Is Direct Mail Dying or Dead? Hogwash!
Sunday, May 31, 2009 at 02:22PM | by
Mal Warwick
My, my. Isn’t it curious how people who are young and enthusiastic about online communications are so firmly convinced that direct mail is dead or dying – while professional fundraisers, that is, the people who are responsible for bringing in the bucks, think the young critics are living on another planet?
For starters, I’m addressing this question on the basis of 30 years in direct mail fundraising and 15 years in fundraising online. You read that right: 15 years in online fundraising. That was when my colleague Nick Allen and I launched what later became Donordigital (and is now a part of my company, Mal Warwick Associates). So I do know whereof I write. We have raised funds for many hundreds of nonprofits by mail, and dozens online – a total exceeding half a billion dollars, largely in the form of small gifts.
Here are a few of the basic facts to keep in mind when you think about this question:
(1) Fundraising online, even according to its most outspoken boosters, accounted for little more than 2 percent of total funds raised by U.S. nonprofits in 2008. That’s $7 billion out of $306 billion. Even if the long-quoted annual growth rate of 35-40% continues indefinitely, it will be the middle of the next decade before online revenue accounts for even 10% of all funds raised here. And the most recent numbers suggest that that growth rate dropped precipitously during the last year.
(2) No one knows with any degree of precision how much money is raised each year via direct mail. However, there is little disagreement that direct mail is the greatest source of new donors and directly accounts for a substantial proportion of all philanthropic gifts. Estimates go as high as half, though I believe the true number is lower.
(3) The direct-mail-is-dead crowd repeatedly asserts that only old people give by mail and that young people only give online. This claim bears close examination. First, any demographic study of the nation’s donors makes clear that the overwhelming proportion of philanthropic giving comes from people who are middle-aged or older. For whatever reason—because they lack the money, because they’re distracted by personal matters, or simply because they don’t relate strongly to nonprofit organizations—young people rarely give money, and when they do, it’s usually not very much. In other words, the “young donor” is largely a myth. Philanthropy has always been primarily a concern of older people. Always.
(4) Response rates to new-donor acquisition efforts by mail have been in gradual decline for some time. The current recession quickened that trend, but these are unusual circumstances. However, direct mail is still the fundraising mainstay for many thousands of American nonprofits—and I can assure you it will continue to be for a long time to come. What is known as “direct mail” to most Americans is, in fact, acquisition mail and is often characterized as “junk mail.” But the lifeblood of the nonprofit sector runs through the much more selective and, usually, custom-tailored, mailings to existing members or donors rather than to prospects. Other than in the recession, response rates in those resolicitation mailings to members or donors have not been in decline. And, up until the recession, the average contribution in those mailings was steadily trending upward long-term.
(5) The furor about “junk mail” is mild compared to that about spam—as it should be, because online communications is prey to all sorts of fraud. And as Forest Ethics found when researching the anti-junk-mail campaign cited in the article Is Direct Mail Really Headed for the Exit?, the real culprit in the minds of the American public emerged as the banks and other financial institutions sent endless waves of credit card offers. That’s junk mail, and, yes, it should be eliminated for economic as well as environmental reasons.
(6) Social networking is fun – no doubt about it. I love my 800 friends on Facebook. I tweet from time to time. But I don’t labor under the illusion that my clients are going to raise money through these or other social networking sites. To the best of my knowledge, not a single nonprofit organization has yet raised more than $200,000 through social networking – cumulatively. And that was for an organization with a budget in the hundreds of millions of dollars. Will social networking evolve? Yes. Will it someday play a useful role in engaging nonprofit members or donors in the work of the causes they support? I hope so. But as a fundraising tool that will replace direct mail? Don’t hold your breath.
Shortly after I first became involved full-time in raising money by mail, the fundraising field was engaged in a similar debate. “Your donors are dying,” the claim went – and younger people would never take their place. The argument was that those for whom the Depression and World War II and its aftermath were formative experiences were the backbone of direct mail fundraising, and that they were dying off, never to be matched by their juniors. That was nearly 30 years ago.
Isn’t it curious that that didn’t happen? That the total funds raised by U.S. nonprofits have kept pace with population growth as well as inflation? That so many thousands of nonprofit organizations have raised billions of dollars, year after year – by direct mail – from untold millions of new donors?
