Can I measure incrementality on direct mail and catalog?

Trevor Testwuide, Expert in Business Strategy and Marketing Measurement

Published 03/01/2021

Yes, incrementality can be measured on Direct Mail and Catalog. It is in fact among the more measurable channels because of the strength of identity resolution between audiences who received a mailer and customers transacting online, or in store.

The classic approach to incrementality measurement on Direct Mail and Catalog is to use systematic holdouts and compare the response rate and revenue per piece from users in the holdout group versus the users in the mailed group. This will get you the true measure of Direct Mail and Catalog impact to the business. You can read more on incrementality testing here.

The most basic form of performance reporting on Direct Mail and Catalog is through what is called matchback reporting. The list of households that were mailed a piece is matched to the list of customers who transacted, to identify how many of those in the mailed cohort eventually made a purchase. Brands who are more analytical holdout a cohort of users from the households selected to be mailed. Metrics from the matchback reporting on mailed users is compared to the same metrics on held-out users to calculate the incremental impact of the Direct mail or Catalog campaign.

There are two major types of Direct mail and Catalog campaigns.

  1. Housefile campaigns are programs that target households who are typically customers of the brand, and the brand has both the household address and consent from the user to market to them.
  2. Rental campaigns are programs that target households who are typically prospects of the brand. The names and households targeted are typically rented from a co-op that has the household address and has obtained consent from the user to be marketed to.

The audience selection, response rates, mail merge process, data collection process, data formats, data quality, match back process and other associated norms vary significantly between Housefile and Rental campaigns. Hence, experimental design, holdout selection and data processing is tailored very carefully to align with the process behind how lists are created and households are mailed for housefile and rental campaigns.

For Direct Mail and Catalog, the incrementality reads vary significantly by several audience dimensions - Housefile vs Rental, recency of engagement with brand, frequency of engagement with brand etc., Also, it is reasonably typical to find that response rates and incrementality are inversely correlated.

graph showing the inverse relationship between response rates and incrementality by recency

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