The Cost Per Impression Era Is Over featuring Prof. Jonathan Zhang

Drew Sanocki

Hey everybody today on the nerd marketing podcast, Mike and I talked to professor Jonathan Zhang, who is a business and marketing professor at Colorado State University. He is one of, if not the only, experts in academia on direct mail. And he publishes in the MIT journal in the Harvard business review, all about how big brands are using direct mail. We go over lot of data that shows how direct mail as a channel can have lower cacks than digital channels and drives higher lifetime value customers. How CMOs can best leverage the channel. You're not going to want to miss it because I think this, this really is the next five years in marketing. and without further ado, enjoy our podcast with Jonathan Zhang.

Michael Epstein

So maybe to kick things off, John, and before we dive into your research, what was your perception of direct mail when you started this research?

Jon Zhang

Yeah, know, the MIT piece just came out, like, I guess now, right? So it's 2025. But I've been thinking about this. I've been observing, and I've been thinking about this phenomenon probably since 2018. And let me tell you why. Because see, I've always been a very tactile kind of a sensory person. I like going to physical stores. I like to read paper books. I enjoy receiving catalogs over the years, even ever since I was a teenager. As you know, the market, the culture for marketers, starting around late 2000s, 2008, 2009s and 2010s, the beginning of digital marketing, when it was heavily subsidized, was that, the days of direct mails are over, right? That's like an old dinosaur system and digital marketing. Just like nobody's gonna read paper books, no one's gonna go to stores, right? Everybody's gonna be virtual, everything's gonna be online. that's why, so you could see it's a cultural shift, right? So a lot of that shifted towards digital, as you guys know, right? And I always found this kind of an extreme pendulum shift to be questionable, right? Sure, know, e-commerce, that's the period when e-commerce was growing a lot, you know, even though, you know, kind of offline retail was still kind of the large, you know, vast majority of the US, of the retail activity, but e-commerce was growing at a faster pace. I think there's a human tendency for, is a human tendency for media, also for business decision makers to focus on the next shiny technological object, Being the same thing with AI, you know? That's why a lot of companies are all of a sudden become AI driven. They have this kind of AI kind of a name in their brand because they wanted to attract the attention. So I saw the trend going on through much of the 2010s. And one thing that started to get me thinking is that around 2000, if you recall, around 2017, maybe 18, that season, Amazon started sending out catalogs for its toy category, right? And this got me thinking, right? Because those guys are, they have the most amount of data of all kind of retail operators. So they must see something that most operators didn't see at that point, right? And this guy, and then at the same time, think several other companies, again, these are all, know, kind of paradoxically, these are all digital native companies, Like Bonobos and Warby Parker, they started to have some sort of direct male presence. And then the reason why it's a paradox is that those companies started saying, oh, you know what, you we are truly digital, right? We don't have any kind of a physical presence. Not only this, they started to have direct mail, they also started to have physical stores. Remember Amazon has store, starting 2014 and then all these other kind of mobile partners have stores. So this kind of, you know, made me think about my original thesis that, Hey, you know, even though technology has made these digital advertising and digital marketing possible, and, you know, for, for many years, more effective, more measurable and cheaper, right? Cheaper than traditional quote unquote direct mail or even junk mail because junk mail wasn't targeted. But our human psychology, how we make decisions hasn't really fundamentally changed because that's the reason why all these tactile sensory experiences still are, making a comeback. So that led me to my first kind of investigation and I ran my first field study in 2019. And that became the 2020 Harvard Business Review article titled, did I send you guys the articles, the HPRs?

Drew Sanocki

Not yet. No.

Michael Epstein

Not the HBR one.

Jon Zhang

Oh, okay. So yeah, so if you want to, you know, like you asked me, what's my, like, what is the evolution of my interest in this domain? So, the first one was started in 2019. And I ran a very simple field experiment, right? With an online luxury watch retailer. And the premise is that, hey, you know, if you don't want to have a store, right? And if all you're doing is email marketing, you know, can you make your marketing a little bit more sensory rich by introducing catalogs? I'm not asking you to sign a lease. I'm not asking you to hire staff. Why not make it a little bit more sensory rich than just having an email? And then we did that. The ROI was 600%. You know, they had increased inquiry, increased revenue, right? The company made additional $12 million in incremental profit, not just incremental revenue, over the span of one campaign. That wasn't even like that customized. It was just like, you know what, let's add, right? Let's add a catalog, right? And then let's compare the customer behaviors for those who receive a catalog versus those who only receive email, like business as usual. Let's see what happens, right? So that became a 2000, that short piece became a 2022 HPR. And afterwards, I wanted to figure out what happened. So then I conducted interviews about the respondents. They said, because I feel like when I'm reading the catalog, I feel like the watch spoke to me. Again, it's this kind of physical proximity. And then as you guys know, there's a lot of neuroscience research about this touch, the touch of paper. And then the products, the hedonic and aspirational and emotional purchase, it feels closer, psychologically closer. So that was 2020. We established that there is a promise for catalog and the title of the article is that why are catalogs making a comeback? And it was making a comeback because Amazon started to do it. And then fast forward to two years later during COVID, nobody could do anything. All the stores were closed. Nobody was going to the stores. I want to know whether this effect persisted during COVID. And also because of the first HPR piece, more retailers got interested. So was able to partner with a much bigger retailer than just online luxury watch. Because I wanted to figure out, does this effect persist across different categories or only luxury products? So we ran a multi-product category field study. And that was published in 2022 in Harvard Business Review. 

