Exploring the Impact of AI Language Models on Direct Mail Marketing

Posted on by Bryan.Formhals

 

ChatGPT….a term that is likely newer to our vocabulary, but undoubtedly, a word you’ve seen pop-up at an increasing rate anytime you open an internet browser or a smart device. But have you considered the impact of ChatGPT on direct mail marketing? 

At the start of this article, we were confronted with a dilemma. Do we ask ChatGPT for an outline? Do we have it write the entire article (as a meta-experiment of course)? Or do we ask it to provide some background research on the topic to get us started? This seems to be a common situation that content marketers now face. 

And of course, this is just a minuscule example of how this fast artificial intelligence is impacting marketing departments and other knowledge workers.  

 

According to a recent CBS News article, 30% of professionals are already using ChatGPT for their jobs, and if we had to speculate, it’s likely the marketing industry may be among the leading users.  

 

At Nahan, we believe that AI language models such as ChatGPT have the potential to significantly impact the direct mail channel in a positive way, but how fast and to what degree are very much uncertain, like so many things with the emerging AI revolution.  

In this article, we will discuss how direct mail marketers can use ChatGPT to enhance their campaigns, as well as some of the limitations and potential risks to consider. 

And yes, we did ask ChatGPT for some help in writing this article, but it is mostly human generated!  

What is ChatGPT? 

At its most basic level, ChatGPT is a chatbot that uses Natural Language Processing (NLP) and Artificial Intelligence (AI) to generate responses to user input. Its models are built by analyzing enormous amounts of text from the internet and other sources like books, social media, new articles and academic papers. The algorithms can then use this data to understand human language, identify patterns, and generate responses. 

It’s currently available to use for free on the Open.ai website, and recently a paid PRO tier of $20 a month was created. It has been integrated into Microsoft’s Bing search and Edge browser, with plans for rolling out a new product called Co-Pilot which will be integrated into many of the Microsoft Office applications, including Word and Excel.  

Three Ways Direct Mail Marketers Can Use ChatGPT Today 

The extent that ChatGPT is being incorporated into direct mail workflows cannot be known in full just yet. From our conversations with clients and others in the industry, we know that people are starting to tap into its great potential on certain tasks.  

Of course, AI and machine learning technology have been a part of the direct marketing industry for several years on the data side of the equation, especially when it comes to targeting.  

But what are some other areas where generative AI could have an impact? Let’s look at a few use cases.  

 

AI and direct mail

 

Personalized Responses 

Generative AI’s ability to generate personalized responses based on user input has the potential to enhance the personalization of direct mail campaigns.  

For example, a direct mail piece might include a call-to-action that invites the recipient to chat with a chatbot. Once engaged, the chatbot can ask questions and generate personalized responses based on the user’s answers. 

Optimization

Direct mail marketers are always focused on optimizing campaigns. However, finding the right formula can be time-consuming, and expensive. Artificial intelligence and chatbots could have a significant impact on that process by generating real-time feedback on campaigns. This in turn will allow for more robust and experimental testing with the goal of generating a higher ROI.  

By automating certain tasks, such as testing and targeting, AI can help marketers identify the most effective strategies quickly and efficiently, leading to more successful campaigns. 

Copywriting and Creative 

Direct Response copywriting is a core part of direct marketing campaigns. Best practices have been defined by the industry over the years, and this is exactly the type of structured data tools like ChatGPT have been trained on.  

Generative AI will allow marketers to generate ideas, outlines and research and a high volume of copy in lightning speed. This will give marketers the opportunity to expand possibilities and potentially lead to greater creativity.  

By inputting key information about the target audience and marketing goals, ChatGPT can provide customized content optimized for engagement and conversion. This can save time and resources while improving the overall effectiveness of direct mail campaigns. 

Limitations of Using ChatGPT for Direct Mail Marketing 

While ChatGPT can be a powerful tool for direct mail marketers, there are some limitations to be aware of: 

Accuracy

It may not always generate entirely accurate or relevant responses, although they can sound very convincing. Currently, ChatGPT has a knowledge cut-off date of September 2021. It’s important to review and verify to assure accuracy.  

