Fundraising's Changing Face

There’s widespread agreement among direct-marketing professionals that the industry will continue to change dramatically over the next few years. Now, new research from Forrester Research Inc., an independent research firm, confirms it: Direct marketing is being transformed before our eyes.

The Forrester Trends report, titled “Five Predictions for the Future of Direct Marketing,” focuses on commercial direct marketers, but the findings easily can be applied to fundraising. Here’s an overview of the significant Forrester findings.

1. Online search marketing will surge in popularity and help the acquisition process. We’ve all used Google or another search engine to find information online. Paid search — contextual listings, paid inclusion and search-engine optimization — grew by 33 percent in 2005 over 2004, according to Forrester estimates, and will continue to grow at a rate of 10 percent each year, “powering search to more than $11 billion by 2010.”

What does this mean for fundraisers? People searching for the latest information on cancer research or a natural disaster are prospects prequalified to become donors. If they’ve taken the trouble to search, you can assume these searchers are prime prospects to receive your paid, online ads designed to nudge them over to your Web site where they can put their interests into direct action. Paid search enhancements now can be targeted to specific demographic attributes, behavior and even previous search inquiries. This means that fundraisers can deliver text, audio and video messages with increased sophistication online.

2. In four years, 13 percent of all consumer retail and travel dollars will be spent online. Forrester estimates that online commerce will total $329 billion by 2010. Already, 40 percent of U.S. households have made purchases via the Internet. The Forrester research also shows online buying is surging. What does this mean for fundraisers? Forrester reports current usage statistics that can be easily translated to the fundraising enterprise. For example, of online consumers today, 42 percent have e-mailed a customer-service inquiry, while 33 percent have tracked a package, 28 percent have searched for free offers and coupons, and 22 percent have visited comparison-shopping engines. These online behaviors translate into donor-service inquiries, contribution tracking, matching-gift offers and “where best to give my money” inquiries. Today’s trend-setting fundraisers are developing online tools that will empower their donors to do all of these things quickly and easily using the Internet.

Online giving is rising dramatically, especially during high-profile events such as disasters, political campaigns and targeted multi-channel media efforts that draw attention to a particular cause or campaign. The challenge for fundraisers is to make certain that we’re prepared. Forrester suggests commercial marketers adopt a “war room” mentality to harvest response. Fundraisers should do the same, arming themselves with systems that fully integrate online, direct mail and the telephone into a seamless fundraising structure designed to make giving as easy as buying a product or service.

3. Television, as we know it, will decline as an advertising medium as dollars flow to new formats. Forrester reports that by next year, more than 17 million homes will have digital video recorders. Another 34 million digital cable subscribers will have access to video on demand. Forrester sees a future where “interactive VOD showcases and targeted commercials eclipse” today’s traditional TV ad-buying practices.

What does this mean for fundraisers? The ability to deliver high-quality video fundraising messages to targeted individuals based on highly specific characteristics is a reality today and will become increasingly more sophisticated and common. Just think, a video clip about supporting the families of police officers killed in the line of duty could target viewers of CSI or other police shows. Video clips of urgent human need and how your organization is responding could be embedded in TV news programming. We’re not far from the day when donors will be able to “pull” a video project report from an organization they support to learn the most recent impact of their gifts.

4. Direct mail will become a lower-volume, premium medium. Forrester estimates that direct-mail volume among commercial marketers grew by at least 15 percent in 2005 over 2004 — and this is a conservative estimate. We know that direct mail remains the staple of fundraising. But rising costs for postage and paper will force continued innovation in the way
we approach donors in the mail.

What does this mean for fundraisers? The old axiom “mail smarter” is true. But more is required for fundraisers to continue their strong reliance on direct mail — more precise targeting of audiences to fundraising offers based on donor interests and giving-channel preferences, more sophisticated and thorough appeal packages, greater integration of messaging across all communication channels, and higher levels of personalization.

The Forrester trend study reveals a consistent theme — a strong shift to online commerce and consumer-focused demand or pull options. Successful fundraisers will recognize these trends and make certain that donors have quick and easy access to fundraising messages. Successful fundraisers already have deployed a wide variety of tools, which include giving donors access to their giving history online, making project-status reports and other information readily available online, and allowing donors to “pull” video and audio clips onto their laptops or MP3 players.

Taking advantage of these trends also means adapting direct mail and the phone into a seamless package linked closely with online options. Your donor should “experience” his or her relationship with your organization across multiple channels and view them all as related and not in conflict. This is essential if fundraisers want to benefit from the evolving direct-marketing world.

Timothy Burgess is co-founder and senior strategist at Merkle|Domain. Contact: tim.burgess@merkledomain.com.