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March 23, 2020

Mastering Direct Mail Attribution

"From Mad Men to Math Men" is a commonly used aphorism to describe the evolution of modern marketing. Digital channels like email, SMS, display, and retargeting provide not only an opportunity to precisely target advertisements, but also to precisely measure them. This, coupled with the fact that customers’ online behavior generates a ton of usable data, has driven marketers to become master analysts—scrupulously measuring and evaluating all of their activities. This is a far cry from traditional mass media where Nielson ratings provided only a rough, aggregate volume of viewers for a particular advertisement.

However, the low cost and ease of access to digital channels has led them to become saturated. Consumers today are bombarded with marketing messages—receiving nearly 90 email solicitations per day. As a result many marketing teams are taking another look at traditional offline channels like television/radio, out of home (billboards, airports, etc), and direct mail.

Direct Mail as a Hybrid Marketing Channel

Traditional channels are historically challenging to target and measure. But of the traditional channels, direct mail is uniquely interesting as it straddles the online and offline worlds. It provides very precise targeting like digital channels, coupled with the reach and engagement of offline channels (for reference, the average consumer only receives about 2.5 pieces of mail). It’s no wonder then that after years of slow declines, the total volume of marketing mail in the U.S. actually increased in the past year.

As a purveyor of direct mail automation, we’re naturally excited about this trend. Many of the brands we work with are new to direct mail, and one of the most common questions we get is around attribution. Given that direct mail works both like a digital and an offline channel, how should marketers think about measuring its impact? The answer is that it depends. There are several ways to measure attribution, and each has its strengths and weaknesses.

Direct Attribution

The first approach is direct attribution. Here, marketing teams attempt to mimic the 1-to-1 attribution model from email in direct mail campaigns. To do this, a customized call to action CTA is added to each piece of direct mail. This can be a URL, coupon code, phone number, or QR code. The important point is that each CTA is unique, and can be tracked individually if it is followed. Below is an example that we used for a recent event invitation. Each postcard was generated with it’s own QR code which allowed us to track responses and registrations.

Advantages: As the title says, this approach is direct. It allows you to measure the specific impact of a direct mail piece. In multi-channel campaigns where customers are receiving concurrent messages across different channels, direct attribution allows you to know for certain whether the direct mail touch was the one that drove a conversion. This approach is most like digital attribution, and usually the approach that marketers who are new to mail start with.

Disadvantages: Unfortunately, no one has invented click-through CTAs for physical mail yet. All of the methods discussed in this post, try to mimic the click-through behavior from email, but in reality they require an extra step for customers. That, coupled with the fact that most online shopping happens at work (while direct mail is left at home), means that many recipients won’t use a custom URL or coupon code when converting. Relying solely on direct attribution to measure direct mail means that you will be consistently undercounting the impact of your campaigns.

Indirect Attribution

Another way to measure the impact of direct mail campaigns is to treat it more like broadcast advertising. In this approach cohort analysis is used to assess the lift associated with a campaign. To measure indirect attribution marketing teams should:

  • Establish a baseline: Measure the response and conversion rate within the target audience prior to the campaign launch.
  • Create a holdout cohort: Deliberately exclude a group of potential campaign recipients from your mailing list.
  • Measure lift: Within an appropriate time after your direct mail campaign launches (brands typically use a 3 – 6 week window) measure the rate of conversions in the cohort that received the direct mail compared to the holdout. The average difference can be attributed to the campaign.

To be as precise as possible with this type of measurement, you’ll want to be thoughtful about the conversion event you use. It should probably be more than just web visits, and be aligned to the CTA that you use in your direct mail creative.

Advantages: Indirect attribution is a much more accurate way to assess the impact of a direct mail campaign. It captures everyone who converts from a direct mail piece, whether they follow a prescribed conversion path or not. Because direct mail allows you to specifically target your campaigns, you know exactly who received direct mail (and with Lob know exactly when they  received it too), you know exactly which group’s behavior to measure.

Disadvantages: While indirect attribution is generally more accurate, it is less precise—especially for teams that are running multiple campaigns and/or tactics simultaneously. While indirect attribution captures whether a customer converts or not, it won’t tell you which specific channel drove the conversion. This can be frustrating for teams who are looking to optimize their channel mix.

Developing an Optimal Approach to Attribution

So, given that both approaches to direct mail attribution have advantages and disadvantages, which should your company use? It ultimately depends on your objectives. Teams looking for very precise attribution, or are experimenting to test channel performance should look to use specific CTAs to capture direct attribution. However, knowing that this approach undercounts lift, it probably shouldn’t be used for ROI or ROAS calculations.

Teams looking to broadly, and accurately assess the lift from direct mail campaigns should probably consider indirect attribution. This can feel unnatural for teams who are used to primarily marketing through digital channels, but it gives you the clearest picture of campaign effectiveness. This is the approach we see most of our customers gravitating to after they execute several campaigns.

It’s worth noting that these approaches aren’t mutually exclusive. You could add a custom CTA to your direct mail pieces, while still using an indirect lift measurement. As with all things in modern marketing, experimentation is always a good idea. It may take several iterations to find the approach that works best for you.

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