Drew Sanocki

You said watch watches. These are watches.

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Jon Zhang

No, the 2020 was a watch and jewelry. And 2022 was just a general kind of high-end retailer, clothing, cosmetics, jewelry as well. We want to look at multiple categories. But again, it's just only one retailer. So then fast forward, again, 2024, the USPS reached out and said, OK, you know what? By the way, I was the only one in marketing academia who's doing direct mail. Because all of my colleagues are saying, John, hey, why are you junk mail? I think, well, hold on a second. I always believe in a balance. It should be a balance. It should be a mix. Just like some of us prefer to buy everything online on Amazon, some of us prefer to go to the store. Just like some of us prefer to read kindle. Some of us prefer to read paper, just like our brains are different. You cannot just say there's one technological solution that solves all problems. So anyways, so then you ask Pia, so you know what? What if we get you in touch with an agency that has a lot more campaigns across different years, right? Much more robust than just your one retailer. Can you run an econometric model and estimate, at scale, what is the impact of direct mail on firm performance in terms of revenue and sales and profitability? So I did that. So they got me in touch with Cohere One, which, as you guys know, is an agency. And that was great because it's a lot of campaigns over the years across different types of not only product categories, but also different tiers of companies. Some companies are more well known than others. So then we're able to figure it out based on my, because I have an economics and a stat background. Based on the models, we're able to pinpoint when direct mail is most useful, which type of companies, which type of industry, when, and seasonality. And then we can because the data is rich, we could generalize across and then have a statistically significant measurement that translates from direct mail to performance, which is something that, again, based on my conversation with CMOs and CFOs in particular, that is a major pinpoint measurement issue, right? Data measurement, I think that's where PostPilot, you guys are trying to solve exactly the same problem that my observation and my conversation and my research identifies, which is measurement, what type of data are needed, how to measure ROI, how long to measure it for. And then once you have that measurement stack, then how do you orchestrate so that the operators that subscribe to your service can have some sort of a plug and play interface.

Michael Epstein

And interestingly, you were finding that CAC, when you spoke to, I think, couple hundred brands, CACs were lower on direct mail than even some of the digital channels. What was, I'd love to hear sort of your summary of the results on a metric level, how you saw it performing relative to some of these other channels.

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Jon Zhang

Yeah, I don't have the actual piece right in front of me, I think it's the high level. Yeah, the high level is that, again, this is another problem that CFOs and CMOs and the marketing directors often, or VP marketing, people who are trying to use this. And also, of financial officers who are trying to justify the investment, they always express that, you know what, the cost per impression is cheaper, right, for digital versus the art mail, which is true, right? But then if you think about it, cost per impression is cheaper, what is the, you know, you don't build a business based on impression, you business is essentially, you acquire new customers, you make them purchase and you retain them and then you make them buy more, right? That's how any business runs, whether it's B2B or B2C. You guys agree?

Michael Epstein

Sure.

Jon Zhang

Right. So then, okay, so then, so then let's forget about the cost per impression. Let's figure out what the actual cost of acquisition is. You know, getting someone a mail piece is more expensive because you know, your production piece, you know, mailing or that stuff, right. It's more expensive than a Google impression or Facebook impression. But then, you know, the commercial is much higher. Right. So then not only is the commercial higher, customers acquired from the direct mail, not only they made a higher amount of purchase, the initial purchase, they also were more frequent buyers across, so our observation period is four months. I mean, I'm sure I see you guys are smiling, which means that these results generalize across your campaigns as well. So you see, our observation period is four months.

Michael Epstein

Absolutely.

