Posted on 11 October, 2018Retailer Next has reduced its DM budget in favour of digital. We question whether it is right to have done so.
Speaking at a press briefing recently Next CEO, Simon Wolfson, announced that the brand was planning to more than double its digital marketing budget in 2019 – funded by a dramatic reduction in above-the-line media, catalogue production and DM. He said that “print, TV and direct mail definitely no longer delivered the level of ROI they once did, while digital is generating impressive returns.”
However, at a time when digital fatigue is at an all-time high – a study shows that almost half of us now digitally detox on a regular basis and many are even quitting social media platforms for good – is now the time to invest so comprehensibly in a channel that is becoming increasingly fragmented?
In comparison direct mail is experiencing something of a revival. Following GDPR the popularity of the channel is rising. This is because consumers feel like they have more control over their letterboxes. Already there has been a significant reduction in unwanted mail, meaning that consumers are now receiving items through the post that they are genuinely interested in. Whilst this has resulted in a loss of volume for brands, it has led to an increase in ROI. It is likely that Next’s customer database has been depleted as a result of the new privacy directive (and therefore the DM budget should have been reduced anyway) but those that have opted in to receive mail will be actively interested in receiving offers and information through the post – and ultimately disappointed if they don’t!
Another benefit to mail media is its audience appeal. We know that older consumers prefer direct mail to digital communications, but equally the young are also becoming mail fans. This is because Millennials and Generation Z do not have a heritage of growing up with letterbox bombardment. Quite the reverse. To get a letter through the post is an event and when it is from a brand with a well targeted offer they respond favourably.
Apportioning budget to the marketing mix is one of the trickiest jobs in marketing communications, but to cut the budget of a medium that has performed so well in the past and is currently experiencing a renaissance is perhaps a touch short sighted. Time will tell.