Which Costs More: Video or Direct Mail?

What are the economics of producing and distributing a direct marketing video? And, how does it line up with costs for direct mail? If you’re a traditional direct marketer who has lived and breathed marketing costs, then running the numbers should come naturally. For this discussion, we’ll use direct mail as the comparison because historically it’s the distribution channel of choice

What are the economics of producing and distributing a direct marketing video? And, how does it line up with costs for direct mail? If you’re a traditional direct marketer who has lived and breathed marketing costs, then running the numbers should come naturally. For this discussion, we’ll use direct mail as the comparison because historically it’s the distribution channel of choice for direct marketers.

We’ve created a “Video Budget Checklist” that helps you itemize cost comparisons of creative, production and distribution between video and direct mail. If you’d like a copy, email me using the link in the left column. It’s free for our readers.

(If the video isn’t just above this line, click here to view it)

Direct mail can come in all sorts of configurations. Low-cost postcards. A simple package of a letter and flyer inside an envelope. Or more expensive with multiple enclosures such as a letter, fold-out four-color brochure, lift note, order form, reply envelope and outer envelope. Sometimes the outer envelope is a custom size or has an oversize window, or there are expensive die-cuts on cards or tip-on elements that are outside of typical print configuration.

The fixed costs to create each of these packages by employees, agencies or freelance creative teams are pretty broad, from several hundred dollars to well into the five-figures when using proven, top-flight direct response creative professionals.

A wide range of configurations can apply to video production, just as it can to direct mail.

You can pop out a 45-second video using your Webcam or flip-camera and post it on YouTube. You just have to ask yourself if the poorly lit, distracting background, muffled or echoey sound of that presentation exemplifies your organization. Alternatively, the video could be purely voice-over with words scrolling along on the screen. Or you can make it visually more alive with photography images or stock video footage. At a more costly level, you might shoot testimonials or interviews in a studio or shoot on location to demonstrate your product. Of course, length impacts cost (just as the number of components impacts cost in direct mail). There are a lot of variables that go into video production, just as there are for direct mail.

The point is this: Start with a budget you’re comfortable with, talk with writers (ideally writers experienced in both direct response print, online and video), develop a video script and storyboard, and work with a skilled video editor. Don’t just be wowed by special effects on someone’s demo reel. Dig in and learn what results were produced from some samples or case studies. You might just want voice-over with images on screen. (See our last blog post for an example of a 3-minute video and details of how we adapted it from a direct mail package.)

If your personality is a draw, you can record yourself on a small camera that can fit in a pocket with a lav microphone for under $200, total. Make sure you have good lighting and background. Or spring $500 or so and get a green screen and lights. That’s the equipment we use to shoot our video for this blog. Be aware, assembling the right equipment and editing software is the easy part. Knowing how to use it all to your best advantage comes from training and practice—or hiring a pro.

Distribution Costs
For direct mail, you have list costs if you’re renting names, data processing, printing, lettershop and postage. The cost can range widely. If you’re testing in small quantities, you’ll pay more per piece.

Knowing the volume of prospects or prior customers to mail, the marketer calculates how many responses are needed to make a specific profit (or break-even) objective. Translate that number into a required response rate to meet your objectives—your allowable marketing cost—and presto, you can use the test of reasonableness to see if the numbers pan out.

For video, your distribution cost is driving viewers to your landing page. You might email your customer file, or rent a list, and give the reader a compelling reason to click to your landing page to watch the video, possibly opt-in for more information, or attempt to convert to a buyer then. You will need to include the cost to set-up the landing page and related items.

We suggest you begin with a budget where your objective is to create a video for the amount of money it would cost to produce a moderate to elaborate direct mail package (although video production on the cheap is possible—and might work).

Then compare the cost to print and mail a direct mail package versus that of emailing (whether it’s to customers at a low cost to email, or rent an email list at a higher cost). And add in the cost for developing your landing page. Chances are your cost per contact will be less for email and the landing page, but as we all know, it all comes down to the cost per sale or lead so bring your focus back to this metric.

One example worth mentioning is that of the Dollar Shave Club. Perhaps you’ve read about it. A big success for a 1:34 video that reportedly cost $4,500 and after a few days generated over 12,000 orders. The video has now been viewed over 4.6 million times.

Bottom line: just as you’d run the numbers to see if it makes financial sense to use direct mail, you need to run the numbers for video, too. And you just might be surprised how favorable the numbers look to reach out and explore video.

P.S.: Just out: comScore has released its April 2012 online video rankings data with a few notable metrics:

  1. 181 million U.S. Internet users watched nearly 37 billion online content videos in April.
  2. 85.5 percent of U.S. Internet audience viewed online video.
  3. The duration of the average online content video was 6.4 minutes.

12 Reasons to Fuse Direct Marketing and Video Marketing Now

Tried and true direct marketing formulas + online video = your next powerful marketing opportunity. Blending direct marketing sales approaches with online video, where 40 billion videos are watched monthly, can showcase your products and services, build trust, close deals, and raise money. Here are reasons to fuse

Tried and true direct marketing formulas + online video = your next powerful marketing opportunity. Blending direct marketing sales approaches with online video, where 40 billion videos are watched monthly, can showcase your products and services, build trust, close deals, and raise money. Here are reasons to fuse together the power of direct marketing with online video. Today we begin with the first 6 reasons.

