With the high cost of paper and postage, it is imperative to take full advantage of electronic media. But we have seen direct marketing companies significantly damaged – and in one case, destroyed – by a sudden and dramatic shift of dollars from print to electronic media.
Often, we find that such unfortunate decisions are driven by a failure to differentiate between the promotion and the order channel. For example:
- Just because a customer enters an order at an e-commerce site does not necessarily mean that it was an electronic promotion channel that drove this behavior. In fact, the evidence indicates that, for quite a few direct marketing companies, print is the primary driver of a big chunk of e-commerce-captured orders.
- Source code does not necessarily correspond to the promotion channel that was the primary driver of the behavior. For example, many orders from existing customers are incorrectly attributed to search engine marketing. These customers are clicking on sponsored search listings as an easy way to begin the e-commerce ordering process. The smoking gun is when they enter an item number suffix that only appears in a direct mail piece.
Therefore, it is important not to assume that resources should be shifted from one channel (such as direct mail) to another. Instead, data mining and intensive testing should be employed to allow the data to inform strategies and tactics. Specifically, the focus should be on determining the true incremental effect of each promotion channel. Once this has been accomplished, expenditures can be redirected as necessary to more efficiently leverage the marketing spend.
The following are examples in which analysis indicated that print investment should not be shifted to e-commerce:
- With one company, the data showed that increased expenditures were warranted in both print and e-commerce.
- With another company, which began as in Internet pure-play, investment in e-commerce turned out to be close to ideal. However, the data indicated that significant incremental investment in print would be cost effective.
Jim Wheaton (email@example.com) is co-founder of Daystar Wheaton Group.