Do Offline and Online Marketing Go Hand in Hand?
October 23, 2020
With many companies focusing their marketing efforts on digital channels, direct mail can seem like an analog dinosaur. It’s easy to cast aside this traditional medium as antiquated and irrelevant against powerful platforms such as Facebook, Twitter and email, which can integrate video and use data analytics to target messages to a specific audience. But new research from a trio of scholars in the Netherlands shows that direct mail isn’t done yet. Their study finds that offline messages can boost online consumer activity through searches and clicks, while intensifying the effect of display advertising. The result is an increase in net sales.
Lara Lobschat is a marketing professor at Maastricht University; Lisan Lesscher is a doctoral candidate at the University of Groningen, and Peter Verhoef is a marketing professor and dean at the University of Groningen, as well as an academic fellow at the Marketing Science Institute. Their paper is titled, “Do Offline and Online Go Hand in Hand? Cross-channel and Synergy Effects of Direct Mailing and Display Advertising.” The study, which analyzes data from a 2015 car insurance campaign involving a large German firm, is one of the first to explore the link between the two forms of marketing communication.
MSI asked the scholars some questions about their study and its implications for firms that currently use direct mail or are thinking about doing so. Their answers appear below:
MSI: What inspired this research and what new questions were you trying to answer?
Lesscher, Lobschat and Verhoef: Of course, digital marketing is increasing very fast in the last decades, but companies still also use traditional marketing. An important question is what the role of this traditional marketing is. We focus on direct mailing as a long-standing direct marketing instrument that is still being used a lot. We wanted to know how direct mailing influences online behavior, such as online search, but also if it still has a direct effect on purchase behavior. Furthermore, we wanted to understand if direct mailing and online advertising can effectively work together to stimulate customers to purchase.
MSI: What are the key findings in your study?
Lesscher, Lobschat and Verhoef: The main takeaway of our paper is that direct mailing still serves as an effective marketing tool, despite the rise of digital. This holds both for direct mailing by itself and in combination with digital marketing. This main lesson from our paper is based on a number of key findings from two real-life field experiments with an insurance firm.
First, our results reveal that direct mailing significantly influences consumer activity metrics in the online channel (i.e., online search and clicking behavior), in support of cross-channel effects of direct mailing. We also show that direct mailing affects all stages of the customer purchase funnel (i.e., from becoming aware of a product/service to the actual purchase decision). Direct mailing has a direct effect on purchase behavior as well as indirect effects by inducing online consumer activities, which ultimately lead to a purchase. Taken together, we find that the total effect (including the direct and indirect effects) of direct mailing on purchase behavior is positive.
In our second study, we investigate potential synergy effects between direct mailing and display advertising and find that combining these two leads to an increase in sales. This suggests that these marketing communication tools complement one another and when used jointly, even exceed their individual effects.
MSI: In the paper, you discuss what you call synergy effects. Could you explain that?
Lesscher, Lobschat and Verhoef: Media synergy is “the added value of one medium as a result of the presence of another medium, causing the combined effect of media to exceed the sum of their individual effects,” according to researchers Prasad Naik and Kalyan Raman. In other words, synergy between our marketing communication tools (i.e., direct mailing and display advertising) implies that the joint effect of direct mailing and display advertising on the number of purchases is significantly larger compared to the sum of the individual effects of direct mailing and display advertising. This is sometimes also explained as 1 (direct mailing) + 1 (digital marketing) = 3 (combination of direct mailing + digital marketing).
MSI: How can marketers apply this research in the real world?
Lesscher, Lobschat and Verhoef: First, marketers who doubt whether to continue using direct mailing campaigns can be assured that direct mails are still a powerful and cost-efficient tool to persuade consumers and guide them along the purchase journey – from becoming aware of a product/service to eventually [making] a purchase. Given the offline-to-online effect of direct mailing that we find, marketers should also pay attention to consumers’ online search and clicking behavior when running a direct mailing campaign and integrate these pre-sales effects into their attribution modeling. This will eventually also help to accurately determine the total impact of direct mails on consumers’ purchase behavior and justify the relatively higher investments necessary to run a direct mailing campaign to senior management.
In the light of the positive synergy effect we find, marketers should consider carefully coordinating their digital marketing efforts with their direct mailing campaigns to leverage the full potential of these two marketing instruments. For this purpose, the U.S. Postal Service, for example, recently introduced different innovations, such as digitally enhanced direct mails with near-field communication (NFC) chips or augmented reality features, to further advance these coordination efforts.
MSI: This study looked at car and liability insurance. What other products would benefit from direct mail in a similar way? Are there some products that would not?
Lesscher, Lobschat and Verhoef: Generally, all products and services which are high-involvement and need some degree of explanation – such as banking products, health care and pharmaceuticals — are well-suited for direct mailing and hence will also benefit from well-integrated efforts of both digital marketing and direct mailing. Retail also can greatly benefit from direct mailing, especially in the case of promotional offers or changing assortments. The emerging trend to focus on local business due to the COVID-19 pandemic serves as another promising opportunity for direct mailing.
Given the contract obligations associated with buying insurance, consumers only buy these products infrequently. Hence, we expect our effects to be even more pronounced in the absence of long-term contracts binding consumers. Some product categories, such as groceries, might be less suited for direct mailing because they are low-involvement products that are bought on a habitual basis without needing an additional trigger like a promotional offer. But we still expect these firms to benefit from better budget decisions and leveraging the joint power of direct mailing and digital marketing.
MSI: Your study is based in Europe. Can the results translate to American or Canadian consumers?
Lesscher, Lobschat and Verhoef: Direct marketing has a long-standing tradition in North America as well. Think about companies such as L.L.Bean, for example. We see in other studies using U.S. data that catalogs still affect customer behavior. Actually, I [Peter] am currently working on another project with data from a U.S. company where we still find purchase effects of catalogs next to online advertising effects. The reported synergy effects in marketing communications are generally scarcely reported. More research is clearly warranted here.
MSI: What’s next for this line of research?
Lesscher, Lobschat and Verhoef: For marketers, it is of utmost interest to understand how their different marketing efforts influence consumers along the journey to purchase and how these efforts can be better integrated for a more pronounced joint effect. To be able to leverage this joint effect, more knowledge is needed on how to create different marketing instruments in terms of format design and message content with the goal of achieving an effective integrated marketing campaign across both online and offline channels. For example, should a digital ad explicitly refer to a direct mailing sent to a household for an even more pronounced effect? Or should the information provided through the two marketing tools be complementary or substitutional? Hence, as a next step, I [Lara] want to shed more light on the effectiveness of different design aspects across both direct mailing and digital marketing to foster their synergy effect by means of another field study.