More Means More. Until it doesn’t.

by | May 3, 2023

It seems indisputable.

More prospects mean more possibilities. More outreach means more engagement. More engagement means more commitment.

So, we just need to do more. Right?

Over the past 30-plus years, I’ve watched direct mail marketers push the limits on this. Mailing deeper into the file. Increasing the number of appeals. Being more aggressive with the ask. Until rising costs and falling response rates eventually force a reckoning.

Is this the future for today’s digital marketers?

As I read the just-released 2023 M+R Industry Benchmarks Report, it seemed to say “yes” … and “no.” I base this on two primary areas of focus.

1. Email

Participating organizations (215 strong!) reported sending 60 messages-per-subscriber last year, up 15% from the prior year. Almost half of these were fundraising messages, but the revenue-per-message was down 15%, resulting in a 4% overall decline in email revenue.

The average click-through rate for fundraising emails was 0.54% (down 15% from prior year), the average response rate was 0.09% (an 18% decline). For comparison, the average click-through rate for Welcome messages was 3.2%, for advocacy messages 2.1% and for newsletters 1.1%.

For the year, the overall unsubscribe rate was 9.1%. For an additional 7.8% of constituents, messages bounced. The net result was an overall average decline of 2% in file size. For perspective, last year’s report (not directly comparable because these are not the same respondents) unsubscribes were at 7.8%, bounces at 4.6% and overall file size grew by 2%.

Put more simply: more messages reach fewer total people who interact (including donate) at a lower rate.

The report calls out two specific one-day examples that seem to demonstrate this.

  • This past year, nonprofits received 3% of annual online revenue on Giving Tuesday and 5% on the last day of the year. Email revenue on Giving Tuesday was down 18% from 2021; revenue from December 31 was down 22% (overall revenue for both periods was down 13%).

  • Two days that account for nearly 10% of your annual revenue. I remember what my in-box looked like both of those days. Were “more messages” a good investment? (And while I did make contributions on each, it was to implement decisions made far earlier, not simply in response to the “final opportunity.”)

2. Digital Advertising

Last year, nonprofits spent $0.11 of every dollar raised online in digital advertising, a 28% increase from 2021 (and nearly double the $.06 reported by last year’s Benchmark participants). About half of this was invested in direct fundraising. The remainder went mostly to awareness/education or lead generation, with larger organizations more likely to invest in the former and smaller organizations in the latter.

About one-third of this spending went into search. For the balance, large organizations were more likely to invest in Meta, while small to mid-size organizations invested in display. Across all organization sizes and sectors, search advertising showed the highest return on ad spend (ROAS), $2.75, compared to $0.50 for Meta and $0.33 for display.

For the first time, this year’s report featured paid search and Google Grants spending, or, as the authors label it, spending “monopoly money.” (As an aside, even if you can’t read the entire report, you owe it to yourself to read this section. It’s fascinating!)

The ROAS for Google Grants ads is $0.07, a fraction of paid search. Paid search showed a cost-per-donation of $47; Google Grants $1,208. There are a number of reasons. There’s a monthly spending cap ($10,000) on Google Grants, and many organizations don’t even fully utilize that. The average cost per click for search ads was $3.63; Google Grant bids are limited to $2.00. When search results are displayed, paid ads appear above those funded by Google Grants.

So, are Google Grants worth the effort? I think so—if used wisely. Paid advertising is more efficient, and certainly should be used to support higher value campaigns. For every $1,000 of Google Grants advertising, organizations received 431 site visits. These are opportunities to generate the names and email addresses of prospective new constituents. 

As digital marketers consider overall file erosion, they need to develop effective strategies to fill that pipeline. Digital advertising can help fill this need.

Some other top-line results:

  • Overall, online revenue declined about 4% in 2022. Revenue from one-time givers (non-monthly; average 1.2 gifts/year) fell 12%; revenue from online donors went up 11%.

  • Overall donor retention was 29%: first time donors 16%; prior repeat donors 49%; monthly donors 63%.

  • For every 1,000 email subscribers, nonprofits had 685 Facebook fans, 208 Twitter followers, and 160 Instagram followers. However, any specific post is likely to reach only a fraction of that audience, depending on the size of file, the type of content, the algorithm of platform and user engagement.

Take a look at the 2023 M+R Benchmark Report for yourself and let us know what you think.

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