NEW DMA STUDY FINDS MARKETERS TURNING TO E-MAIL AS AN ALTERNATIVE TO HIGH-PRICED POSTAL MAIL

SAN FRANCISCO, OCTOBER 21, 2002 –While postal mail volumes and frequency remained relatively stable last year, a new report from the Direct Marketing Association (The DMA) found that e-mail marketers increased their e-mail, both in quantity and frequency.

"Increasing postal rates and a challenging economy forced many direct marketers to test new strategies in search of innovative ways to communicate with customers," said H. Robert Wientzen, president & CEO, The DMA. "As a result, e-mail marketing has rapidly evolved from a relatively unsophisticated medium of mass promotion to a highly specialized medium used to drive revenue, deepen customer relationships, and influence prospect behavior."

According to The DMA’s "State of Postal and E-Mail Marketing" report, 37 percent of respondents indicated that their mailing quantity did not change in 2001 compared to 2000, while 71 of those surveyed indicated that they increased the quantity of their marketing e-mail.

Twenty-one percent reported a decrease in mail volume, and less than a majority (43 percent) of direct marketers using postal mail indicated that their mailing quantity increased in 2001. This is a significant fall off from five years ago. In 1997, the majority of mailers — close to 70 percent — reported increases in their 1996 postal mail volumes at a time when no other alternatives existed.

Nearly six in 10 e-mailers attributed the significant e-mail quantity increases to the cost of the medium compared to postal mail. Other reasons given were the company’s growth/expansion (41.8 percent), the success of the medium (41.3 percent), and decreased costs (35.7 percent).

Fifty-three percent of postal mail respondents indicated their up-front gross response remained the same from 2000 to 2001, with 25 percent noting an increase and 21 percent a decrease. Comparatively, 59 percent of e-mail marketers reported their gross responses remained stable from 2000 to 2001, with 35.2 percent noting an increase and 5.6 percent a decrease.

E-mail marketers assigned the greatest portions of their volume sent for generating orders (33 percent) and leads (27 percent). These shares are slightly lower compared to postal mail percentages. Respondents cited postal mail as the most frequently used vehicle for communicating product information (60 percent), while e-mail was used most often for providing real-time inventory status updates (38 percent).

Marketers reported the top selling strategies used when sending postal mail were: improving customer retention (89.5 percent), improving customer purchase frequency (81.3 percent), and re-activating customers (78.4 percent), cross-selling direct marketing product lines (70.1 percent), and cross-selling across direct marketing to a Web site (62.8 percent).

E-mail marketing/sales strategies were used most often to: improve customer retention (80.9 percent), improve customer purchase frequency (68.3 percent), cross-sell across direct marketing product lines (62.7 percent), cross-sell across direct marketing to their Web site (59.8 percent), and re-activate customers (58.5 percent).

E-mail’s immediacy enables companies to test and send promotions with less lead-time. As a result, the largest portion of respondents indicate their peak months were November (16 percent) and December (12 percent). For postal mail, respondents said their peak months were January (19 percent), September and October (both at 13 percent).

As a result of direct marketers’ caution to guard against any customer misperception of targeted e-mail as "spam," e-mail marketers are more protective (i.e., do not rent or exchange) of their e-mail names (92.3 percent) compared to 83.1 percent of postal mailers. Far less e-mail marketers make their customer files available for rental or exchange for e-mailings (8 percent), compared to the 35 percent for postal mail. For consumer companies the difference is even more apparent, where 8 percent allow rentals and/or exchanges for e-mailings, compared to 54 percent for postal.

Compared to traditional postal mail, the "art" of applying list segmentation techniques to improve e-mail responses is clearly in its early stage. Currently, e-mail "personalization" is the only list technique used by more than 50 percent of respondents (57 percent). Segmentation methods/tools such as demographics (49 percent), outside databases (45 percent), and geographic segmentation (44 percent), were the most frequently used by e-mail marketers.

For postal mailers, the top list techniques used by 90 percent or more to improve 2001 front-end response were the use of an internal housefile database (93 percent), prior mail history analysis (93 percent), personalization (91 percent), use of NCOA (90 percent), and re-mailing to multi-buyers (90 percent).

Looking forward, 66 percent of postal respondents and 67 percent of e-mail marketers project significant or marginally better business conditions. Both attribute project better business conditions in the years ahead to a better economy, more strategic planning, and new products.

The report indicated that within the next two years, companies expect to be engaged more in improving customer retention (97 percent), improving customer purchase frequency (92 percent), cross-selling direct marketing product lines (91 percent), and cross-selling across direct marketing to a Web site (90 percent).

Conducted on behalf of The DMA List/Database Council during the first quarter of 2002, The DMA’s first annual State of Postal & E-Mail Marketing: New Trends and Results study, reflects new trends on how direct marketers – targeting both consumer and business sectors – are beginning to strike a balance between the use of traditional mail and e-mail. The survey addressed mailing patterns in terms of volumes and frequencies from 2001 to 2002 and expectations for 2003.

The 300-page report is priced at $495 for DMA members ($995 for non-members) and can be obtained by calling The DMA Book Distribution Center at 301.604.0187 or visiting The DMA’s online bookstore at http://www.the-dma.org/bookstore/cgi/displaybook?product_id=009318.

The DMA is the leading trade association for businesses interested in interactive and database marketing, with nearly 4,700 member companies from the United States and 53 other nations. Founded in 1917, its members include direct marketers from every business segment as well as the nonprofit and electronic marketing sectors. Included are catalogers, Internet retailers and service providers, financial services providers, book and magazine publishers, book and music clubs, retail stores, industrial manufacturers and a host of other vertical segments, including the service industries that support them. According to a DMA-commissioned study, direct and interactive marketing sales in the United States is projected to surpass $2 trillion in 2002, including $125 billion in catalog sales and $33 billion in sales generated by the Internet. The DMA's Web site is www.the-dma.org, and its consumer Web site is www.shopthenet.org.

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