Jon Zhang

Right, because this is a beauty, so this is a field study, again, A-B testing. So I spent quite a bit of time getting this retailer, kind of a beauty retailer, there's a cosmetic and beauty retailer on board. And we built up this measurement infrastructure, right, to be able to run this A-B testing similar to a kind of you know, kind of experiment, similar to a clinical trial. And so that is robust. we, our observation period is four months, right? Because the reason why you want to have four month is that you want it to, if the thesis is that customers that were acquired through mail pieces, because mail pieces are more sensory rich, you know, they can have more information, they linger at home longer, then they should develop a stronger understanding of the brand, right? And as a result, should be more in the brand and they should buy more frequently. So then we needed to say, know, we cannot just like observe what happens next week, right? After we send out the mail, we need to observe a, we need to give a sufficient amount of time for the repurchase to come in. Right. So then, you know, based on the category, you know, skin cream or these other things, we say, you know, let's, we cannot measure forever, right? Ideally, I want to measure for longer, for a year or two, because I think the effects will get amplified if you have a longer window. But say, four months is a good compromise because the company wants to know as well. Because those companies, they run on quarters. They don't have the luxury of academics where measure things. But within four months, could see already not only they purchased more in the beginning, they also made more frequent purchase. And also, made more categories. They purchased more categories compared to customers who are acquired only through a digital channel, which is consistent with the psychological theory that customers that saw the direct mail, they have a better understanding of the entire product portfolio.

Drew Sanocki

And it's in line with this Black Friday benchmark report we did, where we looked at several thousand brands over the last few Black Fridays. We saw first purchase AOV hire for customers who touched direct mail. We saw lifetime value hire. Mike, what's our attribution window we typically look at? I don't know. Do we do four months?

Jon Zhang

Yes.

Michael Epstein

We were looking, we initially looked across the first 60 days and then we extrapolated out further to look at an extended window more on an LTV basis versus a.

Drew Sanocki

So we are, yeah, we always are trying to go longer and higher and we do get pushback from the brands that, you we didn't look at frequency.

Jon Zhang

Yeah. Yeah. And then, you know, the observation window really differs by the product category and also the customer journey. I mean, for something that is imposed by a lower ticket item, let's say like a skin cream that costs like $10, you could have a shorter window versus a car. I mean, it's a long career. So I think it's really deep. I think eventually if you have enough categories and then you have a better understanding of the customer journey across different type of product categories and also across different seasonality, you could have almost an industry specific observation window.

Drew Sanocki

Right, Thank you.

Michael Epstein

Yeah, I imagine that's true. I mean, we see certainly significant differences in performance across verticals and categories, primarily driven by AOV or frequency of purchase of the consumable product will look a lot different than a pizza oven or something that you're going to only purchase once. But that speaks to something that I also found really interesting that you highlighted a lot. You did a lot of analysis of the psychological impacts of direct mail relative to other channel channels. Talk about what is like the endowment effect and, the concept of object permanent permanent in sort of as applied to marketing tactics or marketing channels.

Jon Zhang

Yeah, so let me give you two, I try to summarize these effects into two kinds of quote unquote soundbites. The first one I think is like direct mail is like a channel you can now unsubscribe. It's not something that sits on your kitchen counter for a little bit. Even if you receive it from the mailbox, you look at it and then you're on the way to the recycle bin, right? That walk for 10 seconds, know, that 10 seconds is probably 9.5 seconds more than an email that you just saw. And then you don't even open it. You see what I mean? Right? So, okay, so object permanency in this case is that, you know, so that's just like you trying to throw away the thing. But if it's a well-produced piece, I did a lot of work with catalogs. Again, more hedonic. So you can think about luxury, like watches and jewelry or clothing. see a lot of clothing. Respiration hardware, they don't do it anymore, I don't think. They used to have those huge books, hundreds of pages of furniture. Again, they could do that because the AOV is so high for their products. Those things sit around on the coffee table for like months, right? And then people forget them away. And then what happens that every time you sit down and you look at it, it's like a constant reminder, super effective, right? So whatever, let's say $10 to produce a glossy magazine like catalog, if that produces reminder 20, 30, 40 times over the span of the lifetime, you in your living room, I mean, not only the cost per impression is relatively low, right, compared with digital, but it's effective, right, because you're flipping through it. And also part of it, okay, so then going back to the second point, like, you know, this idea of endowment effect, you know, you are, again, this is, think the endowment effect applies to, again, beautifully produced, almost like a magazine type of catalog, right? It has narratives and pictures and, know, like, I think a lot of luxury brands are very good at doing this. A lot of cruise lines, they do that as well, you know, they tell you about the vacation spots. You know, they have those pictures. So then, know, so well done. You don't want to throw it away. You keep it around for a while. Right? So I think these two, you know, these are the reasons why, you know, so again, it's not a magic, right? These are the reasons why, you know, direct mail, when it's done well, it's effective because they just, they stay around for longer and, you know, people's attention, you know, lingers for longer.

