The Value of Direct Mail: Is It Really Too Expensive?

Direct mail is an expensive channel from a cost-per-piece standpoint, especially when compared to digital advertising strategies. Data, paper, ink, and postage are legitimate tangible expenses. However, from a cost-per-acquisition (CPA) and return-on-investment (ROI) perspective, direct mail can be an affordable workhorse, especially if you’re leaning on it for scale. When utilizing the right testing strategies, direct mail doesn’t have to break your budget.

Let’s dive into the topic to answer common questions and uncover the reality behind direct mail costs and the channel’s strategic value to marketers.

Prefer to listen? Check out our podcast The Direct Effect: The Value of Direct Mail: Is It Really Too Expensive?

Is Direct Mail Really as Expensive as You Think?

The first question that comes to mind when considering direct mail marketing is cost. 

While it is true that direct mail campaigns require an initial investment, it is essential to look beyond the price tag and consider the long-term benefits they can bring.

Direct mail marketing campaigns allow businesses to target highly specific audiences with tailored messages, leading to increased response rates and engagement. This targeted approach helps maximize the return on investment and boost conversion rates when compared to broader, less personalized marketing strategies.

After a successful campaign is launched, continued mailing and testing schedules work towards an evergreen direct mail program. Evergreen programs sustain performance without increased investment and allow brands to scale while improving profitability.

So, How Much Does Direct Mail Really Cost?

When evaluating the cost of direct mail marketing, businesses should consider factors such as the quality of the mailing list, design and printing costs, postage fees, digital integration, and tracking and analytics tools. These variables depend on how your mail program is implemented, i.e., in-house vs. with an agency partner, or using an automation program or printing vendor.

• The average cost of a direct mail campaign test is between $75,000 and $300,000. This depends on your campaign goals, package complexity, and mail volume.
• Direct mail industry research shows that more than half (59%) of direct mail campaigns have an average CPA of $100 to $249.
• Most marketers (53%) have an average CPA of $100 to $249 for all direct marketing programs.
• Use this direct mail calculator to determine your customer acquisition cost tolerance based on your product/service and revenue model.

A straightforward way to determine the cost of a mail campaign is to use cost per thousand (CPM). It’s calculated by dividing the total direct mail campaign cost by 1,000. This metric can also be used to compare costs for other direct marketing channels.

With careful planning, businesses can manage campaign costs and maximize their direct mail budget for a cost-effective program that yields positive results.

Cut Costs, Not Impact: Effective Direct Mail Strategies to Save Money

Implementing cost-saving measures into your direct mail strategies does not have to compromise campaign performance. Here are a few ways you can optimize your direct mail campaigns while staying within budget:

• Refine Your Audience Lists: By utilizing defined audience segments and lookalike modeling, you can ensure that your mailers reach consumers who are most likely to convert – eliminating wasteful mailings and reducing your costs.
• Maximize Data Hygiene: Keep your CRM up-to-date and accurate for cost-efficient campaigns. Improve your direct mail list by regularly updating customer information, removing duplicate entries, and eliminating addresses that have changed or are no longer valid.
• Leverage Printing and Production Discounts: The volume of mailings significantly impacts direct mail pricing. If you’re mailing more than 500 pieces, use bulk mailing to run a more cost-effective campaign. USPS marketing mail incentives also offer discounts for brands that include innovative and interactive elements in their campaigns.
• Consider Alternative Formats: The size and weight of your package greatly influence printing costs. Explore alternative formats, such as postcards or self-mailers, to capture your audience without breaking the bank. Avoid additional or unexpected charges by designing your mailer to align with postal regulations.
• Test Regularly: Testing elements of your campaign helps determine what resonates best with your target audience. Strategically testing audiences, channels, creatives, offers, and cadence to identify what is working will help you avoid wasting money on elements that aren’t working.
• Integrate Direct Mail with Digital Marketing: Digital integration tools, such as Franklin Madison Direct Surround, help you maximize your impact and reach while reducing CPAs by 30% or more. It also protects your digital campaigns from ad fraud when activating your audience list online.
• Start with Shared Mail: To optimize CPA, consider starting with a shared mail campaign for cost-effective testing. Then, transition to a solo mail strategy to enhance scalability and gain greater control.
• Performance Monitoring: Direct mail campaign analytics allow you to track campaign performance and measure impact. Analyze response rates, conversion rates, and customer behavior for data-driven decision-making.
• Partner with a Direct Mail Agency: Look for experienced partners with the expertise and resources to plan and execute a successful campaign within your budget. Direct mail providers have access to reduced pricing and significant discounts in-house teams may not.

