without asking for money or repeating talking points.

In direct marketing, The Ask is dying (or worse, failing, while being kept on life support and trotted out for appeals.) It’s being replaced by consistent good citizenship, characterized by real generosity and minimal narcissism that generates ambient positive feelings over time and positions you to take advantage of your donors’ desire to fund something crucial you’re working on at exactly the moment when they (not you!) want to take action.

It’s a big change – help the orgs you’re working with start listening and learning in the window while they still have a direct mail-responsive donor base.

— Wendy Kloiber Jun 2, 12:46 AM #
Apparently I wasn’t quite done:-). To answer Mal: “To the best of my knowledge, not a single nonprofit organization has yet raised more than $200,000 through social networking – cumulatively.”

MyBarackObama.com raised an unheard-of amount of money through social networking – by being just-in-time rather than interruptive. Both the technology and the generosity/lack of narcissism of the MyBarackObama approach were key.

The fact that most nonprofits haven’t figured out how to make this work outside the context of an election doesn’t mean it hasn’t been figured out. Or (more importantly) that it’s not absolutely crucial that we start figuring it out on behalf of the orgs we serve.

— Wendy Kloiber Jun 2, 12:58 AM #
Still not done: from Beth Kanter’s bio:

Beth is an expert in the use of web 2.0 for fundraising, having raised over $200,000 for Cambodian orphans using her blog and other Web 2.0 tools. She was the first place winner of the Yahoo Network for Good Contest in 2007 (covered by the Wall Street Journal) and came in first place for global causes in America’s Giving Challenge sponsored by Case Foundation and Parade Magazine. Her case studies about using social media to raise money for charities are documented at http://gsp4good.wikispaces.com/.

Okay – done now.

— Wendy Kloiber Jun 2, 01:05 AM #
I don’t believe DM is dying. But I do believe the art of building community and developing the relationship—which will ultimately determine the effectiveness of the ask—is maturing with the advent of social networking tools. Organizations that don’t effectively build community will find themselves falling behind in their DM efforts.

— Ed Nicholson Jun 2, 11:41 AM #
Fascinating responses! Some are on the mark, others beside the point.

Can anyone seriously suggest that the Obama for President campaign was in the same league as the nonprofit organizations we were all (I thought) writing about? Or that raising money for the most popular cause in the world — and the most popular man — is akin to raising money online for the likes of the country’s struggling local and regional nonprofits? Of course not. The Obama campaign is an exception that proves the rule.

Kudos to Beth Kanter for raising $200,000 for Cambodian orphans. But that example doesn’t prove I’m wrong — it merely underlines the point I made. Nobody in the nonprofit sector has yet raised substantially more than $200,000 through social networking. I don’t mean to suggest that it won’t happen someday. I’m merely asserting that (a) it hasn’t happened yet, and (b) something drastic will have to change if it’s to happen anytime soon.

The most substantive response to my rant was about building authentic relationships using social networking. Hear, hear! I’ve been singing that song for more than 20 years. We used to call that “relationship fundraising,” a concept popularized by my friend Ken Burnett.

Social networking can indeed be a valuable tool in the effort to build genuinely two-way give-and-take relationships between donors and the causes they support. However, social networking is NOT the only tool. Nor is email. Nor are blogs, Web sites, or any other online mechanisms. They can be PART of the solution, but not the solution itself.

We’re not living in an either-or world, and I sincerely doubt that we will be anytime soon. The vaunted telecommunications “convergence” the pundits were writing about in the 80s and 90s has instead resulted in “divergence.” Today, we fundraisers have at our disposal a plethora of communications tools. If we’re not familiar with all of them, and find ways to fit them all into the mix, we’re going to be out in the cold in the years ahead.

— Mal Warwick Jun 2, 01:25 PM #
Mal is absolutely right! And, let me add that we are going to move from a “marketing” based fundraising experience to a “information” based fundraising experience very soon as well. Donors, in particular, high net-worth donors, want real information about the effectivness and impact non-profits are making…not just numbers of people helped, but real reports on the impact that non-profit is having on their communities and world. The non-profits who actually start reporting on the impact their programs are making donors will bring in the most money.

