It can be difficult to define a marketing budget, but it helps to look at how peers are allocating resources. We decided to start with ourselves.
Mail and E-mail are the Most commonly Used Media for Marketing
According to The Direct Marketing Association’s 2010 Response Rate Report, mail and e-mail remain the most commonly used media. In addition, the 2010 report also stated:
- Direct marketing accounted for 54.3% of all ad expenditures with marketers spending $149.3 billion on this channel.
- The response rate for a letter-sized direct mail piece was 3.42% for a house list and 1.38% for a prospect list. This compares with 2005 response rates of 3.33% and 1.71%, respectively.
- Catalogs continued to be "an effective way for retailers to reach existing customers." Response rates for catalogs sent to a house list went up in 2009 to 4.92% from 3.56% in 2005. For catalogs sent to a prospect list, the response rate was 0.84% compared with 1.74% in 2005.
- Telephone marketing had the highest response rate of any direct marketing mechanism, but it also had the highest costs associated with it. Catalogs, on the other hand, had the lowest average cost per order/lead, which was $47.61. The cost per order/lead was $47.69 for inserts, $53.69 for e-mail and $75.32 for postcards.
- Of the specific industries reviewed in the report, the publishing, media and entertainment and retail segments had the highest volumes of direct mail use; financial services and nonprofit respondents strongly preferred direct mail over other media.
- Direct mail still represents 17 percent of the overall marketing budget, which is larger than the share held by any other media.
- Email to a house list averaged: a 19.47 percent open rate; a 6.64 percent click-through rate; a 1.73 percent conversion rate; with a bounce-back rate of 3.72 percent and an unsubscribe rate of 0.77 percent.
- Paid search had an average cost per click of $3.79, with a 3.81 percent conversion rate. The conversion rate (after click) of internet display advertisements was slightly higher at 4.43 percent.