Originality

ChatGPT is capable to generating dazzling, convincing, and sometimes even very funny results, but it does require trial and error with the prompts, otherwise there’s a risk that output will sound like more generic marketing copy and nobody wants or need more of that. Due to this limitation, copywriters will still have job security. Human touch and talent are still critical to the process of refining and enhancing the ideas AI outputs.  

Data Privacy

As with any tool, precautions need to be taken to assure that your proprietary data is safe and secure, so at this point you most definitely do not want to share that or any private customer information. 

Legal Risk

The insurgence of AI capabilities in marketing is new. And while very tempting to use in any way you can, its newness means that laws and regulations have not yet caught up with it. We simply don’t know the answers to all the legal and ethical questions that ChatGPT may bring up with its use in marketing. 

As the industry learns more about generative AI, there will no doubt be more clarity on some of these limitations, but for the time being, caution is recommended.  

 

AI and direct mail

 

Takeaways for Direct Mail Marketers Using ChatGPT 

The marketing industry understands hype better than just about any other. In fact, it’s marketers that help build and generate hype for brands. At this point, the hype around ChatGPT and generative AI is impossible to avoid, and likely won’t dissipate anytime soon.  

ChatGPT is certainly one of the most impressive, and potentially industry changing tools to come around in a long time. We believe the hype is real and that the direct marketing industry needs to start experimenting with these tools because, well, your competitors are going to and the risk that you fall behind is very real. To summarize:  

  • Direct mail marketers can use ChatGPT for personalized responses, optimization, and copywriting. 
  • There are limitations to be aware of, including accuracy, originality, and data privacy. 
  • Direct mail marketers should start experimenting with ChatGPT to stay ahead of the competition and take advantage of its potential benefits. 
  • The integration of AI technology is new, and thus best practices are ongoing. However, we recommend this source as a starting point for getting your feet wet in learning how to form prompt questions for AI. 

 

The Dynamic Duo: Combining Direct Mail and Digital for Increased ROI

Posted on by Bryan.Formhals

Author: Alan Sherman, VP of Marketing Strategy

Direct mail and digital ads are the ultimate power team. While compelling on their own, together they make a larger impact on the consumer, but this is increasingly difficult to achieve in the wake of the phasing out of third-party cookies.

For years, direct marketers have run cross-channel marketing programs that use third-party cookies to track user behavior across websites – we all see those ads that seem to follow us around online. In response to European and CA privacy regulations, third-party cookies have largely already been phased out by most browsers (now only relevant 40% of the time), such as Apple’s Safari and Google’s Chrome, which will fully phase out cookies in 2023.

So, if cookies are going away and direct marketers want to reach consumers at the same time across channels to lift and improve response, what do they do? 

Our Solution

Nahan’s solution is known as Direct Mail Companion™ (DM Companion™) – or if you’re a cataloger, it’s known as Catalog Companion™. The name may vary, but the solution remains the same. And what a solution it is! You can now leverage the power of your targeted offline prospect or customer files to create a seamless message before, during, and after your direct mail or catalog in-home date, leading to greater response and higher ROI.

DM Companion™ is a multi-channel marketing program that combines direct mail and mobile targeting. We leverage the direct mail file and target the same recipient via their mobile devices in their homes. The targeting process is based on geocoding technology that achieves a 100% match rate (except for multi-dwelling units) between the direct mail file and the digital universe.

Those that click the ads on their phones are further retargeted across digital channels and other known devices, all without the use of third-party cookies.

Respecting Privacy

We respect consumer privacy by leveraging mobile device ID, which is not considered Personal Identifiable Information (PII). It does not leverage cookies or IP address targeting and is not subject to digital privacy restrictions.

