The twilight of direct mail?

On a recent trip to my mailbox, I was shocked to see a direct mail solicitation from Barack Obama’s campaign. I wasn’t shocked because they included me in their prospect pool, since I’ve donated before. I wasn’t shocked because they had my home address, since I gave them that. And I wasn’t shocked because he was asking for money – even with his fundraising prowess, Presidential campaigns are expensive. No, I was shocked because I realized that this was the first piece of snail mail I’ve ever received from Obama.

It made me think about how small a part direct mail seems to have played in his meteoric fundraising campaign. I’ve been donating online since February, but even the thank you’s for my online donations came in via email, with no supplemental thank you/re-ask message arriving in the mail. How is it that Obama for America could shatter all fundraising records with small donations, without making direct mail a central part of their strategy? And what could this mean for the future of non-profit fundraising?

My thoughts on these, and other questions, below the fold…

While we can take as a given that a significant portion of the Obama camp’s money came in via the internet, let’s not forget that he’s still looking at other sources as well. Some of Obama’s early campaign rallies have had a nominal admission charge, and when you’re speaking to hundreds of thousands at a time, that adds up. His strong brand identity as being the Apple of candidates has led to what I’m suspecting is more merchandise sales than any candidate in history, and these are all donations as well. And of course, no candidate for President can get by without shaking down the big donors for their $2,300 checks.

But these elements can only count for so much – the price of a ticket to an Obama rally became your email address earlier this year, merch can only go so far, and contribution limits mean that major gifts aren’t as major for candidates as they are for non-profits. The rest has to have been solicited, a few bucks at a time, from the millions of Obama supporters out there via mass market fundraising, though telemarketing, direct mail and online.

The online category, though, has gone from being a single line item to a complex web of channels – using both push and pull tactics, the Obama web presence provides quite a few pathways from engagement to donation. Among these are:

• Traditional email solicitations, and specific fundraising drives with premiums and contests. Obama’s email segmentation is also rumored to be among the most sophisticated systems ever created
• Google checkout/youtube integration that allows instant reaction to a speech or ad – rather than viewing it on a TV, waiting for a solicitation to come, then hopefully remembering and donating, YouTube lets viewers just move their mouse a few pixels to make their contribution if they like what they see
• Sophisticated online advertising, on search networks, blogs, and traditional banners, each designed for the appropriate audience – for sites and search terms that likely mark you as a supporter, the ads ask for a signup or contribution, while those likely to be undecided voters provide education about the candidate
• Social network outreach that’s more than just “give me your email” – the Obama camp provides much of their web content via their Facebook application and page, and sends out solicitations specifically targeted at social network users.
• Obama’s own social network that lets users become microbundlers, and provides donors to show support for a given constituency or issue by contributing through a specific page

Beyond these major channels, Obama also has dozens of smaller funnels, like ActBlue, where over a hundred and fifty pages are set up to funnel money to him – while it’s only brought in about $430,000 so far, it’s been almost pure profit with no online or fundraising staff needed to raise these contributions.

So why would direct mail not be a major contribution channel for Obama? First, because direct mail can take a long and expensive time to build up, as you identify those individuals who like you enough to donate and establishing a pattern with them. This relates to the second problem: many Obama contributors are people who campaigns and non-profits don’t think of as donors, particularly students. These new donors would be and costly difficult to prospect, but using a pull method of just providing a quality donation process gets them in the door at a low per-donor cost.

Online fundraising is also considerably more agile than direct mail. Obama’s best fundraising month, February, was largely due to spikes in contributions caused by events on the ground – donors gave when Obama won primaries, when he lost primaries, when Clinton dropped her own money into her campaign, when good or bad news stories came out for candidates, etc. By being able to nearly instantly capitalize on these events and hit donors when it’s still fresh in their mind, the Obama camp was able to bring in millions in “impulse purchases.”

All these things point to a significantly more minor role for direct mail in a presidential campaign, but will it translate to non-profits? I’ll projecting that the answer is yes, though it will take time. Presidential campaigns tend to be early adopters of new technology at a faster rate, given their temporary nature and massive war chest – in many ways, the presidential campaigns are paying to pave the road for non-profits to follow (sometimes literally – more than a few software vendors have built out their products for campaigns, then turned around and provided those upgrades to other clients at a discount).

Non-profits are also less small-dollar dependant. The ability to raise grant money and collect checks from single major donors means that while small donors are an important part of the fundraising pyramid, they’re less critical part. Non-profits also have an advantage of longevity that campaigns don’t – they can spend 5 years building a direct mail base, while candidates know that they’ll have long since won or lost by the then.

There’s also something about a political campaign that just works better for online donors than it might for some non-profits. Immediacy is a big deal – candidates for office have a lot more big news days than most non-profits. Of course, when those big news days come for non-profits, having the infrastructure to capitalize on it is critical – during Hurricane Katrina, the Red Cross was able to raise considerable funds for disaster relief because they’d invested in an online program that made it easy for people to go from seeing people in need to making a difference, with just a few clicks. Many other non-profits have similar opportunities come up occasionally, and being able to accept donations online can make a huge difference when that time comes.

On a related note, the universe of donors that Obama and other candidates have tapped is demographically different from many non-profits’. Non-profits that connect with wired constituencies, like young people and civil libertarians, are going to find more success porting their fundraising online than those non-profits that work with individuals in rural areas, where broadband isn’t common, or the elderly, who have been growing more wired but are in many cases still skeptical of the security of online donations. But as connectivity rates creep up year after year, this will eventually change – there hasn’t been a year yet where the internet became less used (I won’t try to speculate on if it’s become less useful – today Digg pointed me to a dating site for zombies).

But despite these factors, I still think that this year’s presidential election marks a turning point for small donor fundraising. Those organizations that embrace the internet in their fundraising programs aren’t guaranteed to see the same astronomical small donor fundraising that the Obama campaign experienced, but as time goes on, they’re likely to see greater dividends than ever before.