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6 Oct

How Does Direct Mail Marketing Pricing Work?

Author: Lori Paikin

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Direct Mail

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As with other marketing channels, the cost to execute a direct mail campaign includes several components. You can decide on the right combination of these various elements in order to keep costs low. Here are some of the components to consider when planning out your direct mail campaign costs. 

How Does Direct Mail Marketing Pricing Work?

Why Use Direct Mail Campaigns?

Direct Mail, when used properly (think targeted, personalized, and timely) continues to be proven to be the most responsive channel marketers can use to drive demand. Now layer intent on top of that; intent demonstrated through online website browsing activity. Advertisers have the ability to bridge the gap between online intent and offline marketing. Average response rates for a direct mail campaign that incorporates these key criteria remain north of 5%. Pretty impressive. Just as important as the performance direct mail marketing can provide – given its ability to be easily measured – is its cost.

How Much Does Direct Mail Cost?

As with other marketing channels, the cost to execute a direct mail campaign, whether it be via postcard or catalog, includes several components. You can decide on the right combination of these various elements in order to keep costs low. Here are some of the components to consider when planning out your direct mail campaign costs: mailing postage, copywriting costs, mailing lists & audience data, design, and design print.

Mailing Postage

In June 2021, it was announced that postal rates would be changing for the second time in 2021 (January 2021 being the earlier one), and on August 29, 2021, that second rate change went into effect, having a direct impact on the math behind direct mail. Given the importance of timeliness in sending direct mail, first class mail is necessary. Advertisers can expect to pay an additional $0.03 cost per piece for first class mail delivery as postage rates increase. “Starting Aug. 29, USPS will raise prices of first-class postage stamps to 58 cents from 55 cents. Price hikes are needed because over the past decade, mail volume has declined by 46 billion pieces, or 28%, while single piece first-class mail declined 47%”, USPS said.

Marketing Copywriting Costs

Copywriting can be done in-house or through a third-party such as an agency or freelancer. When executing this part of your direct mail campaign, it’s important to remember the goal of your copy…to get people to take action. This action could be driving your customer to your website, setting an appointment, or buying a product. Copywriting can cost anywhere between $100 and $2,000 depending on the copywriter’s experience and the project.

Mailing Lists and Audience Data

When considering your mailing list for your direct mail marketing campaign, it’s important (again) to keep your main objective in mind. Is this campaign a retention play to your existing customer base? Or are you trying to acquire new customers by introducing your brand or a new product with an incentive or offer? Some brands purchase or rent lists from vendors which can cost anywhere from $20 CPM to $220 CPM. Mailing list costs are calculated either as per thousand or per record. Rates depend on the quality, the number of records, and the number of times you want to use a particular list.

Other brands use their website’s first-party intent data for both retention and prospecting. This type of data partner, such as NaviStone, enables marketers to powerfully leverage the intent data of website visitors to convert them to customers, without compromising consumer privacy. This data tells a story of "intent", intent that can be used to craft personalized marketing messages and drive demand through the high-response channel of direct mail.  

It is important to consider your audience aligned closely with the goal of your campaign. From there, work with your data partner to establish the right audience for your direct mail campaign.

Design

Similar to copywriting, direct mail design can be done either in-house or outsourced by an agency or freelance designer. One of the most unique aspects of delivering a direct mail campaign is the amount of real estate a postcard or catalog allows for delivering your message in a creative way.

Some components that every marketer should take into account when it comes to the design of their direct mail piece include generic versus custom imagery, in-house versus outsourced designer, template versus original design. All of these variables will play a role in the final cost of your direct mail campaign. It’s important to make these decisions up front to avoid any surprises to your investment along the way.

Design Print

The printing costs of a direct mail campaign can range from $0.05 to $2.00 per piece. The size of your direct mail piece will play a role in the cost. Many times, heavier pieces cost more, while lighter pieces cost less. Most printers offer discounts for printing in bulk. Some components to consider when planning for your printing costs include, page count, paper size, paper stock, ink, number of sides, number of elements per side or per page, colors, color density, coating, finishing, and binding. Although this may seem overwhelming, most experienced designers who specialize in print and/or your printer will know how to talk you through these options.

Size Matters

With things like relevance, speed, accuracy and cost all accounted for across the different offer channels available to marketers, an additional consideration remains and that is size. Advertisers have limitations with regard to the space they have in which to tell their story whether that story is being told digitally or offline.

While postage has increased for many direct mail formats, it has also substantially decreased for one format (6x9 postage mailed first-class), allowing marketers the opportunity to use a larger format for advertising through direct mail, with no additional postage cost. More space for print design allows for more real estate in which to present your product / offering, more space to educate and more space to persuade.

Direct Mail Marketing Costs: Calculations

Direct mail can be priced by per-piece of mail that you want sent out. The pricing can range from as low as $0.20 to $1.00 or more per piece of mail. There is a wide variety of factors that play into this pricing. As mentioned above, components that are included into the pricing of direct mail include size, design and color options, copywriting, layout, and material. When it comes to your size and weight of material, carefully consider the impact of the piece against the cost. Increasing the size and weight will also increase the cost of postage.

Also, be aware that most companies will charge a setup fee to get you started with a new campaign. This is usually a few hundred dollars, and normally only charged once.

  • B2C mailing list, the CPM cost ranges between $.05 to $.22 per name.
  • B2B mailing lists, the CPM is around $.175 to $.395 per name.

Digital Advertising Pricing Increases

The actual numbers associated with digital marketing programs need to be understood as well for comparative purposes. As of July 2021, the five major social media platforms showed increases of anywhere between 64% on the low end (Snapchat) to 108% increase on the high end (Google and YouTube). Increased competition online means online CPMs are increasing. Supply is up and demand is relatively flat. According to Adespresso, the starting cost per 1000 impressions cost in 2019 was around $5.12, While according to Webfx, the average cost per 1000 impressions in May 2020 is $7.19. (https://blog.hunchads.com/facebook-ads-cost). So, while the cost of first-class postage for direct mail programs increased by ~11%, the cost of digital impressions has gone up nearly 100%!

Is Direct Mail Still Effective? Does it Provide a Decent ROI?

It’s a catch 22 for sure…Fewer direct mail pieces are being mailed, meaning there is less clutter in the mailbox. Less clutter in the mailbox means more time spent by the consumer on each piece of mail they receive. Each piece is more likely to not only be viewed but to actually be read, potentially saved, and therefore responded to. So, with mail volume decreasing, the responsiveness of direct mail is increasing but the total cost has increased as well, negatively impacting performance. The actual numbers will make all the difference in evaluating direct mail programs moving forward.

Adding It All Up

With all the enhanced capabilities available though direct mail, the two offer channels are more comparable than ever before. The ability to accurately target the consumer with relevant messaging is similar for direct mail and digital advertising. For the speed of deliverability, the edge has to go to digital marketing. Measurability is a tricky one as the ability to measure exists for both but over the next year, as Google’s support of third-party cookies deprecation, we don’t yet know if or how measurement in digital channels will be impacted. Given that very real unknown element, direct mail has to get the edge. As we look at all of the other factors that contribute to a successful campaign, the numbers are the numbers. Direct mail allows for more space to advertise, greater response and lower cost. When you add that all up, with the only way to add it up being performance, direct mail is the way to go.

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