FMCG brands should try the benefits of direct mail

A study by Royal Mail and Dunnhumby provides evidence that FMCG brands should follow supermarkets in exploiting the direct mail channel, writes Richard Roche, head of Media Markets at the Royal Mail.

Direct mail is rarely chosen by FMCG brands, for which the traditional route to market is typically to invest in above-the-line media.

In most sectors direct mail spend has increased and the fiercely competitive supermarkets have recognised it as an important channel to reach and influence consumers. FMCG brands must consider following their lead and taking advantage of multi-channel marketing techniques.
There are two historical obstacles currently preventing the FMCG market becoming direct mail advocates.

Firstly, this sector is a firm believer in above-the-line advertising, particularly 30-second TV spots. This has been the traditional way of creating differentiation in a highly competitive sector, enticing valuable consumers away from the competition, or retaining loyal consumers.

Secondly, FMCG marketers rarely want to make the brave decision to switch the budget away from the proven model. Especially when they normally only have a couple of years to make an impression in this extremely competitive sector.
But never has the time been so right for change. FMCG brands that develop their marketing model avoid erosion of their customer relationships and remain a dominant brand in the market. The change in the retail environment, which has seen supermarkets become more dominant and establish their own-brand products as sought-after goods, demands that FMCG brands sit up and take notice of alternative channels.

Therefore, using an integrated marketing strategy that includes direct mail should be considered. Masterfoods and Innocent have already seen the value of such strategies and it's time that others followed.
Royal Mail and Dunnhumby took on the challenge to prove the effect of direct mail on FMCG brands. This has normally proved difficult as many factors influence a purchase including word of mouth, promotions and peer recommendation.
A study of 31 campaigns from 25 FMCG brands was conducted to look at the effect of direct mail on sales uplift, penetration and brand share, by isolating the effect of direct mail campaigns over a certain period of time.
As might be anticipated from any well-targeted mailing, the recipients showed a sales uplift which can be attributed to the mailing. Of the 31 campaigns tracked, 29 showed an immediate positive short-term effect, and sales increased on average by 21.2%.

Penetration increased by 5% and brand share increased by 2%. More significantly, there was an average long-term in-store sales uplift of 12%, which would imply that a shift in behaviour has occurred.
It is widely thought that familiarity and peer recommendation rather than brand differentiation have the strongest influence on purchasing FMCG brands. Direct mail can help these brands by familiarising consumers with the products, providing information and an in-depth brand experience.
Direct mail's benefits go beyond familiarisation, and if the FMCG sector uses it to the optimum, then the common benefits that other sectors have been enjoying for years can be experienced. These benefits include personalisation through tailored messages which can create loyalty, poach a group away from a rival brand, or entice a new group. TV advertising, the FMCG brands' traditional route to market, only provides a blanket message and does not necessarily hit the target audience.
Furthermore, direct mail can reach the same audience numbers as the most high-profile TV campaign, but the audiences are being treated in a personalised and targeted way, therefore developing the company's relationship with its customer base. With data capturing improving year-on-year through schemes such as supermarket loyalty cards, brands are in a stronger position to target their audiences effectively.

FMCG brands that ignore this channel are ignoring the chance to speak directly to their customers, improve loyalty and increase brand share.

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