Think about it.
15 Comments | by 




Reader Comments (15)
First, really enjoyed your "ask the expert" conference call with NTEN a few weeks ago.
Second, I agree with you that direct mail isn't going anywhere. I work for a well-established non-profit (organization has been around over 100 years) and we don't have "online contacts" for most of our donor base and still received a lot of checks in the mail. We also have many donors who are still very uncomfortable giving their information online (credit cards, etc.)
I do think that there will be a drop in direct mail over the past 5 years as more things move to online and "social media".
It's going to be all about listening to your donors / customers. The most successful organizations are going to be those that use a multi-channel approach based on what your donors are telling you they want.
Sue Anne Reed
Communications Manager
EMQ FamiliesFirst
sreed@emqff.org
Yes, NGO's can and should be raising more $ online (and here in Greenpeace China we are doing just that) but I have yet to see strong data that supports us shutting off the DM facet just yet.
My 2 cents.
Cheers,
Cristina
Fundraising Director, Greenpeace China
The point is that the world is changing - there are new channels - and that we need to look at how to best strategically incorporate them. It isn't a black and white - stop this now and start this - it's a gradual incorporation of using new tools and learning so that you don't have to play catch up down the road.
I cringe when I see the tons of mail environmental orgs send every year. I get a lot of this mail because I take action alot online. I never give in response to a piece of mail. But the channel isn't setup to respond to individual behavior, rather it's setup to look at aggregate. And in the aggregate, sending action takers online mail is good for the bottom line.
Online won't replace direct mail, just like mobile giving won't replace online giving. These channels will develop and co-exist. The trick is to understand and optimize each channel, and to not give in to simple black and white thinking, but to rather think strategically about your message, your audience, and how to provide the most substantive, mission-based benefit for the donor's dollar.
What you wrote here largely applies to the commercial world as well.
And I agree with the comments made so far that the issue is not either or, but how do we integrate all available media (now called channels:)) to maximize the financial opportunities for our organizations.
But here's the rub. The online proponents go too far by exaggerating the effectiveness of solo online activities. They seem intent on undermining there credibility by insisting that traditional media and the knowledge gained there has no value for online practitioners. Nothing could be further from the truth. Online marketing is a subset of the direct marketing strategy.
Let's get back to the strategies and focus on the objectives letting the channels fall where they should. Forcing media tactics into the strategic realm makes no sense.
I do think there are some instances when online marketing does largely replace traditional forms of outreach. A key example of that is peer to peer fundraising associated with events, where some of the most progressive groups are now raising 75% of funds online. I also think there are a lot of lessons to be learned from sites like Kiva, where the concept of micro-designation really resonate with donors and could only easily be achieved online.
Vinay Bhagat
Founder & CSO, Convio
Overall, however, I'm a big proponent for integration vs. replacement.
I am fairly certain direct mail advertising won't die, but I am equally certain you'll see a precipitous decline in the next five years. Those of you in fundraising have a very strong value proposition and will likely be somewhat insulated; the largest decline will be in "junk mail." To say that email will replace it is, indeed, hogwash. MANY digital media sources -- including addressable TV commercials -- will supplant direct mail.
I've seen a lot of trends in more than three decades in this industry, and read a lot of history about advertising media. The instantaneous predictions are kind of nutty, I agree. But those given careful consideration and held up against the model of distuptive innovation -- like we at Borrell Associates do with all media channels -- tend to have a very good report card of accuracy. We see direct mail spending declining almost 40% over the next five years.
If you recall your grandparents telling you about chasing the ice truck through the streets to pick up the shards of ice that fell out, then I think you'll understand that we are likely to fascinate our own grandchildren with stories about a long-ago time when there were only three TV channels, and that most of them went off the air at midnight!
Our children likewise will have a story to tell their grandchildren. I'm pretty sure it will be about those wacky times when every single household in the community got a 10-pound book delivered to their doorstep every year with the phone number of every business and person listed in it, and how newspapers used to have little tiny advertisements in the back for cars, homes and jobs. And a time when the federal goverment delivered 150 pounds of unwanted paper per year to every single household. To them, in a wildly digital world that we can only barely begin to conceive, what we've grown accustomed to all our lives will seem so inefficient and foreign.
