Marketing Channel Attribution

It shouldn’t come as a surprise to anyone that Deliver, a marketing magazine published by by the US Postal Service, is little more than propaganda for direct mail marketing. Seeing the following in a recent issue was hardly shocking:

“The Direct Marketing Association has found that direct mail boasts a 4.4% response rate, compared to email’s comparatively tame average of 0.12%. Translated into ratios, direct mail has a response rate of up to 10 to 30 times that of email. Direct mail’s response rate jumps even higher when compared to online display. Overall for display, only 6% converted as a result of the immediate action of the click, meaning that 94% of conversions happen at a later date.”

My take: The implied conclusions, as well as some of the stated “facts,” are wrong.

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First, let’s look at the incorrect “facts.”

Direct mail’s response rate does not “jump” when compared to online display. The response rate is 4.4% regardless of who or what you compare it to.

In addition, the DMA is comparing apples to oranges. Because the study tracked consumers’ online behavior after clicking on an online display ad, it could determine that 94% of conversions came on subsequent clicks to the initial click.

But there was no ability to track consumer behavior after opening a piece of direct mail. It’s quite possible that consumers purchased at a later date or through another channel (also a possibility with the display ad).

And why the Deliver article implies that direct mail outperforms display ads challenges my mathematical sensibilities. Isn’t 6% greater than 4.4%?

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The second — and more important — problem here are the implied conclusions to the DMA study: That the direct mail channel outperforms other channels. There are a couple of problems with these implications:

1. They ignore ROI. If I spend $1 million to send out 1 million pieces of direct mail, and get a 4.4% response that produces $100 per response, I generate $4.4 million in sales, which is 4.4 times my investment. If I spend $0.25 million to send out 10 million pieces of email, and a get 0.12% response rate that produces $100 per response, I generate $1.2 million in sales, which is 4.8 times my investment.

2. They ignore other factors. If the study compared the same exact campaigns, with the same message and offer, to two similar groups of prospects, then maybe you could attribute the difference in results to the channel.  But we know that wasn’t the case. So by claiming the channel’s superiority, the DMA — which you would think would be comprised of some some marketers — ignores important contributing factors to marketing results.

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The cited study is hardly unique and the same message gets trotted out year after year.

It’s indicative of what marketing has evolved to: Fiefdoms protecting their channel turf, grasping for any straws (or statistics) that prove their particular channel’s superiority or worth.

There’s no end to that channel-centric marketers will claim about their channels. Deliver magazine quotes a DMA spokesperson who attributes direct mail’s “continued” strength to “the fact that consumers face an ever-increasing number of digital messages.”

Hmm. I guess it’s not because marketers have learned how (or at least improved their ability) to right-channel — that is, sending the right message to the right prospect through the right channel. No, it must be — as the DMA spokesperson asserts — the weaknesses of other channel that props up his/her preferred channel.  

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4 thoughts on “Marketing Channel Attribution

  1. My experience is that none of the channels work optimally in a vacuum by themselves, but are most effective when used in conjunction with other channels. None of the channels are ‘dead’ (sorry direct mail haters), but the investment in mass media, direct mail and even email as a percentage is decreasing as greater investments are made in digital and social media.

    At New Control, we have moved from being primarily a direct mail agency a few years ago to generating almost a 50/50 mix of direct mail and digital revenues. And we don’t see the trends changing anytime soon, as more people are accessing more channels with more devices. In fact, we often suggest placing the first $$ of marketing investment in retargeting and digital strategies to take advantage of online ‘shoppers’ who self identify themselves as potential banking customers. This strategy is both low cost and highly effective.

    I have never seen any trade journal publish a story that their communication channel is ineffective. For once, it would be great to see a study where the value of using multiple channels is illustrated with proper control groups and various channel mix strategies. Unfortunately, even if that was done, the results would vary with every industry, product, market and target audience.

    My recommendation – Use trade association studies with caution and never as a substitute for ‘test and learn’ at the organizational and product level. Maybe studies like this should have a warning label similar to weight loss supplements, “Direct mail is intended to be used in conjunction with other media and an ongoing measurement exercise. We do not promise, claim or imply the results described without other channel use. Individual results may vary.”

    • No arguments from me, Jim. But I think the bigger issue here is whether or not marketers can attribute a sale to any channel, regardless of the combination in which they’re used. I see a banner ad for something –recall that Jim Marous told me about this product when I had lunch with him last week — and click on the ad and buy. Is the banner ad REALLY the channel the sale should be attributed to, or was it WOM?

  2. @RonS: Fact is, it’s impossible to attribute a sale to any single channel, as the example in your response to Jim M’s comment perfectly illustrates. Fact is, on the whole, marketing works. However, CMOs have done a lousy job at projecting the big picture of their actions, and have, instead, gotten themselves forced by the Wall Street – Investor – CFO triumvirate into justifying every $ of their marketing spend at the finest level of granularity. This has led to a lot of superficial methods of computing ROMI, most of which lack the most basic level of rigor that I was taught back in my days of Engineering and MBA. However, the sad rerality is, without them, marketers will be starved of even the tight budgets under which they’ve to operate.

    • As a marketer, I’m inclined to believe that “on the whole, marketing works.” But: a) few, if any, companies do a good job of proving that, and b) most companies are trying to figure out which pieces (of those that make up the “whole”) contribute more than others. So they concoct approaches to try and measure it. Which is understandable — but believing that what gets measured is “the truth” is ridiculous.

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