“Strategically testing audiences, channels, creatives, offers, and cadence to identify what is working will help you avoid wasting money on elements that aren’t.”

Beyond the Price Tag: The Strategic Value and Benefits of Direct Mail Marketing

While the cost of direct mail marketing may seem significant at first glance, it is crucial to recognize the strategic value and unique benefits that drive direct mail’s success.

Direct Mail Reaches Consumers

Most U.S. consumers have a mailing address and regularly engage with their mail. Mail’s targeted lists are built using various data sets, including geographic locations, interests, age groups, purchasing behavior, and more. As your campaign grows, you can scale your lists with additional privacy-friendly data sources and prospecting models to continue identifying and reaching new audiences.

Proof: 9 out of 10 consumers engage with promotional mail (USPS).

Direct Mail Creates a Personal Connection

Direct mail’s effectiveness lies deeper than a targeted list. One of the key strengths of direct mail marketing is that it’s a physical marketing channel. When recipients hold a mail piece, it creates a subconscious personal and emotional connection driven by the act of touch. Mail creates a sense of exclusivity and importance – a personal invitation to engage. This makes recipients feel valued and appreciated, which enhances brand loyalty and lasting relationships.

Proof: Direct mail is one of the top four most influential forms of advertising (FM Direct).

Direct Mail Can Be Integrated with Digital Channels

Integrating direct mail and digital marketing creates the multichannel experience that today’s consumers enjoy. When paired with digital advertising, mail reinforces campaign messaging and increases overall campaign effectiveness. Combining the two strategies also helps to ensure your message reaches high-quality audiences online, as mailing list audiences can be onboarded into digital environments.

Proof: Nearly all (90%) marketers agree that integrating direct mail and digital channels has a positive impact on campaign performance (FM Direct).

Direct Mail is Attributable

Since your mail campaign starts with a complete audience list, you can easily track and measure the impact of your efforts by matching the sales file back to your recipients. In addition to a matchback, you can incorporate response tracking methods like personalized URLs, coupon/offer codes, QR codes, and dedicated phone lines to evaluate ROI.

Proof: Marketers indicate “easy to track attribution and performance” as a top two advantage of the direct mail channel (FM Direct).

Direct Mail Yields Results

Direct mail’s effectiveness is backed up by years of industry statistics and data. According to the ANA, direct mail’s ROI surpasses the majority of digital channels and is used in more than half of direct response campaigns. Our research also shows direct mail leads in terms of expected budget increases going into 2025 – solidifying marketer trust in the channel.

Case studies:

• Targeted direct mail campaign produces 200% ROAS for food and beverage retailer.
• Direct mail launch generates 22K new customers for debt-settlement company.
• Strategic direct mail approach increases sales rate by 10% for alternative investment brand.

Launch Your Cost-Effective Direct Mail Campaign with FM Direct!

While the initial investment of direct mail may seem daunting, its strategic value and unique benefits make it a cost-effective marketing tool for brands eager to make a lasting impact on their target audience. A well-planned mail program can produce a high ROI and affordable customer acquisition, translating into long-term success for your brand.

With FactorTest, you can test the mail channel quickly and affordably. It combines the best of A/B test and multivariate testing to identify the winning campaign combination to propel your brand growth and protect your budget.

Start maximizing your ROI with FM Direct’s direct mail solutions today.