1. Now is the early stage for the blending of DM disciplines and online video. While DM and video have been around for years, many marketers have yet to blend the methodologies together. The Deep Dive: Early adopters have been using video with streaming words and voice-over, interviews and product demonstrations. But the next stage of successful video uses proven direct marketing copywriting techniques and call-to-action in video script writing, and uses DM design techniques that will move production values to a higher level.

2. Online video use and views are exploding.

  • In just one recent month, 181 million U.S. Internet users watched 43.5 billion videos averaging over 22 hours per viewer.
  • Over 84% of internet users watched an online video.
  • Americans watched over 5.6 billion online video ads. In fact, online video ads are 38% more memorable than TV ads.

The Deep Dive: According to comScore.com, a global source of digital market intelligence, online video viewing was up 43% from Dec. 2010 to Dec. 2011 This video is a summary of comScore’s findings about the explosive increases in online video viewing during the past year. (By the way, we’ll show you, in an upcoming post, how you can drastically improve upon their really distracting audio quality for about $30.)

If you’re not incorporating video in your marketing strategy, you’re out-of-date.

3. Consumers’ attention span is shorter than ever, and it’s not likely to increase. People will give you a few seconds to watch a video. Engage them quickly, and they’ll stick with you long enough to get your message across and prompt enough curiosity to check you out more. The Deep Dive: Does this strategy sound a lot like using a compelling teaser on an outer envelope, or a strong subject line in an email? Of course it does! So, set up your video strategy properly by getting the viewer to opt-in to watch more of your future videos.

4. Websites with video are perceived as having higher importance. When you add videos, you attract more in-linking domains than with plain text. The Deep Dive: Video inclusion on your social media or blog posts has been shown to triple inbound linking. The following chart is from a well-respected seomoz.org blog post that goes more deeply into this topic. http://www.seomoz.org/blog/what-makes-a-link-worthy-post-part-1.

5. An inbound marketing strategy may be a challenge for a traditional direct marketer to accept, but video has the power to draw prospective customers to you. The Deep Dive: Video on blogs and posted YouTube can be shared on social media and will draw traffic to you. This is a far more powerful-and less costly-marketing strategy than pushing your unsolicited message using outbound marketing strategies.

6. Online video analytics are amazing. Post your video on YouTube and over time you’ll see not only how many times your video was viewed, but second-by-second you’ll see retention levels and discover at what point you lost your viewer. You’ll see demographic information. You’ll be smarter so much faster that your head will spin. The Deep Dive: If you’re a traditional direct marketer, you surely love numbers. With video, you get a lot of data to crunch that will make you smarter and your selling more effective.

In our next post, we’ll reveal six more reasons why you should fuse direct marketing and video marketing now. In the meantime, comment below and tell us your video marketing successes or what you’d like to read in future blog posts.

Timing Really Is Everything

The recent flaps over mailings sent out by Republican fundraisers reminded me of a rule put forth years ago by the late Dick Benson: “Direct mail should be scrupulously honest.” In case you don’t know, here’s the skinny. First, the use of the word “Census” on mailings by the Republican National Committee and the National Republican Congressional Committee led to Congressional passage of a bill last month that required new, clarifying language on the outer.

The recent flaps over mailings sent out by Republican fundraisers reminded me of a rule put forth years ago by the late Dick Benson: “Direct mail should be scrupulously honest.”

In case you don’t know, here’s the skinny. First, the use of the word “Census” on mailings by the Republican National Committee and the National Republican Congressional Committee led to Congressional passage of a bill last month that required new, clarifying language on the outer. Apparently, there had been some concern that people would mistake these efforts for the big Census Bureau mailing that was due to drop. Then, someone who actually had that complaint called the number on the RNC’s donation form, only to discover that it was for a phone sex line. Coming on the heels of news about lavish RNC spending, it’s been a tough few weeks for the party.

It’s easy to dismiss the second problem as merely a vendor mistake, one that appeared on only some of the mailings. It’s also easy to brush aside criticism of using “Census” on the outer. After all, it’s legal — it had passed muster with the USPS. And, it doesn’t really look like the Census mailer. It’s pretty obvious when opened that it’s just another issues poll, with leading questions, and a request for money. There’s nothing wrong with that, both parties have been mailing surveys for many years.

But it illustrates a bigger problem. A great national political party shouldn’t rely on a gimmick, like putting “Census”, or the IRS form — like “(2009) Return Enclosed” on the outer envelope to get someone to open it. Seriously, no one at the RNC thought this through, and saw this bad publicity coming? And, given how some of the Republican base feels about the Census, and especially, the IRS, it’s an especially puzzling choice of a teaser.

Twenty-five years ago, in the newsletter Who’s Mailing What!, Roger Craver wrote that to have a successful direct mail appeal, the “donors of principle,” the heart of any political organization, must be motivated by writing that conveys mission, selectivity, urgent need and effectiveness. The GOP was way ahead of the Democratic Party in this regard for decades, but as shown in the 2008 presidential race, not anymore. It’s going to be very interesting to see how both parties will energize the faithful in this election year.