Direct Mail Marketing Costs
In the age of digital marketing, direct mail campaigns are often overlooked or undervalued as an effective means of reaching customers. Part of the problem is that people have a hard time understanding how much direct mail costs.
It doesn’t help that costs can vary widely and calculating rates isn’t always as straightforward as it should be. Even deciphering a quote for the cost of a direct mail campaign can be difficult since different companies tend to present their pricing differently.
As a result, marketers often stay away from direct mail and lose out on a tried and true tool. That is exactly why we have put together a comprehensive guide to understanding and calculating the cost of direct mail.
After reading this guide, you will be able to understand how direct mail fits into your marketing budget and make informed decisions that allow you to take full advantage of this resource.
How Much Does Advertising with Direct Mail Cost?
It depends. On average, you can expect to pay anywhere from $.45 to $3.00 on a single piece of mail advertising. The final costs, which often doesn’t include your own time and man hours, will vary depending on a variety of factors, including:
- The complexity of your project;
- How many vendors are involved;
- Design and copywriting costs;
- Postage rates;
- Quality of materials (paper, ink, etc.)
If you have an in-house team of writers and designers, you won’t have to worry about the cost of contracting out that work. In addition, certain software programs can help streamline the design process and reduce overall production costs. Part of your challenge is finding the right balance between creating a professional looking product that converts and maintaining a reasonable cost per lead.
Calculating Direct Mail Costs
Most commonly, direct mail costs are measured in CPM or cost per thousand impressions. To find the CPM, you would divide the total cost of the campaign by 1,000.
For example, let’s say that you receive a quote of $.65 per piece of mail. This price includes paper, printing and postage. If you want to send 10,000 pieces of mail for your campaign, the total cost would be $6,500.
To find the CPM, simply divide the total cost by 1,000.
$6,500/1,000 = $6.50 per thousand impressions.
Now compare that to the cost of other types of marketing:
CPM for 60 second television ad in Los Angeles = $34.75
CPM for 60 second television ad in Kansas City = $14.36
Not only does direct mail cost offer a more affordable CPM, it also provides a tangible piece of advertising that customers will look at several times. Other forms of digital advertising only display for seconds at a time, which means less time to make an impression. This leads us to our next major point:
Why Direct Mail Offers a Higher ROI
Not only is direct mail alive and well, it is making a comeback. Today’s consumers live in world of digital overload. There are so many email campaigns, CPC ads and social media ads that it has all just turned into white noise that is easily ignored.
Consider this: the average person is served 4,000 to 10,000 ads each day. That makes it nearly impossible for businesses to stand out and earn the attention of an online customer.
A world that is saturated with digital ads has actually made direct mail more valuable than ever. In fact, direct mail has a 783% higher response rate than email. This is due, in part, to the fact that email marketers have to battle spam filters and customers who want less emails, not more.
On the other hand, customers who receive a personalized piece of mail at their home feel valued and they are more likely to remember the sender and contact that company. That is why direct mail offers a 29% ROI, which is more than other digital options.
Automation has also helped to breathe new life into direct mail by reducing production costs and making this type of marketing and advertising more affordable. Companies can spend less than ever on direct mail campaigns and reap the rewards.
How to Increase Your Direct Mail ROI
As mentioned above, direct mail offers a higher ROI than other digital forms of advertising. However, the costs of sending direct mail can quickly add up. Keep reading for a breakdown of costs to consider before putting together your campaign along with tips about how to reduce costs:
Don’t Cut Corners on Design
Design matters and it can be a big part of your direct mail budget. You want to send a professional product that reflects your branding, offers a personalized message and contains a clear and actionable CTA. Here are your options when it comes to design:
Take Advantage of In-House Resources
If you have a design team or expert in-house, call on them to head up the design portion of your direct mail campaign. Even if they don’t have a lot of experience with this type of project, they should be able to follow direct mail design best practices and use their skills and experience to create something polished and effective.
Use a Template
There are tools on the market that offer templates and simple drag-and-drop editors that make it easy to customize each template. You can start by choosing a layout that fits your needs and add images, text, logos and other important details. This is a quick and easy way to streamline the process and reduce design costs.
Work with an Agency or Designer
For companies that have the financial resources, hiring an agency may be the best route. While this can be more expensive, it might be the right choice if you don’t have the in-house resources and you want to create a high-quality product that has the best chance of converting customers.