— Jeff Schreifels Jun 2, 03:14 PM #
“Both and” beats “either or” almost every time. My small institution relies on DM for the bulk of operational support fundraising, but we’re also using social networking sites and e-solicitation to augment those efforts. If one believes that DM will not work for his or her institution, it won’t — as one expects, so one will experience. There are many ways to tell a compelling story. From my seat, DM and e-comms are best when used in tandem.

— Ron Walrath Jun 2, 03:48 PM #
Mal: Yes, I absolutely compare MyBarackObama.com to the work not-for-profits are doing. For example, in my inbox today is a request from NARAL to support the staff of Dr. Tiller. It’s just-in-time marketing – NARAL is offering me an opportunity to use a donation to respond to a problem they (rightly) assume I am experiencing.

The difference between the Obama and Dean campaigns’ brilliant use of social media and what the rest of us need to be doing is only a matter of degree. True, Presidentials are given a spotlight… but all the issues we care about receive some attention, and it’s important to be part of the conversation before a crisis/opporunity hits.

Yes, we’ll continue to be in a hybrid mail/email environment for years to come – but not forever. (There will still be newspapers for years to come – but not forever.) More importantly, however, we’ll be in a hybrid interruptive/just-in-time world for some time to come. Everyone needs to be building the ambient social media presence that makes just-in-time marketing work. It’s genuinely new, genuinely different, and not something you (or anyone) came up with twenty years ago. The looking-down-your-nose “My, my” tone is a bit of a turn-off, frankly. Listening and learning is the order of the day.

— Wendy Kloiber Jun 2, 04:03 PM #
Unfortunately, I’ve seen the “either/or” debate used in many different industries. I was the research director at a major bank when a top-3 consulting firm predicted that half of all bank branches would close in the next five years due to the rise of electronic banking. I had to quell a lot of panic at our bank by pointing out that building new brick-and-mortar branches had been trending upward for the past five years – and the trend was highly unlikely to plummet all of a sudden because a consulting firm (which was trying to sell its services in migrating people to electronic banking) made such a prediction.

I’ve been told that the traditional focus group will be dead in just a few years because online focus groups will replace them – only to watch the “traditional” methodology be as healthy as ever.

Pundits like to generalize. “All young people are relying on social media!” I know plenty of young people who think Facebook and Twitter and the like are an utter waste of time – and plenty who are enamored with these things.

The rise of new technologies often means diversification rather than elimination. I have no doubt that direct mail will decrease in importance and electronic communication will increase in importance over the coming years – but predictions of DM’s total demise are just silly. Twenty years from now, there will still be lots of people who don’t like to read things from a computer screen, don’t want to bother with electronic communication outside of work, or still don’t trust online commerce because of hacking and privacy issues. It may be a smaller proportion of the population than it is today, but it will still be there. I really agree with Ron’s perspective – we’ll see more multi-modal communication and segmentation as consultants and organizations determine what donors respond best to what methods.

It will likely be similar to the rise of cable/satellite TV – the big national networks are still there (in fact, there are now four instead of three). They have diminished in importance and power, but the consumer now splits his/her time among 10 – 20 different favorite channels, rather than 3 – 4. The watchword of the future is “options,” not necessarily “obsolesence.”

— Ron Sellers, Ellison Research Jun 2, 05:35 PM #
Ideally, what the internet replaces is list rental. The internet is potentially the funnel that allows you to inexpensively gather a large volume of people interested in your cause… they may not be interested enough to give you money, yet, but interested enough to register, for example. From there you use the high-touch follow up of direct mail to this highly targeted list (which was certainly used by the Obama campaign) as well as targeted emails. Because fewer companies are using mail, direct marketers have actually experienced BETTER responses because there is less clutter in that channel (certainly less than in email!).