Results Are Impressive

Click-through rate results are typically 2x higher than traditional digital display campaigns, with a 50–75% reduction in cost-per-click and the added  frequency provides incremental response rate improvement of 20%+ over direct mail alone. Recipients can be digitally targeted before the mailing is delivered to build awareness, during the in-home delivery period, and during the remainder of the response cycle. This program uses a highly targeted, cost-effective approach that streamlines the path to response, and is proven across every industry we work with.

Multiple contacts to the same people across multiple channels translate to un-matched results. To find out more about DM and Catalog Companion™, get in touch with your Nahan representative or reach me at alan.sherman@nahan.com.

Bio: Alan Sherman is our Vice President of Marketing Strategy. Alan enhances Nahan’s current value proposition with strategy solutions that support new/existing client relationships. For clients, he leverages market, customer, and competitive intelligence to build achievable strategies for omnichannel marketing success. His marketing plan strategies include targeted data, predictive analytics, testing and creative that drive ongoing client performance improvement. In his spare time, Alan enjoys spending time with his family, traveling, going to concerts, watching sports (he’s a fan of the NY Giants, Boston Red Sox and Celtics) and walking the dog, even though it was just out.

The Value of Triggered Direct Mail

Posted on by Bryan.Formhals

 

Author: Sean Wambold, VP Client Solutions

What are trigger mailings?

How many times have you bought something online, looked up what a monthly loan payment would be or gotten an insurance quote, only to get follow-up offers in the mail? Or moved to a new home and received furniture offers? This happens every day and is known as trigger mail. Trigger mailings are “triggered” by an event – your behavior – and are the most effective type of direct mail campaign. Response is typically 40-70% higher than a typical mailing.

Trigger mailings produce superior results

Marketers that work with data know that prospect and customer behavior – whether it’s a credit inquiry, purchase or a life event, our interest in a product or service – is more relevant than our household income or which zip code we live in. But as marketers, we also know that consumer attention is fleeting – just because we’re looking at switching auto insurance because we received a rate increase – doesn’t mean we’ll still be interested a month from now.  The best trigger programs reach us quickly with personalized offers while the interest level is still high.

But how do you build an effective trigger mail program? Nahan’s solution is in combining both fresh and highly targeted trigger data and an efficient production process that reaches prospects quickly, with the right creative and messaging.

Trigger data sourcing

The two main trigger data categories are Credit and Invitation to Apply (ITA) data. Credit triggers typically come from the three main credit bureaus: Experian, Trans-Union and Equifax, and include auto, credit card, mortgage, personal loan, home equity, retail, and insurance inquiries.

ITA data is non-credit based, comes from many sources, and is driven by lifecycle events like age, marriage, employment, home purchase, moving or shopping. There are approximately 38MM to 65MM credit inquiries a month. ITA data ranges from 10-20MM monthly occurrences. Trigger data can also be web-based, such as cart abandoners or visitors to a website, captured via software or IP address.

Trigger data costs more than the usual compiled demographic data and non-triggered credit data. This is because of its credit bureau or multiple data sourcing and the extra work involved in capturing it daily, linking/deduping from multiple sources, cleaning it, and then delivering it for mailing, all within 24 hours. However, our clients usually find that the added benefit of far higher trigger response (+40-70%) greatly outweighs the additional cost. In some cases, it may be worth testing first class postage against standard class in terms of total ROI.

Nahan’s trigger data: faster, fresher, and more accurate

Nahan provides highly targeted triggered data via its credit data agent partners, who can also supply ITA lifecycle data. A credit data agent consolidates data from the 3 credit bureaus, providing real-time, deduped, and cleaned trigger data, delivered to Nahan for production within 24 hours. The “freshness” of this data means superior response results. Credit data agents have the ability to access all credit-active consumers, identifying the “best” address and info for an individual across the 3 credit bureaus. Because they source from 3 bureaus, they find 15-30% more net triggered data than is available from a single bureau.

