Channel preference study_2011_final_12_1_11

epsilontargeting.com

STRATEGY AND ANALYTICS / TARGETING / CREATIVE / TECHNOLOGY / DIGITAL / LOYALTY

THE FORmuLA FOR SuCCESS: PREFERENCE AND TRuSTConsumer Channel Preference StudyDecember 2011

INTRODuCTION

DIRECT FROm THE SOuRCE: THE CONSumER

An envelope from a national bank highlighting attractive interest-free checking arrives in your mailbox one morning. While skimming the newspaper over breakfast, you notice an ad for that same checking offer in the local paper. Later that afternoon, you log into your email to find that the bank has sent you a message pre-qualifying you for the checking account. As you browse the internet you continue to see web display ads with the bank’s features and benefits. In the evening, you pick up your cell phone to make dinner plans and see a text message from, guess who—the bank.

This marketer has reached you over five different communication channels throughout the day. Which one captured your undivided attention: the envelope in the mail, the newspaper ad, the email message, online advertising or the SMS text?

If you chose the envelope in the mailbox you’re not alone. According to Epsilon Targeting’s 2011 Channel Preference Study, 36% of U.S. consumers and 40% of Canadian consumers agree that direct mail is the preferred channel to receive financial services information.

Interestingly, U.S. consumers report an emotional boost from receiving direct mail, with 60% agreeing they “enjoy checking the mail box for postal mail.”

Not only are consumers receiving marketing information via multiple channels, they increasingly are deluged with information, leading to greater selectivity in determining what merits attention. Capturing the attention of today’s consumer demands more relevance than ever before. Effective marketers apply custom-designed research approaches to better understand and leverage consumer relevance when spending their communications dollars.

The 2011 study highlights the latest national survey results from Epsilon Targeting onpreferred communications channels for consumers to receive marketing messages.

Epsilon Targeting survey results from August 2011 show direct mail continues to serve as the channel of choice and most trusted for receipt of marketing information in many categories.

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Percent of population agreeing based on top two selections on a five point scale

30%

42%

51%

55%

64%

52%

48%

66%

61%

26%

36%

43%

43%

60%

65%

50%

59%

75%

Postal mail information is more trustworthy

Receiving postal mail makes me feel valued

Spend time searching online for new products

Enjoy getting email from brands on new products

Enjoy checking postal mail box

Receive too many emails in one day

Postal mail gets more attention

Enjoy getting postal mail from brands about new products

Get a lot more emails that I do not open

Attitudes Toward Postal mail and Email

U.S. 2011

CAN 2011

However, there are exceptions, such as travel. When asked about travel communications, 32% of U.S. consumers prefer the Internet, though 21%, which is not an insignificant population, prefer direct mail.

Notably, the preference for direct mail extends to the 18-34 year old demographic in both the United States and Canada. This key demographic finding underscores the importance of avoiding assumptions on age and instead capitalizing on research that enables marketers to understand what consumers want and where consumers are going to find the information that eventually will be culled down to a purchase decision.

Armed with research-based information marketers will be equipped to reach each consumer with relevant communications through the channel in which they are most engaged.

Epsilon Targeting’s August 2011 Channel Preference Study is based on completed surveys from 2,226 U.S. consumers and 2,574 Canadian consumers. Epsilon Targeting has now completed three surveys on the topic of consumer channel preference to generate trending data. The August 2011 research was preceded by an initial study in February 2008 as well as a survey in February 2010.

RESEARCH INSIGHTS

ExTEND YOuR REACH

Consumers today have access to and are using an increasingly wide range of media to gather and receive information. Just a few years ago the key channels included TV, radio, newspapers, direct mail and email. Now the range of choices extends to mobile, third-party websites, social media and location-based services.

Given the proliferation of channels, marketers need to leverage a multichannel approach in order to engage their key audiences. The savviest marketers seek insights into their best customers’ preferred media to maximize the impact of their communications investment and drive business results.

For this reason successful marketers utilize a multi-pronged approach. Marketers do so for three logical reasons:

1. Consumers vary in the channels they use REGuLARLY

• In the U.S., 37% of consumers use TV daily to get information about consumer product categories, down from 43% in 2010.

• In Canada, 29% claim they use TV daily to learn about consumer product categories, down from 35% in 2010.

• 36% of U.S. consumers use print newspapers for consumer product information on a weekly basis, up from 34% in 2010.

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• Similar to the U.S., Canadian consumers rely on newspapers for information on consumer products, with 33% using this source on a weekly basis.

• Facebook and mobile phones were the only channels showing growth among U.S. consumers in the survey, with Facebook increasing to 10% (versus 6% in 2010), and mobile phones steady at 6% in 2011 (versus 5% in 2010).

2. Consumers vary in the channels they PREFER

• Across the board, U.S. and Canadian consumers prefer receiving sensitive or general health information from a trusted health care professional.

