Old Marketing Campaign Rule That Every Digital Marketer Should Know
When you think of cutting-edge marketing, direct mail is not what comes to mind. And yet, despite previously declining numbers, it’s proving to be a resilient marketing niche, and still represents the largest local advertising spend of $38.5 billion in 2020. There is a sort-of minimalist purism in direct-mail marketing. The message is delivered to the prospect, and that’s it. No cookies, no click-throughs, just a pass or fail, convert or wind up in the garbage can. And, with open rates of up to 90%, and a 28% better conversion rate than digital channels, there is at least one key principle that can help any digital marketer concentrate their efforts more efficiently.
The 40/40/20 Rule
A core concept taught in direct-mail marketing (and virtually nowhere else) is the 40/40/20 rule created by a marketer named Ed Mayer in the ‘60s. The premise is simple: “The success of your marketing campaign depends 40% on the list, 40% on the offer, and 20% on everything else.”
Or, to generalize: your marketing success is determined 40% by the efficacy of your targeting, 40% by the value you offer, and 20% by everything else.
Most marketers I know spend much more than 20% of their effort on “everything else”. While audience selection gets a cursory demographics-based glance and the offer is left at “I dunno, 5% off or something?”, a disproportionate amount of time is spent on arguments about the right comma placement (easy, always use Oxford, duh) or the particular shade of mauve used in the graphic. http://220.127.116.11/media/171c2acf84cb9f67a1854815ec61951f
As harsh as this may sound to the marketers who obsess over the design details or the specifics of wording on their marketing message, these elements only affect that 20% of efficacy, the “everything else”.
Here’s why the 40/40/20 rule makes sense. While marketers tend to be brand-obsessed. I don’t believe consumers care all that much. I am not alone in this position. Customers are people who have lives and problems they want to solve, and for the most part, they don’t really care what the label on the packaging for the solution to their problem says (so long as the solution works, and isn’t too expensive).
The customers mostly don’t want to engage with your brand. Unless you share a deep value-driven connection (a small minority of brands for any customer), all you can hope for in creating a relationship with the consumer is to deliver value through your product and not lie. What the customers want is a solution at the golden mean ratio of cheap and effective.
First 40%: Getting “The List” Juuust Right
In direct-mail marketing, the list is the key ingredient, the roster of your potential customers. Access to a well-curated, up-to-date list will eat up the bulk of a campaign budget. Targeting in digital marketing disciplines can be more cost-efficient, but it is still a crucial component to a successful campaign. This is the phase where you can remove a ton of dead weight —the likelihood that the views and clicks you get will lead to few or no actual sales.
Take a customer-centric view. You have problem X and need a solution to it that is at that golden-mean intersection of cheap and effective. More importantly, you need this solution now. You are now the ideal customer for brands that cater to solving X. It’s very likely that you’re going to make a purchase if presented with a solution. In fact, if X isn’t a significant purchase, you are not likely to carefully evaluate one solution over another, so long as it fits into a reasonable cost range. Whatever product presents the simples, most frictionless option wins.
Targeting needs to be somewhat probabilistic. A TV spot (the broadest targeting option I can think of) still goes for a demographically selected slice of the public, presumably one that aligns in values and interests with the content against which you run your ads. These ads are targeted, but they also rely on a certain sense of anonymity for the audience.
Digital tools give tighter targeting — from your relationship status to liked causes to purchase history. That still means your list shouldn’t be too on-the-nose. Perfect targeting is creepy. Just remember that time Target knew a teenage girl was pregnant before she did (or at least her father).
So, your job in building your “list” is to select a reasonably targeted audience who are likely to want your solution, without being creepy. That sounds a bit like best practices for dating. Chatting up that guy or gal in the bookstore (remember those?) is easier if you notice that they don’t have a wedding ring, seem in a good mood, and are browsing the section of an author you like. But, if you pop out from behind a shelf with a “hey, you just broke up with your girlfriend, right?” is a real turn-off.
Next 40%: How to Offer Value
The next part of the equation is “The Offer”. The benefits of the product you’re selling are the foundation for the offer. If it’s a pack of french fries, that salty, oily satisfaction is the value you offer.
Now, slap a 2-for-1 sticker on it — you’ve just doubled the value for the customer. If you sell the fries for $1, and your actual manufacturing costs are $0.11, doubling the value for the offer still gets you a profit. But, if your fries are always 2-for-1, they will eventually become less valuable in the eyes of the consumer. Putting them up as a 2-for-1 deal makes this process slower than just pricing them at $0.50 each, though.
Beyond just the immediate product value, you should consider the total customer experience. If you’re offsetting your carbon footprint or planting trees in Israel for every unit sold, those additional social responsibility points are part of the offer value. The offer can encompass more than just the price and immediate effect of your product.
Even your brand personality offers value. Part of the offer can be the sense of belonging to a club or being snarky and anti-establishment. The end utility that your customer derives from your product is the offer. If the offer is good and made to the right person, not much is needed to get the sale.
Of course, presenting it well is important. You should acknowledge the client’s need, present a painkiller solution, make the decision and purchasing process painless, use social proof, provide guarantees, all that. But, without having a clear and compelling value for the client, all these other things just sound like sales tactics. They won’t convince many, and certainly not for long.
20%: The Everything Else
This is the part where you worry about the design of your packaging or the specific wording used in the ad. You know, the thing marketers tend to get stuck on in meetings.
The idea behind the 40/40/20 rule is that getting the list and the offer right means that the small details, the agonizing decisions — they just don’t matter quite as much as marketers assume.
If you have a set of brand guidelines, sticking to them will keep you more or less on course. The time when that last 20% really matters is when you are in a hyper-competitive, saturated market, like yogurt.
When the competition on price has already compressed everyone’s margins, the technology is standardized across the industry, and the utility and value to the customer have been established — this is when the 20% matters. Looking at the yogurt aisle in a supermarket shows off that feverish push for differentiation — the labels, the colors, the graphic design, all of it tries to eke a slight competitive edge in the race for customer attention.
Go for the Force Multiplier
An example of winning in a competitive market is this highly recognizable brand:
This campaign concentrated on competing through improving (at least the appearance of) the offer. Instead of competing on presentation, packaging, and “everything else”, the brand upped the stakes of the offer. By providing a functional health benefit that other products in the category couldn’t, Activia commanded a 30% price premium. While the other brands fought over pennies splashing around in the “everything else” section of the pool, Activia dominated a self-made category.
The campaign did overstep consumer protection and advertising boundaries, their original claims are not flat-out lies. The specific strain of Bifidobacterium lactis DN-173 010 present only in Activia products is unique and does have an impact on gut health and digestion.
The Activia campaign was crazy successful, despite the product eventually dropping health claims under pressure from lawsuits and regulators. The $45 million (some sources report $35M) settlement from Danone is likely a drop in the bucket compared to the decades of retail profits, and branding that left an inseparable association between the product and the unique user benefit.
By tailoring the campaign message to a tightly targeted audience need and providing a distinctly valuable offer, Danone was able to put this product beyond the competition. Concentrating on the audience and the offer allowed Activia to command a price premium and enjoy being dominant in a niche market.
Putting the bulk of your effort in the 40%/40% has a disproportionate impact on marketing success, especially when the competition is spending their time debating small changes in the 20%.