Choosing A Direct Mail Retargeting Partner

Postcards sent daily to unknown website visitors work well. That’s why it’s the fastest growing form of advertising today!

Direct mail retargeting is still evolving, making it difficult to compare different partners. Fortunately, performance marketing, regardless of channel, all use the same fundamentals. You compare revenue or number of new customers generated vs. cost. Return on Ad Spend (ROAS) and Customer Acquisition Cost (CAC) still apply. Here’s how to evaluate different retargeting companies.

Revenue and Customer Generation

Revenue and customers generated by different partners vary significantly. This may seem counterintuitive. They are all mailing postcards to people who visit your site.

Why should there be any difference?

Unlike other forms of marketing, there is not a common feature set used in the industry. Two potential partners can execute direct mail retargeting very differently in ways that significantly impact performance. Here are the seven elements most important differences:

1. The source of postal address data: The backbone of any direct mail retargeting program is the linkage between a device browsing a website and a postal address. This linkage is often called an Identity Graph. Postal address linkage can cost as little as five cents a record. Many low cost providers create this linkage using stale data. IP addresses, email address, hashes, etc. get out of date quickly. High quality identity data costs between 10-20 cents per record, depending on quantity. The best remarketing partners use multiple data sources, not just one. Why do you care? If the address you’re sending to is no longer associated with the device browsing your website, response rate and effectiveness will suffer significantly.
   
   Note: You can get good address data at a lower cost IF you allow the partner you’re working with to supplement their identity graph with identity data contributed by your website. Brands have made this tradeoff for years with Meta and Google advertising. However, there is a reason Meta and Google are sunsetting their “data sharing” based advertising products…Lawsuits. And these lawsuits go after not just Google and Meta, but also the website that put up their tags. Unfortunately a lower cost through data contribution requires you to take a big risk. Make sure you know if you’re getting a lower price because of data contribution.
2. Modeling: Many retargeting partners do not score website browsers in terms of likelihood to buy. 50-70% of browsers just aren’t engaged enough to justify sending direct mail. As postage costs have increased, making sure that someone is truly “in market” has become more important. Ask a potential partner to show you visitor counts by score ranges/segments. If they can’t then they are not modeling, no matter what they tell you.
3. Personalization: You can boost response rate 30+% by matching the image/message shown on a postcard to the category of product/service a visitor browsed. For example, if a visitor browsed a wine country vacation, show a picture of people in a vineyard at sunset with a glass of wine in hand. Ask potential suppliers to show you data on the lift their clients experience with personalization and the number of versions a remarketing campaign typically offers.
4. Identify existing customers: The visitors on your website are a mix of existing customers and new prospects. Existing customers will respond better than prospects, so you can mail a higher percentage of the customers you identify, optimizing your return. The ability to differentiate between customers and prospects also allows you to present each group with different offers.
5. Holdout test: In all forms of advertising, nothing is 100% incremental. A holdout test means that you’re NOT going to mail some people who visited your website. This will tell you how much business you would have gotten from consumers naturally returning to your website on their own or as a result of other marketing you do. Every program in your marketing mix must add incremental sales in order for you to grow. If a partner can’t prove incrementality, you might as well take the money you would have spent with them and buy lottery tickets. At least with lottery tickets you’ll know if you won or not.
6. People/Support: Some postal retargeting partners offer little or no support, either strategic or tactical. You will typically get a lower price in this situation, but you are also now solely responsible for strategic direction and execution. There are many ways to optimize retargeting programs (see above!). If you’re not doing all of these, you’re leaving new customers and revenue on the table. Meet the team that you’ll work with at any potential partner. Ask them for ideas and, more importantly, for references. A great support team can return much more than a few cents of cost.
7. Success metric orientation: Ask a retargeting supplier to share their ROAS/CAC averages in your industry/vertical.  If they can’t do so, or say that they don’t know clients results, it indicates that they aren’t able to optimize your results. It’s just as important for your partner to track success metrics as it is for you. Best practice is to agree with your partner what success metrics looks like before you begin.

Cost

The costs for all direct mail retargeting solutions have two common components: Postage and printing

First class postage for a 6x9 inch postcard, the most common retargeting form factor, is .40 to .43 cents per piece as of July 2024. Postage costs have been reset every six months by the Post Office, always going up. The post office provides discounts that generally reduce cost when more pieces of mail are sent daily. They also offer incentives at a few points during the year specifically for retargeting direct mail. 

Note: ask your partner if they return these postage incentives to you or keep them…you will be surprised at what you hear! You can find a list of 2024 incentives here.

Digital printing, which allows you to personalize the mail sent based on elements like the type of product a visitor browsed or where they live, costs between 9 and 15 cents a piece for 6x9 inch postcard. Prices can be higher when you are mailing smaller daily quantities.

There are three ways to reduce cost, however all cause a significant reduction in the revenue a retargeting campaign generates.

1. Send retargeting mail only once or twice a week rather than daily. This will lower cost by providing greater quantities per mailing. However, every day of delay between a customer’s website visit and receipt of the postcard reduces response by about 5%. You could shave 5 cents per piece of cost, but reduce revenue by a dollar or more. You’ll lower return on ad spend by making this trade, and reduce the total impact your retargeting program.
2. Use standard mail postage rather than first class. You can save 5 cents per piece, but will lose on two fronts:
   1. Mail will arrive 3-7 days later (resulting in a 15+% decline in response rate).
   2. The deliverability rate is lower for standard mail, meaning that fewer of the pieces of mail you send (and pay for) will reach your prospect.
      
3. Send every website visitor the same piece of mail. You’ll save a few pennies on printing if you don’t personalize, but as you’ll saw above, it will cost you 30+% in revenue and new customers.

The lower priced direct mail retargeting partners can cost 35% less. If you only consider the cost component of ROAS or CAC, it’s an easy decision! The problem with this approach is the revenue and number of new customers generated by different partners/features vary as much as 300%. if you only consider the cost side of the equation, you won’t optimize marketing efficiency or program impact. Getting 3x more revenue or customers makes a difference!

Larry Kavanagh
CEO, Co-Founder

As CEO and Visionary at NaviStone, Larry spends a lot of time working on the big stuff: big relationships, big ideas and solving big problems. Appropriately, he spends his web browsing time on big idea websites such as fivethirtyeight.com, washingtonpost.com and npr.com. He also finds time for fun on mlb.com and “Bad Lip Reading” on youtube.com. How and when does a busy CEO find time for browsing at all? Early in the morning or late at night, always on his iPhone.