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Case Study: Nonprofit Evaluates Digital Investment
Date: April, 2015 --
In the past several years there’s been a huge shift in advertising dollars toward online media almost uniformly across industrial verticals, and the reasons are well known. Costs per message and impression are typically far less than those of traditional media for acquisition, meaning organizations are able to broadcast messaging to a greater volume of prospects at far less cost. But has this digital investment delivered for organizations in the only metrics that ultimately matter; i.e., more customers and more revenue? In this case study we’ll review how one UK nonprofit took stock of its digital media investments, and discovered the true driving force behind a positive turnaround in year over year fundraising. This case study was assembled by Data Services, Inc. in cooperation with our friends at the Prescott Report.
The Salvation Army is a unique church whose mission is to assist those in need by virtue of poverty, natural disaster, unemployment or illness. Its churches are centers of assistance to those in need rather than dedicated centers of worship. Founded in England 150 years ago, it has grown to be present in 126 countries, helping victims of natural disasters, the unemployed, the abandoned and ill. In short, their ministry is anyone in need. They depend entirely upon donations and gifts for their funding and in the UK their main fund-raising period is the six weeks leading up to Christmas.
Donations Fall, But Then Rise
Until 2007, “the Army” raised most of its Christmas donations through addressed mail, “door drops” (unaddressed mail delivered to the household), press advertising, and inserts. In that year returns began to decline and a change was imperative. (“Door drops”, or “leaflets” can be delivered to the mailbox and home by anyone; in the UK and in the rest of Europe, the posts do not “own” the mailbox.)
In 2008 they began testing other outlets and added TV and digital media. Their online presence was intended to be the primary donation collection vehicle and in both 2008 and 2009 they generated more donors. In addition, in 2009 they had a marked increased in response rates to mail and door drops after several years of slow decline in both. What caused this?
By 2010, income donated online had increased 4 times. However, the only investment made online was search-engine advertising, and the primary home site with the donation collection pages. There must have been something else causing behavior given that SEO doesn’t tell a story to potential donors. People coming to the online payment site must have already known the organization as it appeared that they were intentionally coming to donate. Search wasn’t driving the donation, it was just a sign post saying “To donate, go to this website….” What convinced people to go to the online “donation plate”?
What’s Driving Donations? Online or Offline?
The answer was not a mystery, but it did prove the “digirati” were wrong. Using econometric tools, experts determined which offline channels had influenced the decision to donate. This in turn helped understand the link between the message media and the act of giving. As they began to better understand the consequences and impact of using different channels for message delivery, addressed and unaddressed mail, radio, TV, SEO, other online tools, it became increasingly possible to predict donor behavior, and thus donation amounts to be expected from investing in different channels. The tools and the data related to the tools were saying that direct mail and TV were driving online responses and donations; the two worked together to “convince”.
These conclusions matched those from other research which had suggested that TV ads “prime” (or prepare) people to engage a subject and act when prompted by mail , and mail “primes” people to act and engage when prompted by TV! The same message in the two media reinforce each other.
The Army had increased its investment in TV and mail by £1 million. New donors and net income reached record levels, as did net income, while the cost per donor went down. After the investment, the cost of acquiring a donor by mail fell 16% and new donors recruited increased from 50,000 to 136,000.
This is an example of a carefully planned and executed marketing transformation in the midst of a revolution in consumer media use. Assumptions that could have made the situation worse were avoided. It would have been “natural” in 2008 to reduce the mailing budget and spend more online. The working hypothesis, and conclusion, was that the channels perform different functions and investments must be made to exploit those strengths. The data that said people would contribute online did not necessarily mean that people were being convinced to contribute by online messaging. And, indeed, they were not. They were convinced offline, and gave online. Mail is the best ‘convincer’. In fact, the data showed that 97% of the donors generated by mail were new-to-file. Mail ‘finds’ new donors in their homes and nothing online proved as cost-effective in “finding” a potential donor.
Since mail is probably the “killer app” in your toolbox, be sure to keep the “edges” sharp with proper data hygiene and data management services from Data Services, Inc. For example, if your file is “typical”, something approaching 15% or 16% of the people on it will have changed their address in the last year. It pays to not only keep in touch with those loyal customers and donors but also be able to create, execute and track data-driven campaigns using DSI’s benchmark platforms and solutions.