Ron’s comment of 10-20 different channels is exactly right, it’s not an either-or proposition, it’s using all channels to most effectively market to people, and giving them choices. The shift is from a push model, where marketers decide what the consumer (or in this case donor) is going to see, to a pull model, where the consumer decides what information they want and how they want to receive it.

What will never go away (but has been sadly neglected by many marketers in all industries) is that the basic principles of test, test, test in the direct mail world apply equally in the online world, and are actually more effective because test cycles are so rapid. Email testing and landing page optimization are the same as testing direct mail packages and response cards, and statistical significance still boils down to a mathematical fact!

A year old but worth reading: http://philanthropy.com/premium/articles/v20/i12/12003501.htm

— Kathy Henry Jun 3, 01:59 AM #
As a career marketing guy, I have to side with Kathy Henry — testing the method and subsequent result is the only way to know which is the most effective approach for your discipline. “Information-based” fundraising isn’t replacing or more relevant than other techniques, it’s just another technique.
Use your resources to narrow your prospect list, and then use direct mail to deliver the impact and power of your cause through good photojournalistic composition and writing. Hard copy images and text are still the most effective way to convey a message and elicit a response. Web image good — hard copy, much more compelling.

— Bill White Jun 3, 02:55 AM #
All arrows in the quiver. Not to use all of them leaves income and goodwill communications “on the table.” I can’t believe anyone wants that. The synergy of channels make fundraising and relationships stronger. I don’t believe we can afford to exclude a channel and miss any of what fuels the mission.

— Jim McLachlan Jun 3, 10:31 AM #
I checked in with Beth Kanter to see if the 200K limit still held. She said:

Charity Water raised $250,000 on Twitter in a day … my totals have been raised over three years. Humane Society raised $600,000 from the FB Spay Day Contest, TNC raised over $100,000 from the Lil Green Patch.

Also, elsewhere on Philanthropy.com http://tinyurl.com/3yqeay
in an excellent, nuanced forum on this topic, Madeleine Stanionis recommends that direct marketers sign up with the presidential campaigns in order to experience what they’re developing in the social media realm. Stanionis and Roger Craver agree with the consensus of this thread (multichannel is the way to go) and talk about the need to integrate message across all channels.

— Wendy Kloiber Jun 3, 11:44 PM #
I’m coming in late on this discussion, but I’d like to add my two cents as well.

We work with a lot of non-profit organizations – including many, many zoos across the country.

We just sent out over 3 million pieces of direct mail—yes direct mail—to acquire new members. Our target audience? Women with children under 6. While I may be showing my age, I think that women under 40 constitute this “younger” audience we are all speaking—and worrying—about.

The result?

On average, response rates are up 20%. All but one zoo will net money—yes net!—from their acquisition campaign. Two zoos are poised to net over $500,000 from their direct mail acquisition campaigns.

Yes, we coupled the mail with e-blasts. Where they could, our zoo clients’ blogged, posted and tweeted the offer. In fact, the offer went viral on a few local mommy blogs. We also drove people to fulfill online (and well over 35% are doing that).

We don’t consider our acquisition campaigns to be mail-only. They are clearly multi-channel campaigns designed to get the message out in different mediums and allow for fulfillment in any way possible. However, they are based on a mail piece.

Every year we test to see if we can drop the mail component of the campaign.

We can’t. Our 25-40 year-old moms still need the mail.

Now, I don’t propose that a zoo membership offer is the same as saving polar bears or ending worldwide hunger. There is real value in a zoo membership.

What I do propose is that the younger audience is still reading and, through one channel or another, responding to a great offer received in the mail.

— Jessica Harrington Jun 4, 10:36 AM #
Analyze the data base and then segment, segment, segment. Reach people the way they want to be reached. There will always be folks who want the hard copy. There will always be folks who want the on-line version. Each has its own reasons … environmental, convenience, etc. The key is to know your donors and respond accordingly.

— Sue Jun 19, 01:39 AM #

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