Michael Epstein

Yeah, and you talk about how you spoke to a bunch of CMOs and CFOs primarily in your research. How did each one, what were the differences between how those different leaders thought about direct mail and investing in the channel and how they thought about measuring performance or just their approach to the channel? And how can those two work together to be successful with this channel? Because I imagine they come at it from slightly different perspectives. You've got the brand person over here. You've got the pure sort of finance spreadsheet person over there. How do they think about it differently? How do they come together to execute the channel successfully?

Jon Zhang

Yeah, so I think based on the companies I've talked to, there are two types of companies. One is that they've never really done much with direct mail. Again, I think a lot of it is a cultural thing. So it also depends on the age of the CMO. So if it's some of the companies I talk to, especially tech-driven retailers, their age could be in the mid-30s. So they just never believed it. They think it's, again, they focus on, I think they focus on the wrong metric. They're still focusing on cost per impression. They focus on reach. But again, I think it's a metric problem. I think the metric problem is there. I think the measurement is a big deal. I think all three of us are collectively trying to solve the problem of measurement. But once they tried it, think once they tried it, especially after I shared some of my preliminary results with them, and some of them have tried it, they see a bigger promise. They see a bigger promise. Now, the other hurdle, especially from a CMO perspective, that I think there's a lack of education among, there's like a generation, there's like a gap. There's like a gap that, over the past 10 years, nobody talked about like omnichannel marketing. People don't talk about... When they think about omni-channel marketing, they think about Facebook, Google, TikTok. But I think there's a lack of training among business schools. And as a result, there's a lack of understanding among the current marketing practitioners how to utilize various versions of digital versus the analog or tactile channels. I don't know if that's something that you guys are seeing. It's a disconnect, right? So the marketers that use direct mail before, they get it, but then you know.

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Jon Zhang

Again, I think that the folks who are in their 30s, the prime that are making big decisions for the next, you know, decade or two, I think they are, I think there's a general lack of talent in this space.

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Drew Sanocki

For certainly experience. I, I, agree. mean, I, if you look at the typical Shopify store, first, no one, no one has an MBA, not like you need an MBA to run a Shopify store. And the second is they skew a bit younger. And so I would say it's, you've got this entire generation of marketers who grew up just throwing money at Facebook. was like money and money out. And that's kind of what they, how they think they think in terms of Facebook funnel and email. I think maybe Warby Parker and Peter Fader, a lot of those brands that came out of Wharton sort of started a dialogue around lifetime value. And all of sudden, I think that manifested in, now I've got to not only watch Facebook, I've got to figure out email so that I can maximize lifetime value. But really, we only typically having conversations with a brand and they've done direct mail, the person on the other end of the call is 40 years older or older. It's rare that you find that. So and again, yeah I think it's typically also the bigger brands probably, doing 100 million in revenue went up a billion dollars in revenue. Like that's that's where you find some experience with that channel.

Jon Zhang

Yeah. So I think part of the problem is that the business school, the professors, my colleagues have been neglecting this domain for the past like 15 years. Right. I think that's the reason why, right. Cause nobody, again, you know, again, even as I wrote my first HPR published five years ago. And I think even to this day, I'm the only one doing this. I try to get some other folks interested. like, nah, you know, I care about ad measurement, you know, on Amazon. I said, sure. That's also very important. But when digital is getting more expensive, if you are a pure play e-commerce company, if the digital ads are getting more expensive but the trackability goes down because of private concerns, what are your alternatives besides opening up a store? That's even more expensive than direct mail, so I feel like now hopefully companies are seeing the, I think they definitely see the urgency. That's my experience talking to the CFOs, the CMOs. want to know, because they're complaining. They say, know what? 10 years ago, these big platforms, the costs were lower, right? But now over the past decade, they've gotten more powerful, right? And as a result, once you have more power, you increase your price, right? So now they're getting more expensive. The ROI is going down. What can we do next? I think they all feel the urgency to find alternative and more effective ways to acquire customers and retain them. So I think the stores are always good. That's another area of my research, having physical stores, especially on boarding new customers, assuming the stores are well run. They're not like run down stores. But again, that's a luxury that a lot of smaller companies can't afford to So something that I wanted to explore next is that speaking of omnichannel, so really omnichannel. So again, if you have digital, you have email, you have direct mail, and then I want to know how these things interact with having a physical store presence. I think there's a synergistic effect if they're used well in the right sequence.