• For insurance information for example, 36% of U.S. consumers and 38% of Canadians prefer traditional mail over other channels.

• Consumers similarly prefer mail over other channels for information about financial services, with 36% of U.S. consumers and 40% of Canadians preferring mail over other channels (including email, newspaper inserts, and internet).

3. Consumers vary in the channels they TRuST

• U.S. and Canadian consumers place the highest levels of trust in their health care providers (doctor, nurse, or pharmacist). 80% of U.S. consumers place their highest level of trust in their health care provider, while 84% of Canadians feel the same. These high trust levels are reflected in consumer preference to receive health- oriented information from a health care professional they know.

• The least trustworthy channels are social media and blogs, each garnering only a 6% trust level among U.S. consumers and 5% among Canadians, and only 6% of U.S. and 5% of Canadian consumers expressed trust of online forums.

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13%

7%

12%

8%

9%

9%

9%

10%

9%

13%

8%

9%

9%

8%

21%

25%

25%

27%

30%

30%

30%

31%

33%

34%

36%

36%

37%

41%

Travel

Household services

Retail information

Cleaning product

Personal care

Over-the-counter medication

Charitable causes / donations

Food product

General health

Mail order shopping

Financial services

Insurance

Prescription

Sensitive health

15%

15%

17%

8%

10%

12%

11%

12%

13%

13%

13%

11%

10%

10%

20%

21%

21%

24%

28%

28%

29%

29%

30%

30%

30%

32%

38%

40%

Retail information

Hobbies or interests

Travel

Household services

Charitable causes / donations

Cleaning product

Over the counter medication

General health

Personal care

Food product

Mail order shopping

Prescription

Insurance

Financial services

Postal Mail

EmailU.S. CANADA

Consumer Channel PreferenceBy Cateogry

In the age of information overload, consumers prioritize what they read based on their level of trust in the source. The 2011 Epsilon Targeting survey shows that across categories, direct mail, brochures or flyers continues to be a trusted source of information, with social media currently the least trusted in the United States and Canada.

Exceptions to note are health care, where U.S. consumers place the most trust in their health care professionals (74%), and in family and friends (47%), a decrease from 2010 (55%).Another personal filter impacting channel preference is the perceived maintenance of privacy.

For example, when comparing email and traditional direct mail, 37% of U.S. consumers feel traditional mail is more private than email. Supporting this view is data showing a decrease in the perception of maintaining anonymity. Specifically, fewer U.S. respondents, 8%, feel that the Internet “is more anonymous,” compared to 11% in 2010.

EmPOwER YOuR CONSumERS

With the omnipresence of Internet access in 96% of the U.S. households surveyed, why don’t consumers prefer email more? U.S. consumers cite the following main reasons:

• “I already get too much email” (32%).

• “A lot of online information can’t be trusted” (24%).

In contrast, traditional direct mail retains consumer appeal for a variety of reasons:

• “It is more private if sent through the mail than sent by email or online” (main reason for 37% of U.S. consumers).

• “I pay more attention to information I receive by postal mail than if it was received by email” (50% of U.S. consumers strongly or somewhat agree).

• “I enjoy checking the mailbox for postal mail” (60% of U.S. consumers strongly or somewhat agree).



Channel/media Trustworthiness

21% 21%

15% 16%

10%

6%8%

6% 6% 6% 6%

16%13%

21%

15%

8%5% 5% 5% 5% 5% 5%

U.S. CANADA

Percent of responders who said media is trustworthy, based on top three box score on a 10-point scale

The idea that checking the mailbox is a source of enjoyment may provide a powerful emotional hook for consumers.

In addition, personally addressed mail is greatly preferred over unaddressed traditional mail in all categories. In the insurance category, the numbers show that 31% prefer personally addressed compared to 5% for unaddressed among U.S. consumers. That’s a significant difference that could greatly impact whether the message reaches the desired target. “Current occupant” doesn’t seem to have the emotional pull of a personally addressed piece of mail.

The 2011 Channel Preference Study also shows that marketers are doing a better job of targeting the right consumers with the right information. Thirty percent of U.S. consumers said, “I now receive more mail that interests me,” compared to 20% a year ago. 50% report-ed, “I find there is more information being sent to me in the mail,” compared to 63% in 2010. Less clutter in the mailbox and more targeted pieces are reasons why consumers pay attention to traditional mail.

CREATE A BALANCED APPROACH

There are a number of good reasons to continue the use of email as an effective marketing communications tool. Key among these is the ability of the consumer to receive email on their own terms including:

• Choosing to receive or not receive (main reason for 42% of U.S. consumers).

• Deciding to print or not to print (main reason for 41% of U.S. consumers).

• Saving on paper (main reason for 34% of U.S. consumers, considerably greener than 2010, when 21% chose this as the main reason - for Canadians, saving on paper is the main reason why 42% prefer email).