Data can also be ranked and prioritized by the use of sophisticated predictive models during the 24-hour data processing period. These models leverage thousands of credit and non-credit data points, which dramatically increases the amount of available predictive data. Machine learning algorithms enable us to evaluate and sift through the data to find the right combination of data elements for the best model performance. Model performance continually improves as updated campaign results are added to the data.

Nahan’s trigger production: fast, flexible and nimble

One of Nahan’s capabilities that I’ve been the most impressed with is the agility of our platform and how well it can support the execution of high-performance trigger mailings. With our dedicated triggers team, we can provide flexibility and nimbleness unmatched by competitors. We convert the complex programming process into a simple, automated lights-out program.

Timing is everything and partnering with a solutions provider that delivers a quality product provides a major advantage. At Nahan, our 48-hour turn-around time, from receiving data to first mail-drop, sets us apart in our speed-to-market. Our experts can leverage the data to create a personalized direct mail piece based on the consumer’s behavior that arrives in-home as fast as 5-7 days after the event. We can also time triggers to an integrated mobile digital program.

What matters – the results

Analysis conducted across client products and industries has proven a Nahan trigger response lift ranging from 40-70% over traditional direct mail credit data programs. Analysis also indicates that it is crucial to reach recipients within 7 to 10 days after the behavior event. Nahan triggers average 7 days from event to in-home when first-class postage is used. After that, response begins to drop off. First class mail usually out-performs standard class mail on a cost-adjusted basis.

Nahan’s trigger programs are perfectly timed and managed to interact with prospects at the right time with the right offer. They work because they quickly and effectively identify and reach prospects that have expressed a need through their behavior. We understand that our clients’ offers are not the only ones out there and recognize that a program that brings together high-quality data, superior production, and speed to market is crucial for marketing success.

Direct Marketing Strategy: Direct Mail Testing

Posted on by Bryan.Formhals

Author: Maggie Stack, Account Director

At least once a week, while doing homework, one of my kids will say “when will I ever use this in real life?” I like to point out to them how often I use my Algebra skills, but I never thought I would use science in my marketing career. As my colleague, Alan Sherman, mentioned in a previous blog, we use direct mail testing to determine the best direct marketing strategy. This is where science comes in. By following the steps of the scientific method with a continuous improvement mindset, we aim to exceed our clients’ marketing goals.

Purpose

When thinking about our clients’ direct marketing strategy, our question is always how can we improve results. The exact Key Performance Indicator (KPI) we are trying to improve varies by client, but it always means a better Return on Marketing Investment (ROMI).

Research

We start by reviewing current marketing efforts. Who is the target audience? What motivates them to respond? What tactics are currently being used? How do those tactics work together?

Hypothesis

Once our research is complete, we make recommendations for the elements or options we believe will improve results. Sometimes this is the choice to reduce the cost of a campaign while maintaining response and sometimes it is a higher cost option that will improve response. This could be a new data source, a new offer positioning, a new direct mail format, or addition of a complimentary digital tactic. In direct marketing, the options are truly endless. Once we decide on what will be tested, we can begin the experiment!

Experiment

The two most commonly used experiments in direct mail testing are a split test and a multivariate test. Split tests, or A/B tests, involve testing the same package except for the specific element to be tested. Multivariate testing involves testing multiple elements at the same time. The right one to use is based on several factors: budget, available quantity, quantity needed for the result to be statistically significant, and the number of items we want to test. Once the experiment is in the hands of the prospects, we wait for results.

Analyze Data

Depending on what we are measuring, results could take months to gather. There must be enough responders to be confident in the results. Analysis comes in the form of charts and graphs. Our goal is to always improve results, but sometimes we learn what does not work. As my high school science teacher would say after a failed experiment, “if you learned something, the experiment wasn’t wasted.” In direct marketing, the win in a losing test is that it leads to better, more refined hypotheses.

Conclusion

While there is a conclusion to every individual experiment, direct mail testing should never end.  We believe marketers should always be striving to improve their data, improve their messaging, and improve the tactics they use. And we love partnering with those that feel that same. Looking to apply a little bit of the scientific method to your direct marketing strategy? We are here to help.

