When embarking on any direct marketing program, the cost will be a key factor and marketers will do well to keep their eye on their bottom line.
Some direct marketing media will perform better than others. In the last few years there have been some shifts in profitability with email, direct mail and catalog marketing. The biggest change has been with email marketing.
Although email marketing has seen the biggest rise in ROI, catalog marketing and direct mail marketing can still hold their own and marketers should not count them out.
US Direct Marketing ROl, by Media, 2008-2010
The following table has been compiled from the DMA’s (Direct Marketing Association) annual publication, DMA: The Power of Direct Marketing. It breaks down expected ROI for various media for 2008 through 2010.
|Internet marketing (non-email)||$19.88||$19.83||$19.86|
|Direct mail (non-catalog)||$15.52||$15.22||$15.28|
|Direct mail (catalog)||$7.28||$7.32||$7.34|
|Total direct mail||$12.55||$12.55||$12.55|
As one can see, email marketing tops the list for the highest ROI. In 2008, retailers generated $26 billion in sales and spent only $600 million on email for a $43.62 ROI. By comparison, in 2009, retailers made $110.5 billion in sales while spending $15.1 billion on catalogs to produce a $7.32 ROI. Although catalog marketing is by far the most expensive direct marketing medium, it can nevertheless generate some solid income that simply cannot be beaten by any other means. So don’t count it out.
A few reasons why catalog marketing is not as cheap as some other direct marketing media is because it involves higher expenses for postage and printing as well as some other expenses for mailing lists.
When you think of Lands’ End, for example, what comes to mind is their catalog sales. Two years ago, Lands’ End’s did $1.44 billion in net merchandise sales. From that total, 71 percent came from catalogs ($1.02 billion) and 21 percent was from e-commerce ($3.02 million). It is no wonder that Sears bought Lands’ End in 2002, becoming the parent company to the nation’s biggest specialty apparel retailer. For years, Sears was the king of mail order catalogs. Sears obviously knows a good thing when it sees it.
Even non-catalog direct mail holds its own with an expected ROI of $15.28 for 2010. This falls roughly in the middle of the field – with email having the highest and catalog marketing having the lowest ROI.
The point here is to keep this all in perspective. Don’t rely on ROI alone. For example, using Lands’ End as a comparison, how likely would it be that a marketer could generate $1 billion in sales from direct mail alone (as in the previous example), or even email alone, for that matter? The chances are pretty slim. In certain business scenarios, catalog marketing can be a powerhouse for generating revenue and it shouldn’t be overlooked simply because it has a low ROI when compared to other direct marketing media.