Michael Epstein

I think you called that out across digital, across marketing channels as well. In the research you were seeing that halo effect as brands added more channels to their overall mix. You were seeing increased efficacy across the entire mix. Is that accurate?

Jon Zhang

Exactly. And also, think a part of it is you can think of as a reminder, multiple touch points. And then one thing I also wanted to explore more. Next is that I think just also adds more credibility, right? Just like, we see a company with a store, right? We feel like this is a real company, right? You see a company that's sending out a well-produced direct mail piece. You feel like, oh, this company has the capital and the, you know, kind of the production value to do this. must be a legitimate company, right? So I think that kind of a branding halo carries over channels.

Michael Epstein

Yeah, absolutely. for brands that are thinking about entering the channels, how would you think about allocation of budget if they've been pure play digital up to this point? How should a brand or CFO think about allocating some test budget to exploring it as a new channel?

Jon Zhang

I would, I'll give you my kind of back of the envelope answer. I want to hear, also I'm curious to hear what you guys have, you know, have recommended to your folks. I would say, it depends on the type of products that you're in, right? The category you're in, right? If you are in a kind of what I call emotional hedonic products, for example, clothing, you should, I think you should at least devote. In this, in 2025, in this environment, probably devote 20%, at least 20%, even as a task case, right? Or even if not more, right? Because we know that direct mail is more effective with those types of discretionary hedonic products with higher price tag. If you're in a utilitarian type of product that, you know, that lacks those kind of emotional effect. It's hard to say, right? So then I'll be a little bit more cautious. I would say maybe like five to 10 % just to see. Yeah, but at least I think having the infrastructure, because even if it's five to 10%, it forces the company to build up some sort of a capacity and capability, right? So that even later on, if they wanted to diversify the marketing mix, they could do it. Because otherwise, they're just stuck with the same loop.

Michael Epstein

Yeah. And enough that you can get sort of statistically significant read on how things are performing. And you also saw basically a one-to-one correlation on spend into the channel to top line revenue.

Jon Zhang

Yeah, and that's just a very coarse type of analysis, right? Because the data was there, but then it's not as detailed as I would like. So yeah, so even with that, you can see a one-to-one conversion. And again, for some types of companies, and that's just overall across all kinds of companies and all sizes, all industries, right? But if you break it down to a little more detail, you could see some of the companies, again, they use it well in the right season, if it's right in the right shopping season, the ROI is even higher.

Michael Epstein

And what are some of those characteristics of the companies that you saw having the most success with the channel?

Jon Zhang

I think bigger companies, bigger brands benefit more from direct mail. I think it is because they already benefit from a halo effect, but they're well known. So then people, I feel people pay more attention to the direct mail piece, register more. So I think that's the main effect that I found. I think clothing and furniture benefit more versus non-clothing, non-furniture, which is also not surprising. There are any luxury brands or luxury products in our category. But I would imagine, again, if the psychological theory that direct mail produces a stronger consumer emotion, consumer affect, I would imagine chocolates, vacation, those type of industries would benefit more from direct mail. They do that like Hall of America, Carnival, and Celebrity, they send out those vacation packages. those companies, the reason why they're doing it, they've been doing it for years, is that they see ROI.

Michael Epstein

Absolutely. And that's, that's consistent with what we see particularly on the acquisition side, brands that have a little more baseline brand awareness where it's maybe less likely to be the first interaction or first touch point that someone has ever had with the brand versus maybe it's a brand that, you know, they remember seeing a Facebook ad at some point, they remember seeing a, even a billboard or something like that. And then direct mail, you know, we all know that it takes multiple touches to convert a new customer. So I think to your point, brands that have some general awareness in the market are going to be able to see success on the acquisition side in particular.