Bio: Maggie Stack is an Account Director with over 20 years of experience in marketing services and direct mail production. When she isn’t discussing data and creative with her clients, you can find her and her husband cheering on their children in hockey, baseball, and dance.

The Importance of Data in Direct Mail Marketing

Posted on by Bryan.Formhals

Author: Alan Sherman, VP of Marketing Strategy

Quite often, when we work with clients in direct mail marketing, creative development is the first focus. But, just as in any marketing channel, who we target is just as important, if not more so for driving increased direct mail response and a successful direct mail campaign. For a full-service direct marketing company like Nahan, using data in direct mail marketing is a crucial component of an integrated success chain that includes strategy, data, creative and production execution.

Direct mail provides more data points to target against than any other marketing channel. The typical national data compiler manages over three thousand data points per person.*  Combine a multi-sourced wealth of data with sophisticated predictive analytics, and we can precisely rank prospects based on their propensity to respond (or other desired outcomes).

Let us take a look at typical data used by various direct mail industry clients. In the interest of time and space, what follows is not an exhaustive list.

Financial Services and Insurance – Credit Data

For financial and insurance clients, we see widespread use of credit bureau prescreened data – both in terms of trigger (credit or insurance inquiries by consumers) and broad market (often dictated by credit score and other data points) campaigns.

As a direct marketing service provider, Nahan partners with credit data agents, which can provide unique sources of value. Credit data agents typically receive and maintain real-time data from all 3 main credit bureaus, providing a comprehensive picture of all credit behavior across bureaus. More data across all 3 bureaus means more net qualified names, typically 15-20% more, and improved credit decisioning.

It also means more flexibility in terms of FCRA regulations, allowing for counts to be more easily run before actually pulling a file. Typically, when one pulls a complete prescreened credit file, one is obligated to make everyone on that list a firm offer of credit. Credit data agents have more flexibility in this regard. Custom models can make use of both credit and non-credit data for increased predictive power.

While credit data is usually the go-to data source for most financial and insurance acquisition mailers, it can often be supplemented by Invitation to Apply (ITA) data, which is primarily driven by a lifecycle event – such as college graduation, marriage, having children and buying a home. While ITA prospects are typically not as responsive, it is less expensive, and can be tested and paired with credit data as an effective supplemental data source.

Multiple Industries – Modeled Compiled Data

Compiled data is just that – data compiled from multiple sources and then linked to individuals and households. It’s typically used in travel, healthcare, retail, telecom, and auto direct mail.  There are a number of medium and large-sized data compilers that we partner with to provide the best data for our clients. Compiled data typically includes demographic, psychographic, and attitudinal data. 

Demographic data includes data elements like age, gender, income, occupation, and more.

Psychographic data is focused upon people’s interests and hobbies, often obtained via surveys, donations, and specialty lists.

Attitudinal data reflects attitudes and belief systems, typically from surveys and donations made to non-profits.

Compiled data is best paired with predictive analytics to identify the data elements that will give the greatest response.

Catalogers, Non-Profits, E-tailors and Others – Cooperative (Co-op) Data

Co-op data is customer purchase data collected from thousands of co-op members and maintained in a database. Typically, a member marketer must provide their customer data on a regular basis to join and participate. Co-op members include companies from the catalog, retail, etail, continuity, non-profit, publishers, finance, insurance, and business-to-business industries. Some co-ops focus on non-profit donation behavior specifically.

Co-ops collect over 1500 data elements for a given household and cover 190MM U.S. consumers. The depth and granularity of the data can vary by co-op. Given that customer behavior is often the most predictive of future behavior, this data is very powerful in its ability to predict the future response and purchasing.

Using marketer-provided customer purchase data, the co-ops use predictive models to find prospects elsewhere in the database with similar product and purchase behavior. Co-op data has long been a go-to data source for catalogers, replacing many of the more expensive specialty, “vertical” lists that exist, such as magazine subscriber files.