We are asked by many media companies -- direct marketers included -- if there are key indices they should watch and things they should do. For direct marketers and especially fundraisers, I'd take a close look at the average age of donors acquired via direct mail, or via any channel for that matter. If the age is rising, your adoption of new channels must show a corresponding increase.
** Beth, I'm aware that you have raised over $200,000 through social networking. I can't tell you how many people have pointed that out in an effort to impress me with how much money can be raised online. However, no one has yet identified any nonprofit organization that has raised significantly more than you in a similar way -- including the very largest charities charities in the USA. In any case, I didn't mean to imply that there is a ceiling at the $200,000 level for fundraising through social networks, just that there is no evidence so far that this particular channel hasn't yet shown any promise as an alternative revenue stream for nonprofit organizations. I'm skeptical that it will.
** Gordon, I think you'll find that the age profile of new direct mail donors has changed little if any at all in recent years. What the research is showing (as reported online in The Agitator and elsewhere) is that giving by mail is not a generational differentiator. it's characteristic of the lifecycle. Those Baby Boomers we were all holding our breath over a decade ago, wondering if they would adopt different giving habits than their parents, have in fact turned out to be good direct mail donors once they get old enough. Puzzling, but true. Will that be the case for Gen X or the Millennials? I'll be amazed if it is. Because, yes, the ways by which we communicate are indeed evolving, and evolving quickly. I, too, believe that direct mail will play a far less prominent role in fundraising 20 years from now, perhaps even sooner. But not in five years. That assertion is what troubles me. Even if commercial direct mail declines by 40% over the next five years, I would be amazed to see the same happen in the nonprofit world.
Direct mail has served generations of direct marketers but so did radio before TV. But it is time to understand that the days of purely traditional direct mail are over.
Let me also say that those on here who have asserted that the path to success is through email are also wrong.
It is the integration of direct mail and online digital forms of engagement like email and social networks that charities will create a strong fundraising future for their annual funds, events and relationship building activities.
Paper, printing and postage costs have skyrocketed and traditional direct mail has never been efficient at 1-3% response rates. We should be ashamed as an industry of what we have done to contribute to a weaker environment with all the trees we have killed, inks we have distributed and transportation of those letters we have required.
There are unique aspects to the use of email and online engagement that simply cannot be rivaled by the very best direct mail programs.
But neither approach represents a solution by itself.
Stop fundraising. Stop marketing and learn to integrate the mediums of online and offline engagement to inspire an army of supporters to connect people to people in support of your cause. This is the brightest path to success as I look into the future.
Now lets get to work in developing the strategies and creating the integration that will lessen our impact on the environment, engage our supporters and raise more money!
You refer to those who disagree with your direct mail position as the "direct-mail-is-dead crowd". Instead what you did say was "Philanthropy has always been primarily a concern of older people. Always." A statement I find odd even from a champion of direct mail. 22 percent of online donors are under age 40, while only 4 percent of direct-mail donors are that young. A focus on "older people" is certainly not something I argue about, however your posting here shows a bias toward traditional direct mail, it negates the growing and integrated nature of an expanding donor base, a donor base that has always included young and old.
Giving is giving. integration of strategies increase the chances of success. Both direct mail and online donors, studies have shown, both "tend to be spontaneous, flexible, and reactive in giving. They may donate in response to an item of news or other event". It is only through integration of strategies that fundraisers can reach their potential in a multi-channel world.
That having been said, let me answer your question. Is Direct Mail dead? If you mean are envelopes, letters and stamps are on their way out, then the answer is no. However, if you mean, as your posting asserts that traditional direct mail will continue to produce while down playing the role of the Internet, than the answer is yes, traditional Direct Mail is Dead.
Couple of things have changed during that time. The speed of change for one. Economic forces are dramatically shifting. The status quo, the sacred cows, however you might think about it are in a process of realignment.
Think of it this way. How soon will mail be gone? How soon will Fedex be a dinosaur? Quite simply, within a lifetime, in my opinion. Even if you think your past is safe from change, ask yourself how soon Google will be replaced? Nothing happens over night. Even Facebook wasn't born in a day. It does take time for humans to catch up and catch on. What's the saying: Time waits for no man.