Jon Zhang

Yeah. One thing I have explored, I hope to do in future, is that the type of offers, So imagine you're an unknown brand. Let's say the three of us started a clothing company. We're not known, which means that it's risky to buy our products, right? So then how do you get your name out there? How do you even build awareness, right? I can imagine some sort of postcard with a very heavy discount, right? Then, you know, might get people to try it out. Let's say like 70 % off. I don't know. It's just like a new customer only, whatever, right? You we're launching a new company. And then, you know, maybe that's like a good way to build the initial brand awareness because building a brand takes a long time and costs a lot, right? But then how do you do it if you're a brand new company and nobody knows how you even like to get people to try it out for the first time? You know, I think it's like a chicken egg problem. I think direct mail. I think if it's if you make a kind of almost like an eye popping type of almost like a free shirt or whatever like you know Maybe it's maybe doing that if you do the math, maybe you're doing that to induce the first trial, right? That's such an expensive thing. Let's say, let's say you give them a shirt. Let's say, you know, I'm thinking about a company that let's say they sell a basic t-shirt, right? Like a white shirt. Um, let's say it calls the company. Let's say they sell it for $40 online. Right. But then you say, you know what? You just get it for free. I gave you two for free. That allows them to see, you know, the package, shipping, right?And then the customer become a customer. Sure, your negative tend to begin with. But I wonder if you do the math, is that cheaper to, know, in aggregate, is that cheaper to build a brand this way than to have like TV commercials and that kind of stuff? How do you build a brand nowadays? So there are alternative ways to use direct mail, not only just as a customer acquisition tool for like known firms, but even for potentially as a brand building tool.

Drew Sanocki

We do get that question all the time on, know, should I, is it better to put an offer, a discount in the postcard versus just have one that's, a lot of brands don't like to discount and they might just want a brand enhancing postcard.

Jon Zhang

Yeah, or even free. mean, I'll imagine like, again, I use a clothing example, right? I just do some math. Three of us start a company, we sell shirt, t-shirts, and our most basic one is a white t-shirt that costs us, I don't know, $10 to make to get to our warehouse, sells for $40. Let's say we want to, nobody knows us, we want to get people to buy. So let's say we devote $100,000 as our branding campaign, right? We can either put it on online ads banner ads or like on there, you know kind of Connected TV right or we say you know what let's send out 10,000 free shirts to people Which was more effective over a span of six months, it's not clear people definitely remember Yeah

Drew Sanocki

We've seen some data where if you acquire a new customer on a discount, they typically they wait for a discount to buy again.

Jon Zhang

But not a discount, a free one. A discount is a different thing, right? A discount like 50%, people still not want to try. They're like, oh my God, I never heard of this company. 50%, even 50 % is still $20. But what if it's free? I mean, I just have some bold idea that, you know, because you think about it, if you direct mail, it gives people's attention. And if the offer is so outrageously free, it's free, right? It's so outrageous, it also gives people attention. And assuming the product is good. We make a fantastic, the best $40 white t-shirt on the market. And we believe our product. That's why we exist to begin with, right? That's why we started a company. Maybe those turn.

Drew Sanocki

We see beauty brands often send samples, free samples.

Michael Epstein

Food and Bev, yeah, great way to get samples out to a large scale. What was maybe the most surprising thing that you learned in your research or something that was maybe the thing that you expected the least when you went into it?

Jon Zhang

Yeah, I think two surprising things is that once I've shown the CMOs and CFOs how to measure, what kind of data to track, how to measure, and then the measurement window, and what type of metrics to pay attention to instead of cost per impression, looking at CAG and CLV. I was surprised to see how many of them are open to giving a serious consideration. I could see those guys are pragmatic. think once you see the number, once they see the number, the numbers don't lie, they're compelling. They get it. I think it's really a data and measurement problem. I think you guys are kind of leading that shift, helping to lead that shift as well. So that's one result, which bodes well for the omnichannel kind of a mix. The second thing is that just like paper books, we thought it's the older generation of consumers who like these things. But no, I think based on my interview, because I also interviewed about 300 consumers, surveyed them about what's your view of the catalogs, the direct mail, how you interact with them, do you like them? I asked them a whole bunch of questions ot the millennials and then Gen Z. So the younger generation, educated younger generation of consumers who find these things most appealing, which also bodes well.

Michael Epstein

That's fascinating, which we've uncovered a lot of that as well in our research, but it's a very surprising to most brands.

Jon Zhang

Why do you think that's the case?

Michael Epstein

My hypothesis is that this is the same audience that if you ask to look at their phone is going to have a hundred thousand unread emails and like 50,000 unread text messages showing up on their, their home screen. And that it's, it's, it's, it's a surprise. It's almost a novelty to them to get something tangible from a brand that they've, that they recognize or potentially have done business with versus the constant stream of digital ads that they are exposed to on a daily basis. And it's really essentially turned into noise for them. So that's my hypothesis. And we tend to see that in, the data as well, because again, brands ask us all the time. well, you know, I, I don't target older people. So I don't know if I'm a good fit for this. And our, response is like most of our brands don't, they target the Gen Z millennial audience and have success with it and I think it's again the theory is for that reason but very interesting that you found that as well.

