Is pure digital really cheaper? Take another look
It has become an unwritten truth: digital is cheaper than offline marketing. The now almost universal belief is that traditional personalised communications, such as direct mail, are far more expensive – even if they do drive better results. Because of this, many companies are moving away from offline marketing in favour of more ‘economical’ digital only campaigns. But are they really getting the most out of their marketing investment?
Let’s put aside the arguments about effectiveness for the moment. They are true. Direct mail will pull a much bigger response rate and generally drive a higher Return on Investment (ROI). Our own experience across all clients has demonstrated this.
Let’s look at something that is not looked at closely enough: the actual cost. Just why is digital seen to be cheaper? The answer we get back is the cost of the website is spread amongst everyone viewing it, whereas the cost of a stamp and mailing pack is to one person. Indeed, the accepted fact is that email is a fraction of penny compared to the 25p-35p for a piece of personalised mail.
Is that really the case? If you look at the complete budget for ecommerce against the budget for off-line communications, and divide them by the number of paying customers they create, you are very likely to find that you spend more per actual customer – not just casual website visitor – on digital than you do on mail.
Why is this? There are a lot of costs that go with digital and ecommerce that people tend to forget, such as web analytics, tagging and the continual development and maintenance of the website itself. And don’t forget Pay per Click (PPC) advertising, which costs far more than most people are willing to let on.
The cost of PPC is the biggest digital myth of them all. Conceptually there is nothing wrong with PPC – it’s an important part of the armoury. But to pretend that it is cheap is, quite frankly, laughable. You would have spent anywhere between 50p to £5 per click to get someone on your site, with the conventional wisdom being that, because they are more interested, your conversion rate will be better. That’s not what the stats tell us.
When you compare that cost to a piece of targeted direct mail that is triggered when someone is on the website – for the cost of 35p max – which will at least get seen and more likely opened than an automated email.
In this context, digital, while important – and I’d be a fool to deny it – is not as cost effective as people think it is. Certainly, communications and resulting data from digital sources have become central to generating valuable customer insight and then leveraging it to engender loyalty, increase spending by customers, attract new ones of the right type and, ultimately, increase profits. But use of digital tools should not be at the exclusion of other, less trendy, channels.
The reality is that a multichannel, or omni-channel, or whatever you label your integrated strategy, has to be just that: integrated. In fact, consumer research shows that digital channels and post are more powerful when used in combination. A report we did a couple of years ago revealed:
- 47% of the 1,000-plus consumers surveyed ‘more often than not’ visit a website because of something they received in the mail
- 43% would hang onto an item of post as a reminder to visit a store or website when they had time.
- 35% are more likely to take action on marketing that comes through the post and then followed up on via email
We at GI Insight, through technology from our sister company Cognesia, now have the capability to trigger real-time individual mail offers based on website interactions and behaviour tracked live online – e.g. look at a certain range of products on the website one day and get a highly relevant offer through your mail box the next. The targeting of the offer reflects both offline and online information that can be tied to the individual customer.
So, the moral of the story is: when you create an integrated marketing campaign, make sure it truly taps into both online and offline data and uses both types of channel. It is the mix of media that really sparks a campaign and gives you the highest ROI. The world of digital media offers a treasure trove of new opportunities, but it is far more effective when backed by the power of tangible, timely and relevant mail.