E-commerce still favors traditional techniques

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Despite the real-time benefits of Internet advertising, marketers are insisting on using traditional direct mail to drive transactions to the Web.

"During the last nine months we have seen a trend in pure-play Web companies launching catalogs or direct mail campaigns to drive traffic to their Web sites," says Direct Marketing Association President H. Robert Wientzen. "Internet marketers are using these traditional direct marketing techniques both to attract new customers and help grow their existing business."


In its sixth annual survey of Interactive media, the DMA found that 85% of its 4,600 member companies use traditional direct response advertising to drive traffic to their Web sites.

Direct mail is a useful bridge to the Web, says Van Lawrence, director-marketing communications at Pitney Bowes Mailing Systems, because marketers can more easily obtain mailing lists than e-mail lists, and consumers trust mail as a communications vehicle.

In an August 1999 study, Pitney Bowes found that mail is the primary tool for promoting Web sites. A striking 70% of the 125 respondents (companies that generated at least $1 million in revenue via e-commerce) said direct mail is the most common method used to advertise their sites.

On average, these companies devoted the biggest chunks of their marketing budgets to direct mail, which was found to be the most successful medium in generating sales online (See chart above).

"If this is the way consumers want to be touched, at least initially, then it makes sense," says Mr. Lawrence.


By 2010, 12% of all retail sales will come from the consumer direct channel, which includes the Internet, catalogs, direct mail and Interactive TV. That's almost three times the 4.6%, or $133 billion, that resulted in 1999, according to a Peppers & Rogers Group study. "Mass media advertising is a very expensive way to acquire new customers," says Director David Halek. "Companies are now able to deliver more selective and targeted relevant communications to their target audience" via tailored one-to-one communications. "They're finding that consumers are responding favorably to that," Mr. Halek says.

Direct marketing is not only an effective customer acquisition and retention tool, but also builds the e-commerce marketers' bottom lines, executives say.


"It makes a lot of sense that dot-coms are [increasing] direct marketing, because they need to realize greater efficiency with their marketing dollars and use media that are more accountable, such as direct mail, the Internet and [direct response TV]," says Marissa Gluck, an analyst at Jupiter Communications. "I think there's a shift in thinking right now away from the untargeted, mass-media, high-reach campaigns they were doing on television -- away from the Super Bowl mentality -- towards a more accountable mindset."

"The Internet gold rush appears to be over, and dot-coms are beginning to take a step back and evaluate their Web development and overall promotion and marketing practices," Mr. Wientzen says.

Marketers "are more intent on measuring their return on investment than they were a year ago."


Direct marketing is used by a variety of Web companies -- from Internet service providers like America Online to e-commerce sites like Amazon.com and pure-play dot-coms like online photo-processing company Snapfish, which ran a print ad in July that included a postage-paid envelope for consumers to send in film.

Snapfish's strategy for the next year is to put 50 million film mailers in the hands of potential customers.

"We think the most compelling way to get the Snapfish name out there -- very similar to AOL in wanting to get those disks in the hands of millions of people -- is to get those mailers in the hands of millions of people," says Snapfish CEO Raj Kapoor.


Through alliances with partners like MapWest, a publisher of visitor maps and guides, and PictureMark, an event photography company, Snapfish will distribute free mailers in tourist venues where picture-taking is prominent.

"The dot-coms really have to build trust," Mr. Kapoor says. "One of the ways you can build trust is to show real-world things that you're doing," he says.

Consumers' "overwhelming response is that they like to find out about new products through the mail," says Mr. Lawrence. "There's a trust for hard-copy mail that's lacking in e-mail."

Even e-mail marketing companies are using traditional mail to acquire customers. Eversave.com, which creates e-mail campaigns for offline retailers to drive traffic to their bricks-and-mortar stores, uses direct mail to promote its own service and advocates that its clients use it as well.


"There are some consumers that won't click on a banner and won't see us on the Internet, but yet if you send them a direct mail piece, they'll respond," says Eversave President and CEO Jere Doyle. "It's a way to get that consumer that you wouldn't have gotten in another method."

Longtime traditional mail companies like Advo and Cox Target Media are developing strategies to drive consumers to their clients' Web sites via cooperative mail products.

Advo, which includes Web offers in its core ShopWise mailer, created Netserts.com, a magazine with Web ads inserted into 10 million ShopWise pieces once a month.

Netserts "provides the dot-coms with a concentrated vehicle that's dedicated to dot-com advertisers, and it's also targeted to households that have a greater propensity to be online," says Advo's VP-Investor Relations Chris Hutter.

"Ink on paper in the mailbox is a proven way to drive traffic. It's been driving traffic to bricks-and-mortar stores for years, and folks are finding out that it's a great medium to drive traffic to Web sites," he says.

Similarly, direct marketer Cox Target Media last month launched CyberValuz.com, a guide to advertisers' Web sites sent with Cox's Carol Wright mailer to 11.5 million wired households.


"As everyone looks for that return on investment, direct mail is very trackable and very accountable," says Rob Rohr, director of dot-com advertising at Cox. "If I want my URL in front of somebody for more than five seconds, I'd like to have it printed and delivered to the right person."

"When you have a click-through rate on banner advertising of less than 0.4% and dropping," he adds, "then you certainly have to get a better return on your advertising than that."

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