Jon Zhang

Yeah, you know, I actually I'm glad you mentioned it because our results triangulate. So I explicitly did a follow up. I say, know, why? Why do you find this 25 year old, right? You don't even remember junk mail as much. Right. Like, why do you find this appealing? I think a lot of it is novelty. Right. They're like, oh, wow. You know, this brand I've only encountered online or in store. Right. But now I feel like it's a novelty. It's exactly because of the fact that they have not had a bad experience with untargeted junk mail over the 1990s. This feels refreshing for them. Yeah, and I think with a better targeting technology, know, data and targeting technology, I think the days of junk mails hopefully are near the end and mails be targeted to be more effective, right? Which also bodes well for like number of trees and ta-da.

Michael Epstein

Yeah, but while still being limited overall relative to the frequency or volume of digital ads or emails that you're getting. I mean, that number is not going down.

Jon Zhang

Sure. Yeah. Have you guys look at the like, you know, there's a thing of it. So, now I think we have, we have these stats we have established, you know, over the past, you know, your company. And also I think I have a slash over the course of three, three articles that, know, it's effective, right. And, and then currently it's more effective potentially than the digital channels. But have you ever looked at, so I think the next step is try to figure out how to orchestrate, right? Like sequencing or like the, you know, what is the right frequency? You know, what is it? it initially that, initially mail, some email, and then when you send the next mail, the content, you know I mean? Like now we know it's effective, we should not ignore it. What is the orchestration layer? And also, think Drew and I, you and I, we talk a little bit about in the current environment where there's a lot of consumer data, lots of our noises, and also there's privacy considerations. So we cannot collect everything under the sun. What is the most informative set of data that we need to, customer data that we need to make those decisions? How do we minimize that? What is the minimal amount of effective data that we need to do it so then firms don't have liability? Yeah.

Drew Sanocki

Our data team is knee deep in this problem, in the orchestration problem or opportunity.

Michael Epstein

Yeah, I think in general, when we target existing customers, the idea that most brands are most comfortable with is to trigger it at the time after you've emailed somebody at least once and given them a chance to respond to the email. Obviously, that's going to be cheaper. So if you're trying to get them to take a specific action, set up your email sequences around that cadence. And then when they don't react, respond to email, that's the time to trigger direct mail because they become increasingly less likely to take that desired action as time goes on. As you saw in your research, recency being such a primary factor in response rate. As soon as they sort of get past that, that expected period where to, where you expect, expect them to take a certain action and you've emailed them and they haven't taken that action it becomes incumbent on you to ensure that that message gets through to them in a way that they're more likely to take that action before you risk losing them permanently.

Jon Zhang

Yeah. Do you guys also look at, you know, if you have customer touchpoint data at a customer level, across the customer lifespan with a firm, do you also have a sense of when to stop marketing? Because at some point, you know, the customer is just not going to respond. And it makes no sense to keep sending them stuff.

Michael Epstein

Yeah, I mean our best practice is to measure across all these different cohorts, primarily based on recency and frequency, and get validation that certain cohorts are responsive to direct mail and then scale into those cohorts that you're seeing a high response rate. And for different brands, it varies. So for one brand, you might be able to go back three years profitably and still get a high enough response rate from that audience that it justifies the continued investment. Another brand, might be one year, another brand, might be five years, but being able to get that data, you know, testing a relatively modest volume into these different cohorts and then scaling what you see as having proven what works is generally our strategy and brands tend to be very comfortable with that.

Jon Zhang

Do you have a sense of what makes the response rate, you know, what type of brand would trigger a response rate even for a customer that were five years ago versus like three years ago? I tend to think about why these things happen across the type of brands.

Drew Sanocki

Other than recency. It's the nature of the product, I think. And maybe what kind of experience they had with their initial purchase.

Michael Epstein

We have health and beauty or health and wellness products in particular, like things just change in someone's life and they stop for whatever reason. And it doesn't mean that they're gone for good, but it is finding the right opportunity to get back in front of them and catching them at the time where they're receptive to sort of reactivating or getting back into the routine. We see a lot of good results in reactivating customers that have long defected or long been dormant across these consumable products and particularly, I think in that health and wellness space.

Jon Zhang

Yeah, and then when you say reactivation, mean using direct mail as a reactive activation channel.

Michael Epstein

Yeah, so somebody who stopped buying a year plus ago.

Jon Zhang

So one thing I've, so okay, so we explored, the one thing I haven't looked at is using direct mail as a, how effective it is as a reactivation tool. Yeah, so that's something that I should probably look into.

Drew Sanocki

I mean, what we find is if you're talking about a customer who hasn't been around in a while, he or she is most likely unsubscribed from email. So what the brand needs to do is consider that almost new customer acquisition and compare how well they do in pulling those customers back versus going and acquiring a whole new group of customers. There's really no other way to reach that customer.

