Holiday Jeer

July 14, 2008       Michele Donohue      

Santa Claus might be the only jolly person this holiday season. Those involved with direct mail fundraising campaigns are feeling the heat this July as they gear up for the holiday mailing season. With an economic downturn, last year’s and this year’s postage hikes and a presidential election to contend with, direct mailers are planning on conservative campaigns this year.

The American Lung Association (ALA) had a banner year with holiday mailings during 2007, according to Craig Finstad, assistant vice president of direct response operations for the New York-headquartered organization. ALA had experienced file erosion and decreased donations for several previous years. The ALA’s time-honored Christmas Seals tradition helps the campaign and more than half of the organization’s revenue comes in the year’s fourth quarter.

"Our file was built on Christmas Seals," said Finstad of the decorated stamps that celebrated the organization’s 100th year last year. ALA faced a nearly 15-year decline in file size, gross revenue and net revenue before teaming up with Lexington, Mass.-based direct response agency Thompson Habib Denison (THD) in 2004. "We had a lot of winning tests that kept us at a pretty good level, where if we hadn’t implemented half a dozen new things we would have dropped by probably a couple of million dollars," said Finstad. "We are always making adjustments and testing new things."

One element that hasn’t changed is the decision to stick with the Standard Mail Flats, which Finstad called "tried and true" for the ALA. The flats performed better than other forms tested, even with the substantial increases in postal rates. Flats have at least one dimension that is larger than standard letter-sized mail, but cannot exceed 15-inch length, 12-inch height or 3/4-inch thickness.

The flats are still outperforming smaller-sized mailings in most testing, according to Diana Estremera, senior vice president of Greenwich, Conn.-based May Development Services, a division of Direct Media, Inc. "Even though the expense is there with the flat, you just have to look at the results of that mailing with a different metric than you did before the postal hike,"said Estremera, who for some clients is trying to use gift bag packages that mail as flats.

Large envelopes and bold colors are working in most test groups, according to Alan Hall, vice president of client services at Pasadena, Calif.-based Russ Reid. Estremera said that relevant, eye-catching designs depend on the organization and constituency (bright colors for the Christian market, muted tones for health charities and animal organizations), and urged experimenting in test mailings with colors and embellishments, such as embossing and foil. Estremera also said premiums might help snag Boomer donors.

"What motivates them is not just the act of doing something good, but also the act of getting something for themselves," said Estremera. Premiums didn’t reflect poorly on the Boomers, she said, but are motivating factors that direct mailers should keep in mind. "When we do our premiums, we use as nice and high a quality as we can get within the confines of a reasonable budget to make the back-end net work."

Estremera said that premiums require longer lead times, some taking three months. But the more time an organization dedicates to developing the idea and tweaking prototypes, the better the quality of the final product. "You need to be careful of what you produce," she said, explaining that premiums can range from notepads to blankets to trivets – which are hotplate holders. "You don’t want to just throw something in the mail because these are the nonprofit’s dollars you are dealing with and the quality has to be there. You certainly wouldn’t want to sacrifice the result in any way."

And premiums might be the way to reach donors who are feeling the economic pinch this holiday. ChemArt, a Lincoln, Rhode Island-based manufacturing company, designs photo-chemically etched decorative ornaments and collectible premiums for nonprofits ranging from the White House Historical Association to a guide dog organization, according to Lee Rush at ChemArt.

"Any successful campaign needs a visionary when you are dealing long term with passion about their organization," said Rush, who said donors are enticed to keep collecting the pieces, building lifetime donors and brands.

Brand recognition is what helps keep the ALA’s Christmas Seals program strong after more than 100 years. "Their brand is well known by everybody. But just as importantly, their brand for their Christmas campaign is just as well known," said Jeffrey Habib, senior vice president and partner for THD. "A lot of people give to their organization because of their Christmas Seals and their collectors."

Brand recognition has branched out to include multi-channel solicitations that make it easier for the donor to give the way in which they are comfortable. "Clients are looking at that as a more important element in integration," said Hall at Russ Reid. He added that some clients are trying cross-market tactics that can include media and mail inserts, and that agencies should look at ideas they scrapped in the past.

"What we’re really challenged with is to go back, review that changing audience or change in target audience and look with a different lens," said Hall. "Fall is the best time to make sure that we’re throwing everything that we can to bring back. I think we really need to figure out what really works — to do that in a conservative way — and not just letting ideas die."

Trends from a few years ago are also returning in the premium sector Ð this time with a green spin, according to Jill Querceto, vice president of sales for Capital Design, a premium company in Providence, R.I. Querceto said that some agencies are resurrecting the silicone charity bracelets or the magnetic car ribbons, but are sporting carbon-free labels or made from biodegradable products. Querceto said that the company asks clients if they want environment-friendly products, everything from recycled paper to reused metal. Agencies want to go green, as long as it keeps the nonprofit brand in mind.

