What's With All the Address Labels?

John Ernst If you've ever made a donation via direct mail, you're no doubt familiar with return address labels. They come in many designs and themes—patriotic, puppies and kittens, wildlife, kids' art, pink ribbons, and on and on. In fact, chances are the last direct mail donation you made was prompted from a letter appeal that contained a sheet of them. Perhaps you even used one of the labels when you sent in your check. Address labels have been a staple of direct mail fundraising for more than 20 years and have grown significantly as a fundraising tool in the last decade. Paradysz's MarketRelevance, which tracks more than 25,000 direct mail solicitations per year, found labels were included in nearly one out every three pieces of nonprofit direct mail received. While their proliferation may not be popular with everyone, talk to any nonprofit that uses them and it will show you reams of ROI statistics that prove they are one of the most effective direct fundraising techniques available. They get the letter opened and generate donations. Address labels have helped raise billions to fund medical research, feed the hungry, provide disaster aid and preserve wildlife habitats. Why do they work? They're personal, useful and they connect to the lifestyle of the audience making lots of donations -- those who write letters, send greeting cards and send checks to pay the bills. Best of all, address labels are consumable. About the time you might be running low is the optimal time for the next donation request to land in your mailbox. Labels are an ingenious little fundraising device. Generational shifts For many nonprofits, address labels continue to be the donor solicitation of choice in direct mail -- consistently producing better than alternative techniques tested against them. They are still one of the most predicable and scalable methods for delivering fundraising dollars. But like most major advertising channels, labels (and direct mail in general) don't perform at the same level they used to. Certainly, the recession has had a hand in declining response rates. There may even be fatigue -- even a little frustration -- with so many labels in prospective-donor mailboxes. But is there a greater shift in motion? The Strategic Solutions group at Paradysz conducted a study of mailing data for a group of large nonprofit organizations, most of which use address labels. The study looked at the demographic trends of donors in a prerecession period (2005-06) vs. a more recent (2010) period and uncovered a very pronounced generational shift: 54% of prerecession donors were in the 60-plus age cohort, but a whopping 68% of the sample from 2010 appeared in the 60-plus group. By comparison, donors in the under-50 crowd dropped from 24% in 2005-06 to a meager 15% in 2010. Response rates, notably from the older generation, were the drivers of this trend. The study revealed a person 70 years old or older was more than twice as likely to respond to a direct mail piece (most of which had address labels) than someone younger than 50. While overall direct mail performance may be on the decline, we're seeing performance using techniques such as address labels actually hold up when viewing results through an older-generation lens. Marketing through a generational lens News out of the U.S. Postal Service these days isn't very cheery. The Government Accountability Office reported first-class mail volume (USPS' top revenue source) has fallen 19% since 2001, and it is projected to fall another 37% by 2020. According to the Postal Service's annual survey, the average household gets one personal letter about every seven weeks. In 1987, it was a letter about every two weeks. Since address labels usually accompany any mail with a first-class stamp, their usability and effectiveness will likely fall with the broader trends. But has USPS looked at these trends through a generational lens? It may not change the larger revenue crisis picture, but I bet the first-class mail stats are much stronger in the older-generational cohorts. I'd love to see that data, because I know my parents, both in their 70s, still send letters to their grandkids and pay their bills via mail (usually attaching a handy little address label from their favorite charity). By using a generational lens, marketers can appropriately manage that effective little label, ensuring it gets mailed to the right audiences. We can also use generational segmentation to target new direct mail offers that connect with younger audiences. We can even use it to develop techniques to cross the multichannel bridge, calibrating direct mail, online advertising, event marketing and new brand messaging to optimize performance. For those of you younger than 70 maintaining a seemingly endless inventory of address labels from your favorite charity -- hold tight, we're working on a better offer. ABOUT THE AUTHOR John Ernst is president of Paradysz, an audience development agency based in Minneapolis.

What's With All the Address Labels?

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