• Easily forwarding the information (main reason for 23% of U.S. consumers).

However, email communications should not be overused. 65% of U.S. consumers strongly or somewhat agree that “I am getting too many emails in one day, and a whopping 75% admit “I get a lot of emails that I don’t open.”

An interesting shift is occurring with the perception that reading email saves time. The perception that “reading email is faster” declined slightly among U.S. email account holders in 2011 to 45% (versus 47% in 2010), suggesting that our clogged inboxes are still taking more of our time.



In 2011, 50% of Canadians perceive that “reading email is faster,” is consistent with 49% from the previous year.

Top Reasons For u.S. Channel Preference

Postal mail Email Already get too much email 32% I can print the info to keep if I want 41%

Would prefer not to have to print the info 30 Can read the info when it is convenient for me 39

It is more private if sent through the mail than sent by email or online 37 Can choose which info I want sent to me 42

A lot of online info can’t be trusted 24 Can more easily share the info with others 23

I don’t have a computer at home 2 To save on paper 34

ACROSS THE wEB

The Internet remains an important resource when searching for new products and ideas, with 53% of U.S. consumers using the Internet weekly to do so - including company and other websites, forums, blogs, and search engines, but excluding social media sites (which are addressed later in this paper). 28% of U.S. consumers claim to use the internet daily for these purposes.

We know that trusting the source is very important to consumers. The study looked at vari-ous sources that consumers access via the Internet and found that company websites are the most trusted, with more U.S. consumers trusting company websites (21%) compared to other websites, email, online forums, blogs, You Tube, search engines, and social media sites.

Social media sites currently evoke the least amount of trust from consumers, with only 8% placing a high trust level in Facebook, and even fewer users (6%) highly trusting the other social media sites.

Trust Levels in Online Channels and mediumsu.S. CANADA

Internet Source 2010 2011 2010 2011

Company websites 21% 21% 18% 16%

Email 12 10 11 8

Other online sites 11 10 6 7

Online forums 8 6 5 5

Facebook 7 8 5 5

Blogs 6 6 5 5

YouTube 6 6 5 5

Twitter 6 6 5 5

Other social media 6 6 5 5

Search engines n/a 18 n/a 16



Based on percent of respondents who rated their trust level 8, 9 or 10 on a scale of 1-10, where 1 means not at all trustworthy and 10 means very trustworthy

The last year has seen a rapid increase in the number of Facebook users, with an impressive 61% of respondents having a Facebook account, compared to 47% a year ago. Canadian consumers report a similar trend, with Facebook accounts now held by 62% of respondents, compared to 56% in 2010.

Just 5% of respondents report relying on Facebook ads for any sort of household service daily, and only 2% for general health information. Additionally, the study found that a third of consumers don’t find ads on social media sites useful (31% U.S., and 33% of Canadian consumers).

THE YEAR OF GROuP DEALS

Over the past year, a new marketing strategy has emerged—the group deal website and e-newsletter. These providers offer a daily deal that becomes active once a certain number of people purchase the offer. This year, 39% of U.S. respondents claimed awareness of a group deal website (such as Groupon or Living Social). Canadians have greater awareness at 53%.

Of those U.S. respondents aware of group deal sites, an impressive 34% receive a deal every day by email. Another 10% check the group deal website on a daily basis to see what’s new, providing an ideal channel for timely, late-breaking communications with consumers. Every day an additional 6% visit a group deal consolidation website that includes deals from a variety of providers. Every few weeks, 8% of consumers purchase a deal, and 6% pass on deals to family or friends.



U.S. CANADA

usefulness of Advertising on Social media Sites

Percent of responders who answered based on a 10-point scale

13%

31%35%

Very/somewhat

useful(Top 2 box)

Not very/not useful(Bottom 2

box)

Do not useany social

media sites

16%

33% 32%

Very/somewhat

useful(Top 2 box)

Not very/not useful(Bottom 2

box)

Do not useany social

media sites

mOBILE PHONES: THE NEw VIRTuAL COuPON wALLET?

When was the last time you left the house without your mobile phone and went back for it? If you are like most U.S. consumers, you rely heavily on your cell phone.

In 2011, the first year Epsilon Targeting collected this data, on a daily basis 60% of U.S. consumers use their phone for local calls; 31% send or receive text messages; 29% receive or access voicemail; 14% receive or send email; 8% surf the web and 3% receive group deals daily.

Canadian usage is similar, with the exception of only 43% reporting daily local calls and 15% checking voicemail daily.

In addition to using mobile devices proactively to make calls, check voicemail or email, or send a text, some U.S. consumers have started using their cell phones to access coupons. Quick Response (QR) codes, also known as data matrix codes, are becoming more prevalent daily and can be used to share discounts.

