When handled correctly, direct mail marketing is a tried and tested method that can yield big results. However, a key part of running any successful campaign is creating a realistic budget. You’ll need to factor in everything, including design and distribution costs, as well as creating a realistic timeline and budget breakdown.
If you’re running your first campaign, you might be unsure where to start. If so, don’t panic! In this article, we’ll guide you through the process of budgeting effectively. So, without further ado, let’s get started!
The importance of direct mail marketing
With so many developments in online advertising, direct mail marketing may seem a thing of the past. In reality, though, it’s an approach that’s more popular now than ever. The direct mail market is expected to experience an annual growth rate of 0.95%. This translates to a projected market volume of $61.59bn by 2029.
There’s a reason direct mail is still a go-to solution for many businesses. First and foremost, this method consistently brings successful results. As many as 84% of marketers agree that it delivers the best ROI of any channel used.
This is likely because direct mail is much more likely to reach your customers. Online marketing methods may be overlooked or reach the spam folder. Direct mail, on the other hand, is delivered straight to a customer’s doorstep and tends to be read with the rest of their post.
Alongside the points listed above, direct mail comes with a set of other significant benefits. These include:
- Flexibility: Direct mail marketing can be used to promote new products, share business news, or provide discounts and offers.
- Highly targeted: Marketing materials can be sent to specific high-value customers, bringing strong success rates.
- Complements other marketing methods: Direct mail can be highly effective on its own. Combined with other methods it can help enforce messages and drive higher conversion rates.
How to budget for a direct mail marketing campaign
Direct mail marketing brings many benefits. But for these to materialize, you need to budget effectively.
Here are some budgeting tips to get you started.
Define your campaign goals
As with all marketing, a direct mail strategy should begin with a set of goals. These will inform your spending decisions and help you budget effectively.
Remember, direct mail campaigns can be highly varied. Aside from advertising, you may want to reach new customers and spread awareness, grow loyalty, or conduct research. Whatever your objective, make it as specific as possible, so you can carry out a clear strategy. Alongside this, make sure your goals are measurable. Select a set of key performance indicators (KPIs) to track your overall success. Below are three examples of metrics that can be applied to direct marketing campaigns.
- Response rate: A crucial metric for all direct marketing. Tracks the number of customers that respond to your materials. You might track visits to a specific link, use of coupon codes, or scans of QR codes.
- Return on investment (ROI): The total gains (or losses) of a campaign once all costs have been deducted. A high ROI indicates a successful campaign.
- Conversion rate: The percentage of customers that complete key interactions. This might be purchasing a product or joining your mailing list.
Calculate creative and design costs
One thing is certain in your direct mail campaign: you’ll want your materials to look the part. For that, though, you’ll need the right expertise to create professional advertisements. Whether you handle this in-house or externally, this will incur some costs. It’s important that you understand these before you produce any materials.
Let’s look at some of the costs associated with handling design in-house for US businesses.
- A graphic designer – The average wage of a graphic designer is $58,910. Junior designers may receive a salary of around $36,000, while senior designers can be paid upwards of $100,000.
- A copywriter – The average base salary of a copywriter is about $66,5000. A junior copywriter may earn around $40,000, while an experienced writer could earn over $100,000.
- A photographer – The average salary of a photographer is around $52,500. A less experienced employee might earn $21,000, while a senior photographer could earn over $120,000.
Alongside labor, other factors will impact design costs. Your team will need a comprehensive set of design tools, a comprehensive design package can cost $89.99 monthly per license.
If you don’t have an in-house team and don’t think it’s worth setting one up, then you’ll need to factor in the cost of hiring freelancers or contracting a design agency to handle the creative side of things.
Factor in printing costs
Printing costs are an inescapable part of direct mail companies. You can, however, control the amount you’ll be paying for printing your ads. Naturally, marketing materials that require multiple pages, such as a catalog, will be more expensive than printing a single-page item, such as a flyer. The printing and mail service you select will also impact cost.
Equally, the materials you use will also affect how much you pay. Printing paper with a glossy finish, for instance, will always be more expensive than using a matte finish. Equally, colored materials will incur a higher cost than black-and-white prints.
Remember, the materials you use will send a message to potential customers. Sometimes, it’s worth spending more to enforce a certain image about your brand. If you’re advertising a premium product, for instance, it makes sense to use more luxury materials.
Plan for mailing and distribution costs
The process of distributing your direct mail can be expensive. There are opportunities, though, to cut costs. Usually, the more mail that you distribute, the cheaper the overall cost will be. In this way, a larger-scale campaign can be more cost-effective.
Distance will also affect distribution costs. You’ll be paying more to reach international or cross-state customers. You can reduce costs by printing and distributing directly within your target markets.
Another factor to consider is the weight of what you’re sending. If you’re on a limited budget, avoid heavier marketing materials, such as brochures. Instead, consider using a flyer with a link to an online brochure.
Account for list acquisition and management
The best scenario is to have a pre-built mailing list before beginning your direct mail campaign. This way, you can avoid additional costs for acquiring customer details. If you’ve yet to create a mailing list, though, you can work with a direct mail company, a third party that will help you build lists of customers that align with your target audience.
Once compiled, your list will need to be managed. There’s no point chasing customers who have moved or are unresponsive to your marketing. You’ll want to replace these customers with newer, more useful contacts. List management also involves organizing contacts to reach specific audience groups easily. For instance, you might create a segment of customers who live in a certain area.
It’s worth considering the admin costs of managing your lists as well as the cost of using a third party company when budgeting for your direct mail campaign.
Create a realistic timeline and budget breakdown
One of the most common direct mail mistakes is failure to create a proper timeline for your campaign. Set this at the outset to ensure your targets are ‘time-bound’. A deadline helps you to keep focus on your overall objective and avoid getting sidetracked. Create a list of all the key marketing events that will take place during your campaign. Then, set intermediate dates for the completion of each activity.
With your overall timeline in place, look at all the identified events, estimate the cost of each, and apply a budget to them. When applying your budget, try to build some contingency. Not all estimates will be accurate and sometimes things will go wrong. It’s always useful to have a little leeway to avoid overspending when issues arise.
If you have been given an overall budget, you’ll need to compare your estimates to this. You may find that some tasks require more investment than your budget allows. Consider whether these activities are essential for your campaign or simply ‘nice to have’. You may need to find savings or even cut out low-value tasks, rather than spread your budget too thinly.
Monitor campaign costs
It’s vital you stay within budget as you carry out your direct mail campaign. To do so, you’ll need to keep a close eye on all costs and spending. You can handle this process manually but this can be very time-consuming.
It’s much quicker and easier to rely on accounting software for business use. The right solution can provide complete oversight over your finances. This includes detailed records for tracking costs and expenditures, so you can easily spot when you’re at risk of going over budget and re-think your strategy.
At the end of your campaign, you can assess your budgeting success. Which areas required greater funding? Where could you have cut costs? You can take these lessons into future projects.
Final thoughts
There’s a reason that direct mail marketing is the go-to solution for many businesses. Not only is it extremely versatile, facilitating many different marketing goals, but it also delivers consistent results. A direct mail campaign could be a winning solution for your business, but always budget first. Stick to these tips and you’ll stay within budget while reaping the rewards of a successful campaign.
Aislinn Carter is a writer specializing in business, marketing, and startups. With a talent for distilling complex topics into clear, engaging content, she helps entrepreneurs and marketers stay informed and inspired. Her work reflects a deep understanding of the challenges and opportunities in today’s fast-paced business world.
