BRINGING PROGRAMMATIC HOMEWhy physical impressions break through digital ad clutter

JULY 2018 UPDATE

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BRINGING PROGRAMMATIC HOMEWhy physical impressions break through digital ad clutter

The advertising world is increasingly personalized, data-driven and digital. But the more money we pump into digital advertising, the more apparent its limitations become. Shoppers see digital as ubiquitous, ignorable, and often-disrespectful advertising.

By comparison, tangible marketing, delivered to the home, has become more unique as fewer pieces are being mailed (especially compared to the deluge of digital marketing); it’s impossible to ignore, and is usually welcomed by the recipient. However, traditional direct mail has become inefficient, and it doesn’t offer the benefits marketers have come to expect from digital. For the most part, direct mail is not personalized or programmatic. Too often, it’s just another dumb ad.

How can marketers bridge that gap, and communicate with shoppers via a tangible message at home, when it’s welcomed, yet uses the data and intelligence of digital advertising to make sure that ad is relevant, timely, and smart?

Today, we have the technology to market with the best of both worlds and none of the pains inherent in each channel.

The Digital Stalemate

In 2017, total spending on digital advertising reached $67.8 billion, closing the gap with TV ad spend, and set to surpass it by 2019.

Note: gross ad spending; TV includes broadcast syndication, cable/satellite network, interactive/VOD/addressable TV, local/national spot broadcast, and local/regional cable.

Source: eMarketer, March 2017; Jack Myers Tomorrow/Today, “2000-2020 Advertising, Shopper Marketing and Trade Communications Data and Forecasts,” as cited in company blog March 8, 2018.

CHART 1US TV vs. Digital** Ad Spending 2010-2020 (billions)

n TV* n Digital**

2015 2016 2017 2018 2019 2020

$120

$100

$80

$60

$40

$20

$0

3

30%

BLOCK CONTENT

Ads that block the content 4.31

Long video ads before a short video 4.25

Video ads that don’t have a skip button 4.20

MOVING AD PLACEMENT

Ads that follow me down the page as I scroll 4.21

Ads that make the page content move 4.19

Ads in middle of content 4.09

Ads that expand if you scroll over them 3.98

Ads that are closer to the content than usual 3.72

AUTOPLAY

Ads outside an audio player that play audio automatically 4.19

Ads outside a video player that play video automatically 4.12

Ads in a video player that play video automatically before the video 4.01

LOAD TIME

Ads that load slowly 4.19

Ads that load before content loads 4.02

ANIMATED ADS

Ads that shake 4.16

Ads with blinking/flashing colors 4.10

Big ad size 3.97

Ads with moving elements 3.92

Ads with bold colors 3.41

PRIVACY

Ads related to products you’ve looked at on another site 3.49

Note: n=1,292 ages 18+; desktop/laptop only. *On a 5-point scale where 1=not at all annoying and 5=extremely annoying

Source: Interactive Advertising Bureau (IAB), “Ad Blocking: Who Blocks Ads, Why and How to Win Them Back,” July 26, 2016; eMarketer, “Facing Up to Ad Blocking: How Publishers, Advertisers, and Their Media Partners Are Responding,” June 21, 2017.

CHART 2Types of Ads that US Internet Users Find Annoying, June 2016Index*

These impressions bombard almost all shoppers, but they’re mostly low-impact:

› Click-through rates are well below 1%, according to Google’s DoubleClick ad research.

› Response rates, measured by the “DMA Response Rate Report 2017,” are 0.2% for online display ads, 0.6% for email, .4% for social media, and 0.6% for paid search.

› Viewability is a huge issue, with both ad placement and ad blockers contributing to ensure your online “impressions” often leave no impression. In its report “Facing Up to Ad Blocking,” eMarketer estimates that a quarter of Internet users blocked ads in 2017 and cite three main reasons: security, privacy, and fighting annoyance. What’s more, according to the “Millennials at the Gate” study conducted by Google, 64% of Millennials are using an ad blocker on their computer, phone or both.