Business-to-Business (B2B) Data

B2B direct mail data used to come from two main data sources – Data Axle (formerly InfoGroup) and Dun & Bradstreet. They are still major players providing excellent data. Both, along with a continual flow of new players, now offer much more than the traditional data points like annual sales, number of employees, SIC code, and NAIC Code. Data points such as B2B buying behavior, public filings and linked consumer information all provide additional targeting insights. Because people change jobs much more frequently than they change addresses, B2B data is more challenging and labor intensive to maintain and keep up to date, resulting in a higher cost.

The Role of Analytics

The performance of all data mentioned here can and should be enhanced by predictive analytics. We simply can’t leverage any of these types of data to their full potential without the use of modeling to prioritize prospects. While a predictive model adds to the cost, it usually pays for itself in the first direct mail campaign with the increased direct response it produces. Depending on the circumstances, the model can be re-used until market conditions change. Machine learning and artificial intelligence have sped up the modeling process, and in certain cases, such as co-op data or credit models, new models may be built with every direct marketing campaign.

Our Data Role

Nahan has deep and long-time relationships with many types of direct mail data providers and list brokers. We can determine which source is the right fit for our clients’ objectives. Typically at a lower cost than our clients can obtain on their own. Our expertise ensures the best possible data at the best possible price. For any questions about data, please feel free to reach out to me at alan.sherman@nahan.com.

*Source: WebFX

Bio: Alan Sherman is our Vice President of Marketing Strategy. Alan enhances Nahan’s current value proposition with strategy solutions that support new/existing client relationships. For clients, he leverages market, customer, and competitive intelligence to build achievable strategies for omnichannel marketing success. His marketing plan strategies include targeted data, predictive analytics, testing and creative that drive ongoing client performance improvement. In his spare time, Alan enjoys spending time with his family, traveling, going to concerts, watching sports (he’s a fan of the NY Giants, Boston Red Sox and Celtics) and walking the dog, even though it was just out.

USPS Informed Delivery: A Great Way to Drive Increased Direct Mail ROI

Posted on by Bryan.Formhals

Author: Nahan Marketing Team

If you are looking for a way to drive incremental responses and increased ROI from your direct mail campaigns, USPS Informed Delivery is a great way to do just that.

What is USPS Informed Delivery?

Informed Delivery from the United States Postal Service (USPS) gives consumers a sneak peak of their letter-sized mail (outer envelope or self-mailer image) before it arrives in their mailbox through a daily email that the consumer signs up for.

It consists of two main elements:

1) A large grayscale image of the piece or a 4-color representative image of the mailer.

2) A smaller, accompanying image that offers interactive marketing potential. Clicking on this image or on the “Learn More” call to action opens the URL associated with the campaign. It can also be used to open a marketer’s phone app for the recipient to call.

How Many People Are Signed Up for Informed Delivery?

As of 4/23/2021, the USPS reports that Informed Delivery has nearly 38 million users and a national saturation of over 22%.

Based on a 2020 Spring Mail Moment Study, the USPS reports that 50% of the audience surveyed had seen an interactive ad in the past 6 months. Of those, 74% have clicked on an interactive ad, and an astounding 63% had purchased from the website they accessed from the Informed Delivery campaign!

This presents a huge opportunity for marketers to drive incremental sales before the mail piece even arrives to the consumer’s home!

What Data Can I See as a Marketer with USPS Informed Delivery?

The following data is provided for Informed Delivery Campaigns.

  1. Density and Email Statistics (Number of users and % who elect to receive Informed Delivery emails)
  2. Email Open Rates (Number and % of emails opened)
  3. Click Through Rates (Number and % of people that clicked through on the digital content)

Nahan Can Help You Get Started

Our team at Nahan is here to help! We can provide input and guidance on setup, creative, measurement, and more with USPS Informed Delivery campaigns. Plus, as an extra bonus, the USPS is offering an Informed Delivery promotion later this year, so this is a great way to save on postage! Contact us to learn more!