"Fundraisers are looking at their charity as a retail product, and you have to. There are so many different charities out there that you can support, so you have to differentiate somehow," said Querceto. She said that direct mail agencies are still pushing for strong holiday mailings, but the worldwide economic climate is even affecting overseas production costs and guiding agencies to choose less expensive items – like gift wrap bags without including the tissue paper and extras.

"Last year, people were sort of throwing caution to the wind and maybe sending something thicker, in terms of an ornament, that they would have to pay the postal up-charge on," said Querceto. "But this year they definitely don’t want to do that. The cost saving is still an issue, but rather than aborting the whole thing, they are just looking at changing the substrate."

Direct mail fundraisers are also trying more target mailings that can zero in on potential donors. "They are trying to mail much smarter and by doing so they are not cutting quantity per se, but they are trying to segment better on their house files and their acquisition lists," said Michael Kertelitis, brokerage account executive at Danbury, Conn.-based RMI Direct Marketing.

Hall said shorter letters could help in acquisition, compared to lengthy mailings intended to lift donors to the next highest gift. "We still use long, involved copy when we are going to upgrade donors or we are making a case for a large or exceptional gift. There is more justification that’s needed and they are looking for more information to make that kind of an exceptional gift," said Hall. He recommended using bullet points and punchy writing to jump start acquisition. "Just airing out the page a little bit so it’s less intimidating for the reader," said Hall.

Mailers are also swapping and renting lists to rejuvenate fatigued mail programs. "I think a trend over the past three, four, even five, years has been that nonprofits are more apt to exchange their files with other organizations to keep costs down. That’s one way, straight out, that you can cut quite a bit of costs off your acquisition. In general, exchanging has increased over the years," said Kertelitis, who warned that cutting down acquisition now could negatively impact a nonprofit’s list later. "It’s just a trickle-down effect that can affect them two or three years down the line."

"We don’t encourage our mailers to cut back [on acquisition]," said Kris Evans-Matthews, senior account executive for Mary Elizabeth Granger & Associates (MEGA) in Baltimore. Evans-Matthews said she understands why organizations would want to reduce acquisition mails to cut costs, but there is an expense. "You don’t see that result right away, but that can really hurt your house file."

MEGA works with some Catholic organizations that choose to exchange lists instead of just renting and said the organizations have kept the status quo for holiday mailings. "We are seeing drop offs at other times of the year, but not at Christmas, at least not yet." Evans-Matthews said. She encourages clients not just to look at lists not just from similar organizations to fight donor fatigue, but try lists that worked well with comparable mailings. "Sometimes it’s the premium that will attract the donor more so than the actual content of the letter."

Many nonprofits are integrating their online presence with the holiday direct mail campaign to increase their visibility, according to Rick Christ, managing partner at NPAdvisors.com in Warrenton, Va.

"Your job is to remove all the obstacles that are in their way so that they could make that gift," said Christ, who offered that online videos and widgets are the newest online trends – comparable to blogging a few years ago. Christ said even though the Internet is considered instantaneous, nonprofits are now coordinating their online decisions around events through the year. "We are really planning this year. What clients are doing reflects a greater realization that the Web plays a role in supporting communication activities."

The increased donor-organization communication — with blogs, newsletters, emails and more — will throw stewardship to the forefront. That transparent stewardship relationship will grow with increased nonprofit scrutiny — especially in the presidential year, according to Hall.

"Stewardship is a big thing to talk about. Everyone is making promises and most are talking about what their record is," said Hall. "You should not wait until the question is asked and be proactive in educating how all this works, and nonprofit should embrace that."

The holiday season is a great time to renew stewardship for Project HOPE, the international assistance nonprofit in Millwood, Va. The organization mails out nearly 170,000 pieces each month during its campaign, which ramps up from September to December. The organization has tried numerous approaches for appeals but said a constant winner has been their global update that informs donors where the money was spent, according to Erich Fasnacht, Project HOPE’s director of marketing. "Most of Project HOPE’s donors are really committed and like to see where their donations have helped."

But beyond the tests — colors, envelope size, logo placement — it’s still about compelling the donor to give during the holiday season. "We believe in storytelling," said Hall. "So if we have a good, compelling story, especially with a photo that relates directly to that story, we’ll go with that every time." Hall said for Operation Smile’s mailings, the company used before and after shots to show the need for money and highlight the results from the donation. "It’s still about moving the donor emotionally as well as intellectually and there is nothing like a story that punches that home." NPT