› Poor quality digital ads—meaning ads that are either unviewable or receive fraudulent views—are also a very real source of waste. Forrester calculates that these kinds of wasted ad impressions will cost digital advertisers $7.4 billion in 2017, and are on track to waste $10.9 billion per year by 2021 if left unchecked.

› Consumers find digital advertising annoying. An IAB study on ad blocking asked consumers to rate various tactics of digital ads on a scale of 1 (not at all annoying) to 5 (extremely annoying). Most ad tactics averaged over 4.

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“The advertising vehicles in digital are really not well integrated into how consumers are working their digital experiences,” says Adam Solomon, Chief Product Officer at PebblePost. “The advertising is being pushed at them. Even if the data says they’re interested in it, the ad message may be extremely ill-timed and not consistent with the use modality.”

It’s a digital stalemate. The more endemic online advertising becomes, the less good it does.

The Good and Bad of Mail

Tangible impressions, like receiving direct mail in your home, can break the digital stalemate.

Compare the response rates for digital ads mentioned earlier to the response rates for direct mail. According to the same “DMA Response Rate Report 2017,” direct mail garnered a full 2.9% response from prospects and 5.1% from existing customers.

More startling, where digital advertising annoys consumers, mail delights them. According to the USPS’ “The Mail Moment” report:

› 56% of respondents say receiving mail is a “real pleasure.”

› 55% “look forward” to discovering the mail they receive.

› 67% feel mail is more personal than the Internet.

› 77% of Millennials say they pay attention to direct mail ads.

CHART 3Cost Per Acquisition by Selected Media

*Cost per response

Source: DMA Response Rate Report 2017.

n House/Total n Prospect

Direct mail* Email Paid search Online display Social media

$40

$30

$20

$10

$0

5

Spending on digital is increasing, and spending on direct mail and other tangible marketing is slowing some, but not as much as you might think. According to Target Marketing’s “2017 Media Usage Survey,” two-thirds of marketers are either holding their direct mail spending steady or increasing budgets on it. The “DMA Response Rate Report 2017” puts the response rate of direct mail as the highest of all contact channels—far ahead of any digital channel.

And yet, traditional direct mail has its limitations.

In the “DMA Response Rate Report 2017,” cost per action (CPA) of direct mail was higher than digital channels, especially for attracting prospects.

Given the higher conversion and consumer satisfaction rates, why should it cost so much more to drive an action in print than in digital? It can’t just be the cost of printing and mailing.

Marketing Today Must Be Personal

Digital has benefitted from the modern world of data-driven marketing in a way that tangible marketing, until now, hasn’t. Targeting, addressability, and contextual relevance (assuming the shopper sees it) allow digital to take advantage of very granular, person-level insights to deliver exactly the right message to exactly the right person at exactly the right time.

According to Evergage’s “2018 Trends in Personalization,” over 50% of respondents said personalization increases conversion rates, visitor engagement, and the customer experience.

Even consumers see the benefits of personalization. A 2018 report by Epsilon found

Programmatic Direct Mail® in ActionBoxed is an online bulk retailer that has

used Programmatic Direct Mail® invented

by PebblePost to connect with its online

customers at home.

“We use Programmatic Direct Mail® to

target current customers who are either

disengaged from our emails, have shown

an interest in a particular product or

category, or are prospective customers

that have visited the site but are not yet

registered users,” says Nitasha Mehta,

Associate Director, Reengagement

Marketing, Boxed. “We initially started

testing by targeting active users who

unsubscribed from email, and PebblePost

allowed us to message these users

that we were initially unable to engage

with. The more campaigns we ran with

PebblePost, the more opportunities

presented themselves for creative ways

to message our existing users as well as

target potential users.”

In one program, Boxed used Programmatic

Direct Mail® to target customers who’d

unsubscribed from email in the last 60

days, but still expressed interest by

visiting the site.

The Programmatic Postcard™ campaign

generated a response rate of 35%,

conversion rate of 80% and a 35x return

on ad spend. What’s more, according to

Mehta, cost per order was less than 40%

of Boxed’s normal rate.