Jon Zhang

The theory, I'm curious about what you observed, the theory will say reactivating, even someone subscribes, because it's easy to unsubscribe. I we all unsubscribe things before, and then I like a couple months later, it's like, I wish I didn't unsubscribe, but it's too late, right? And then life gets busy and you forget about it. I wonder, theory will say, you know, again, across all people who unsubscribe, who lapse, right? There's no way to reach them. You know, reactivating them would gave you a higher ROI than acquiring a new set of customers, would you say? Right? Yeah, because they already know your products. It's easier to, the response will be higher.

Michael Epstein

Exactly, yeah. And once a customer has gone a year or two years without buying, and they're pretty, they're pretty gone at that point. But so if you can acquire them at a lower CAC than cold, then a cold prospect or a net new customer, there's a lot of profitability there. That was kind of a genesis of PostPilot was Drew and I used them in a lot of turnarounds that we ran on the income side because they would have millions of customers.

Jon Zhang

I tell you what, guys, this is a very, I'm trying to think about what are the, you know, kind of companies' issues. There's acquisition, we get it. And retention, know, keep them interested. Brand building, okay. So think they get it. But the reactivation, which is also another way to acquire customers, but at a lower cost, right? I think that's, I don't think there's a comprehensive study done on that. Maybe you are CPS and you guys might be interested in, you know, in doing some of stuff if you have.

Michael Epstein

Yeah, that was a part of our Black Friday report, was looking at incremental lift amongst existing customer cohorts as well as new customer. I mean, there are certain categories where maybe that's more expected. you know, they don't want to receive a physical mailer for certain types of products. But other than that, you just never see it.

Jon Zhang

Yeah, that's what I thought. So there's no regulation across against like sending sending too much mail to direct mail to someone.

Michael Epstein

No, the same reason you get catalogs and other things from, you know, it's a reason that junk mail exists too. It's like, there's not a, there's no regulation around not being able to send that.

Jon Zhang

Yeah, I think that also helps, because then I think a lot of people unsubscribe because they feel overwhelmed at that moment with their phone. They're like, I don't need this. But then the next day they're like, man, what do I do? But then it's too late.

Michael Epstein

Yeah, but Gmail and Apple Mail and all these CSPs are making it increasingly easy to do it. Whether they're moving all these to the promo tab or they're just creating the one click unsubscribe and they're putting the unsubscribe button everywhere.

Jon Zhang

I bet there's a study and a very compelling article and data-driven study that revolves around this trend. Like, you inadvertently unsubscribe. And also the platforms are making it easy for email marketing. This is email marketing, Easy for the email marketing to disappear because of the promo tab. And as a result, have customers who lapsed not because they don't want the products, because they just like, you know, it's like, all the side, all the side, all the mind situations that they're regretful, almost like a regretful lost customer laps customer. And the only way to bring those back is through direct mail. I think that's a very good angle. I think that's a fresh angle that will resonate well with CMOs and CFOs, wouldn't you say?

Michael Epstein

That's why we exist.

Drew Sanocki

We've been pounding the pavement on that angle.

Jon Zhang 

I think it's a to me, you know, to me, it is very compelling, right? For business, you know, how do we again, businesses are very simple. Doesn't matter what they sell, right? Vacations, beauty products, watch and jewelry, chocolate. They want to get customers. They want to keep them. They want to make them spend more. And then they wanted to acquire like lost customers as cheaply as possible. I mean, that's the entire business model. I mean, that's business in general. like, it's not a, you know, I think all of this metrics and this and that, I think it's just like noise, right? I think if we can just say boil it down and say, forget about cost per impression, like the cost per impression, those days are over. That's like 2010 metric. It’s 2025, so let's go back to the basics. How much did get the new customer for? How much did you spend? And did you make money on that?

Drew Sanocki

That's a great way to end. It's a great, yeah. Stay tuned for the next study.

Michael Epstein

John, this has been great. Just really, really enjoyed the conversation and such a wealth of information. And I love that you've gone, how deep you've gone on the channel and that you're now sort of advocating for it and have all the data to back it up.

Jon Zhang

Thank you. Yeah, I'm just trying out some ideas. think the cost per, you know what, I think the metric, I think it's a data and measurement and metric problem. I think that's a, they've been, I think again, it's like, you know, they learned that thing. They learned that metric, you know, 10, 20 years ago and they kind of stuck with it. That's how, how they justify spend, right? So I think cost per impression is over.

Drew Sanocki

Well, we'd love to work with you on something like that. So really, really appreciate the time.

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