To help reduce costs, look for a newer designer who may be looking to build their portfolio. You may be able to get better pricing and still work with a talented designer.
Opt for Smaller Mailers
As you design your mailers, keep in mind that the size of the final product will affect how much postage you pay to send it. A postcard size design will be the most affordable and anything above a standard letter size will tack on additional postage charges.
Limit Use of Color
Using too many colors in one mailer is a poor design practice and it may also increase the cost of your campaign. Keeping it simple and limiting different ink colors to one to two will help you save money when it comes to the final printing stage, but this decision will need to be made during the design phase.
Hire a Copywriter
An experienced copywriter will know how to effectively deliver your message in a way that produces results and motivates readers to follow-through on your call to action. Bad copy can sink your entire campaign.
While it might be tempting to reduce costs by handling the copy yourself, unless you have some experience in this area, you are better off leaving it to the professionals. If you don’t have an in-house copywriter, expect to spend $200 to $1,000 and above to hire a professional.
Start with a Solid Mailing List
The 40/40/20 rule of marketing says that 40% of the success of your direct mail campaign will depend on the quality of your mailing list, 40% on the attractiveness of your offer or CTA and 20% on the overall design. That means that a lot is riding on your list.
If you have an existing list, you want to make sure that it is up-to-date and free of mistakes. For those who need to acquire a mailing list, you can either purchase or rent a list. In both cases, you will want to look for lists that speak to your brand and business so that you are targeting the right audience. While this approach will add to the cost of your campaign, it will also deliver better results.
At the same time, you will want to be working on building your own list so that you don’t have to continue to invest in purchasing information. This will help reduce the cost of future campaigns and create a more effective list for your business.
Cost of Direct Mail Postage
Postage can be the biggest cost associated with direct mail. Here is a breakdown of different postage options and costs:
In early 2019, the US Postal Service once again raised postage rates. Currently, it costs $.55 to send a letter first class and $.35 to send a postcard. Choosing first class means that your mail will be delivered within 3-4 business days and will receive first priority during processing. It also includes tracking capabilities.
The USPS offers a discounted rate of $.383 for businesses who send at least 500 pieces of mail. You may also be eligible for additional discounts if you take advantage of some of their automation tools.
Depending on the volume of mail you will be sending, you could qualify for the USPS marketing mail program and enjoy a rate of $.190 per piece of mail.
Sending a higher volume of mail can help you enjoy significant savings on postage and further increase your ROI.
Consider Stock Materials
Once you have finalized the design and content of the mail campaign, there are still decisions to be made. The type of weight of the paper stock you choose plays a part in your messaging and the final cost of the mailer. If you really want to make an impression and convey that your brand is sophisticated, then it is a good idea to splurge on heavier materials. While this may drive up the price of your mailers, it may also increase your quality leads and lead to better conversion rates.
Take a Closer Look at Fixed Costs
Great design and writing are a big part of an effective direct mail campaign, but you can also increase your ROI by reducing fixed costs. Before you start getting into the creative details of your campaign, take a look a logistical issues and see where there may be a way to cut costs without sacrificing quality.
- Shop around for a printing company. It is good to read reviews and get recommendations, but you will also want to speak directly with potential printing companies. Ask them about different discounts they offer for bulk printing or first time customer discounts. You may be able to negotiate a better price if you are willing to establish a long-term relationship with the printer.
- Be willing to print in large batches. It will take a printer the same amount of time to set up their equipment for a batch of 500 pieces of mail as it will for 10,000 pieces of mail. Get the most for your money and reduce the cost per piece by purchasing larger orders at a time.
Today’s software makes it easier than ever to create personalized mailers that contain the recipient’s name and even a personal URL for them to visit. Studies show that personalized CTAs perform 202% better than general CTAs. Those kinds of numbers can make it well worth the extra time and cost of working with pre-press operators to set up personalized printing.
Calculating the exact cost of a direct mail campaign can involve a lot of different factors. However, understanding CPM and all of the different costs that can add up and affect the final price will help you make informed decisions and create a campaign that delivers an ideal ROI. As you design your campaign, keep in mind that you are investing in cultivating solid leads that could turn into repeat customers. Spending money now can help grow your business down the line.
Follow design and copywriting best practices, personalize your mailers whenever possible and use direct mail as part of a comprehensive marketing strategy and you will experience results.
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