Essentially a 2-dimensional bar code that is readable by mobile device cameras, these QR codes provide a high-touch, point-of-purchase communication opportunity that savvy marketers have begun to explore.

While only 2% of U.S. consumers surveyed are currently using their cell phone for coupons, the potential for this highly targeted, consumer-empowered channel to increase POP sales is significant.



10%

6%

34%

1%

2%

4%

11%

6%

12%

3%

4%

6%

10%

8%

6%

8%

6%

8%

Check groupdeal website

Check websitethat has infoon multiplegroup deal…

Receive emailwith group

deals

Purchase agroup deal

Send info ongroup deal to

family/friends

Receive infoon group deal

fromfamily/friends Every Few Weeks

Weekly

Daily

13%

6%

42%

1%

1%

4%

11%

7%

11%

2%

5%

6%

11%

10%

5%

9%

8%

7%

Check groupdeal website

Check websitethat has infoon multiplegroup deal…

Receive emailwith group

deals

Purchase agroup deal

Send info ongroup deal to

family/friends

Receive info ongroup deal

fromfamily/friends Every Few Weeks

Weekly

Daily

U.S. CANADA

Frequency of usage with Group Deal Sites

Based on usage frequency of 879 U.S. and 1,272 Canadian responders

Prominent Daily uses For Cell Phonesu.S. Daily Canada Daily

Local calls 60% 43%

Text messaging - locally 31 31

Receive/check voicemail 29 15

Receiving/sending email 14 15

Web browsing/surfing 8 6

Group deals 3 3

Get coupons 2 1Responses based on percentage of those who use cell phones daily



KEY RECOmmENDATIONS FOR u.S. AND CANADIAN mARKETERS

1. Utilize and adjust messaging to a variety of channels that reach consumers through media they prefer to use, use regularly, and trust highly.

2. Use personally addressed direct mail to provide information as well as an emotional lift for consumers. Recognize that more targeted communications are becoming the norm for consumers as they are engaging media on terms they prefer. Every opportunity to express more knowledge of the consumer in the channels they prefer is essential to building a relationship and driving action.

3. Continue to employ email as a consumer-empowered communications channel, where consumers can opt in or out as time and email account storage space allows. Support the consumer’s desire for control or “greening” by enabling them to control what they receive and print.

4. Understand and leverage current trends in the use of mobile phones to retrieve coupons and point-of-purchase information to maximize the upside potential of this powerful, ubiquitous tool.

5. Utilize online channels (email, social media, and group deals) to reinforce information shared through offline channels.

6. (Bonus for Canadian Marketers) Leverage the higher awareness and usage of group deal websites in Canada by using them to be in touch with consumers, and encourage purchases more regularly.

CONCLuSION

SHIFTING STRATEGIES TO mEET CONSumER PREFERENCES

In today’s information-rich, multichannel marketplace, marketers must understand and leverage the sources that consumers trust and prefer. To make sure the message reaches its target, it’s all about location, location, location! And the channels used to get there.

By using channel-specific metrics and advanced analytics, successful marketers can not only fine-tune the content of their marketing messages, but also leverage the most effective delivery routes to their key audiences. The consumer is in charge and must feel empowered by having choices about how to receive information and how to interact with it. Consumers must have the power to customize what they receive and to act on what is compelling in the most convenient, least time-consuming way.



Make the consumer the center of your marketing strategy. Listen to the voice of the consumer. They have very clear preferences and strong reasons for making certain channel choices. Some will prefer direct mail with supporting messages delivered by social media or mobile. Others may want email backed by a robust company website, with the intermittent delivery of mail for certain types of communications.

Regardless of the formula, the marketer’s task is to ensure the right distribution of channels so that consumers are communicated with in the manner that they prefer and trust.

By adopting the right consumer-centric approach, you will be able to implement a winning integrated marketing campaign.

ABOuT THE mETHODOLOGY

This report on channel preferences for the receipt of marketing information is based on the completed responses of 2,226 U.S. and 2,574 Canadian consumers to an online survey conducted in August 2011. The survey is a representative sampling of U.S. and Canadian consumers. A 15-minute questionnaire was presented to respondents 18+ years of age. Statistical significance is calculated at the 95% confidence level. Epsilon Targeting has now completed three surveys on the topic of consumer channel preference to generate trending data. The August 2011 research was preceded by an initial study in February 2008. That effort was updated in February 2010.

ABOuT EPSILON TARGETING

Epsilon Targeting is the data services division of Epsilon ,the industry’s leading market-ing services firm, and provides the most comprehensive view of consumer marketing and purchasing data in North America. Epsilon Targeting has been providing target marketers with precision data and predictive analytics on prospects and customers for over 30 years in both the United States and Canada. Epsilon is the world’s largest permission-based email marketer and is an Alliance Data company. For more information, visit www.epsilon.com or call 1-800-309-0505.

[email protected]

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