Email or Direct Mail: Which Has Better ROI?

Sure, email marketing is less expensive than direct mail. Countless studies demonstrate this. A more interesting topic is, does email marketing provide better return on investment (ROI) than direct mail?

I can’t answer that question in every case. But I can show you one example where email marketing far outperforms direct mail marketing in regard to ROI.

Be Free provides affiliate marketing programs and an automated merchandising assistant to a variety of companies. It wanted to get the word out about its products and services, so it tried a variety of methods.

About a year ago, Be Free, with the help of ad agency Passaic Parc, began targeting marketers interested in the online space by sending direct mail pieces to a database built from prior marketing efforts — Web site, trade shows, and so on — as well as to rented lists. It produced a number of mailings, including the “shrink-wrap” and “Rockwell” mailings.

At about the same time, Be Free and Passaic Parc put together several email offers, many of which were similar to the direct mail pieces. You can view the shrink-wrap and Rockwell email offers. In addition, there was the “toilet” Flash mail. (Note: All pieces were designed for Internet Explorer.) Over the course of the year, Be Free regularly sent both email and direct mail mailings.

Results? Passaic Parc’s Robert Rosenthal says on average the email ROI was nearly four times higher than direct mail returns. And (I’m trying to compare apples to apples here) he notes in both the shrink-wrap and the Rockwell mailings “the ROI has been far higher on email than on direct mail.”

I asked Robert what thoughts he had about the campaigns. He notes direct mail lists generally have better selectivity, but email list selectivity improves every month. Email response rates may be dropping, but response rates are dropping in other media, too. He attributes part of the success of the email campaigns to treating email as a conceptual medium, not merely sending “text mail and pictures to death.”

I’m interesting in hearing about other direct mail versus email comparisons. If you’ve conducted your own, please drop me a line.

AOL Update

As I promised last column, here’s the official response from AOL regarding open rates. (I asked why a marketer was receiving much lower open rates for AOL email versus non-AOL email.) From Alex Joannou, AOL technical account manager:

This is a difficult question to answer without knowing who the partner is and seeing the actual email in question. It is possible that many of the AOL users did not receive the HTML version because of the way the partner coded the email. The truth is that a very large majority (not the 50 percent that you reported in your last article) of AOL users can now receive HTML email both through their client and via the Web email portal. AOL would be more than happy to work with this partner to research why the open rates are so different.

Regarding the second riddle, he had this to say:

Unfortunately, we cannot release the percentage of AOL members that log in to Web Mail to check their email from work or away from their home computer. However, the versions that are sent to AOL members should be viewable the same by members, regardless of whether they are accessing email via the AOL client or Web Mail. Businesses and/or AOL partners that wish to send HTML email to AOL members should send multipart emails rather than separate ones. We have many partners that utilize this functionality, such as Gap and Tiger Direct to name a few, with great success. What happens is that the AOL mail server will determine if the user is able to open HTML mail from the version they are logged in to. If they are, then the user will receive the full HTML mail. If not, they will receive the text. AOL Internet Services has created an informational web page to assist our partners with mail-related issues. You can refer them to http://webmaster.info.aol.com. On that site, they will find technical information to assist them with most issues that our partners face with regards to making their sites work properly for AOL users. The specific link for HTML mail is: http://webmaster.info.aol.com/index.cfm?article=500000000000042&expand=0&sitenum=2.

AOL offered to work with the partner that originally reported having the poor open rate. I’ll keep my eyes on that situation and let you know how future efforts from this marketer turn out.


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