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Direct Responses About Direct Mail Ads

Does direct mail advertising work for Webhosting services? Members of the ISP-Webhosting discussion list take a look at the numbers that define could define success.

[October 21, 2002]

On the ISP-Webhosting discussion list in October, DS asked about direct mail advertising:

"If any, what types of advertising did you, or the company you work for advertise to get its initial customers?

Next week I am starting a lame Google AdWords campaign, and I guess we will see what happens, but only other method I can think of, is create a snail-mail flyer.

Any ideas?"

[RB advised] "I don't know for Webhosting, but direct mail works pretty well for ISPs. Of course, blanketing the whole town is less than $.14 apiece. If you send just to businesses you would probably be looking at $.25 per. Get a list for $15 per 1000. Start in your local area; say about a 50 mile radius."

[DS replied] "Actually, my hosting company is funded by a direct mailing house, one of NY's biggest too. I just didn't know if I should send out a flyer, versus online advertising?"

[WTN expanded the question] "What are the views on direct mailing your message via Val-Pak?"

[BS advised] "We did a Val-Pak mailing a couple of years ago. Val-Pak designed the coupon and selected the list to which it was mailed. As I recall we mailed 40,000 three color pieces and ended up with 1 response to the entire mailing."

[RB did the math] "Are you aiming at home users or business? I used to look at the coupons in the Val-Pak, but it just gets thrown in the trash these days.

If its cheap enough—go for it. You are bound to hit a small percentage and .1 percent of 1,000,000 is still a decent response rate, I would take .005 percent right now. If the charge $.02 per piece that's still a lot of cash, but If your being subsidized, why not try it?

You would, I think, do better to target businesses via a large flat-pack. Try an 8x10 tri-fold form, 4-color print, in large quantity. Postage won't change much. At 5,000 you should be able to get the price below $.50 with postage and what not, you should come under $1 per. You might get 2 percent hit rate. Call it 100 customers. At $100 per setup and $50 first month hosting fees, that's $15,000, plus $5,000 per month residual revenues. Optimistic—yes. But run you own numbers. If it didn't work, VeriSign and others wouldn't be doing it."

[JM cautioned] "There's a big difference between blindly blanketing business customers and spamming (all be it via snail-mail) recent domain registrants. Not everyone has access to a list of those new registrants, and most aren't sleazy enough to use such a list in any event. I'd say your 2 percent is wildly optimistic, by a factor of at least 100. If you're a $0 setup, $20 per month host, those numbers quickly get pretty ugly.

I'd question the value in advertising Webhosting directly to businesses in any form. How many typical business people do you imagine are thinking to themselves, 'I need a new host for my website?' They may say, 'I need a new website' or a new Web developer, but in my experience it's usually the Web developer that chooses the host. Look at how many of those developers do hosting themselves, or are resellers. There's your market, and it's one that the large web hosts are targeting successfully, especially through reseller programs.

Here's a micro example: I have a friend that does computer tech support and a little website development. I mentioned to him that we do web hosting, and now we host a dozen of his customers' small websites. If we had marketed to those same companies, or a thousand like them, there's no way we would have seen so much as a nibble."

[PC agreed] "I agree completely. Market your services to web developers, and make products and services that make it easier for them to sell your services to their existing customers. They're a natural sales force—all you have to do is continue to provide excellent service, and you'll get new customers as web developers build their own businesses."

[RB replied] "Excellent points everyone. So telemarketing then?"

—End