That’s the power of Programmatic

Direct Mail®.

Source: Epsilon, “The Power of Me: The Impact of Personalization on

Marketing Performance,” 2018.

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that, of consumers surveyed, 80% were more likely to do business with a company that provided personalized experiences.

Compare that to traditional direct mail. Catalogs and mailpieces were traditionally stamped out in massive, uniform print runs and mailed at saturation levels to a marketer’s entire list. Context was not unknown, but at best it was seasonal: “Send everyone the Christmas catalog because they’ll all need to do their holiday shopping soon!”

In digital, tactics are far more refined. Retargeting allows the marketer to recognize a person was shopping on its site and layer in lifestyle and behavioral data—as well as sophisticated campaign parameters based on geo, etc.—to make data-driven decisions to determine if that is the right person. Then you can send that person a special offer, or a re-engagement message on the next site they visit—or on a site they visit tomorrow, or a week from now.

Direct mail has never been able to do that.

At the same time, digital marketers tend to send those retargeted messages not at one of those times we mentioned, but at all of those times and every other time they can think of.

And that is one of the problems with digital: Over-serving ad impressions to a disrespectful degree unprecedented before. It can’t break through with tangible impact, so digital marketers, despite the ability to use fine targeting, are reduced to saturation campaigns of their own.

Neither one of those tactics is truly personal, respectful, or effective.

Market Smarter, Not Harder

The best of all worlds would be to employ data-driven decisioning and programmatic principles that balance efficiency and efficacy to engage customers in the home with a tangible message—marketing mail. But mail has not evolved that way.

In fact, as digital has gotten more targeted, direct mail has gotten more mass-produced. The efficiency of producing mailpieces at a large scale and USPS discounts for sending mail at saturation levels—for example, Every Door Direct Mail offer discounts for literally mailing to every door on a postal route—encourage mailers to send the same mailpieces to many more households rather than a few personalized, respectful marketing mail to the people they know are interested.

If you can launch a banner ad based on intelligence gathered from a website visit (e.g., behavior, geo, lifestyle data, etc.), why can’t you send them a postcard? Or a catalog? Or whatever next touch is proving to be most effective at driving conversions, because you’re working in a dynamic environment and can adjust your next steps instantly based on real-time insights?

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Rather than carpet-bombing a neighborhood with your direct mail, this approach lets you use tangible marketing delivered at home to complete that process when it will be most effective and provide the highest engagement and ROI.

After all, the customer was already at your website; it’s time to connect with them in a different place using different senses that can make a better, longer-lasting impression.

That’s exactly the promise of Programmatic Direct Mail® invented by PebblePost. This is a new tool in the digital marketer’s arsenal that combines real-time intent, data-driven decisioning and sophisticated campaign levers to dynamically create personalized tangible marketing delivered at home. This is not sending mail as a saturation campaign, but including this new touch point as a personalized, addressable, and respectful tactic along with your normal online advertising triggers. This is something you can do now, and it yields great results for companies who’ve tried it.

“The delivery vehicle for the message is not a banner, it’s not a native ad, it’s not a social ad or an online video,” explains Solomon. “It’s a durable piece of marketing that arrives in your mailbox and is subject to a different set of behaviors before the shopper comes back to the actual site.”

Programmatic Direct Mail® is “pulled” in by the recipient because it’s relevant, respectful and can be considered on the shopper’s timeline, not the marketer’s.

This technique brings all the data and optimization advantages of digital, with the advantages of at home tangible marketing. And it has real power.

About PebblePost®

PebblePost® invented Programmatic Direct Mail® to transform real-time online intent and activity into personalized, dynamically rendered direct mail that’s delivered into postal hubs within 12-24 hours, every day. Our patent pending digital-to-direct mail platform integrates segmentation, campaign management, production, analytics and optimization. PebblePost® combines the power of intent data with the effectiveness of in-home to achieve far higher conversion rates and ROAS. PebblePost® is a venture-backed company based in NYC.