Debbie: Hi. Good afternoon, everyone. Welcome to today’s webinar on everything you need to know about acquisition before planning for FY22. I’m Debbie Merlino, president of agency services at Allegiance. And I am joined today by a host of really smart people that are going to share this hour with me and help you as you plan for the year ahead.
Today, what we’re going to be talking about is five key things. Number one, we’re going to be talking about learning, how to project the number of new donors that you’ll need to acquire so that you can meet your budget goals for the upcoming fiscal year. We’ll walk through about developing a cost and revenue budget for acquisition.
We’ll talk to you about a little bit about direct mail, but we’ll put a little more of our focus into the digital tools available to you in your quest to acquire new donors. From the number of attendees we have, it seems like a lot of people. Are pretty comfortable with direct mail, but that digital still seems a little bit new.
So we’re going to spend a little more of our time there. And really our goal is that by the end of this webinar, that you will have gained more confidence that you will be able to. Not only acquire more donors using both digital and direct mail channels and be able to budget for that, but that you’ll also be able to correctly report on all of the new donors that you do acquire during FYI 22.
And then during the way, we’ll share some real-world case studies that you can leverage in your own program. I mentioned all the smart people that are here to help you through your journey today. I’m gonna kick it off with Joe McLaughlin so can you introduce yourself?
Joe: Sure. Thanks, Debbie.
And hello everyone. I’m Joe McLaughlin. I’m the director of digital analytics and optimization at Allegiance as well as the senior digital strategist. So I work with our clients to help them raise more money, engage their supporters, and really make sure that we’re using data to inform all of our strategies and tactics.
Liz: Hi everybody. I’m Liz Lowe and I’m a director of data and analytics. I work with Joe hand-in-hand to give everybody the tools they need to really analyze their program and make sure they’re making the most of it.
Gina: Hello, my name is Gina Sibila and I am a client service director. I work with various nonprofits on helping create, manage, and improve all aspects of their program.
Chris: My name is Chris Earp. I’m the director of advertising at Allegiance Group. So I work on everything paid media, and I’m particularly excited to talk about Facebook, Google, and display ads today.
Debbie: Great. Thank you everyone. The first thing we want to do is jump in and talk about why acquisition and helping you make the case for acquisition. Regardless of which channel you use. So really there’s a fundraising axiom that goes, there’s only three ways to make more money, either acquire more donors, get your current donors to make more gifts each year, or increase the average gift of your existing donors. When building your FYE 22 budget, you really need to make sure that you are considering each of these strategies. But today we’re going to be focusing on the first way to make more money, which is acquiring more donors.
In virtually every organization, really, regardless of what vertical you’re in, you’ll see that dollars follow donors. So what I mean by that is if you look at this slide, this is a great example where in each subsequent year, more donors, more dollars. The more donors you have, the more top line revenue you will raise.
That’s why it seems like one metric that every fundraising professional knows is how many active donors they have. So I’m not talking about the number of names that are on their database, but really the number of donors that have made a gift in the last 12 months.
Gina: And we all know nonprofits make money on donor renewals, but acquiring new donors is an essential and costly most of the time, first step in the process. Unless you are continually bringing in new donors, your donor base will dwindle through attrition and acquisition is an investment in the long-term sustainability of your fundraising program. Acquisition allows you to reach new, fresh prospects that you otherwise may not even be able to contact.
Debbie: So the reason that it’s really important to know how many donors made a gift in the last 12 months, is so that you can measure churn or its counterpart, net file change. One of the things that you often see, as we describe your donor file as like the leaky bucket. So you have new donors coming in, you have donors that are lapsing for whatever reason, falling out of the bucket. And the idea is that you want to keep that water level of the bucket, at least the same. So you need to be adding in as much water or as many donors as a sort of falling out all of those holes.
Exactly as Debbie just said, on average, a nonprofit can lose up to 40%, sometimes even 50% of their donors every year. So acquisition helps replace them. And you really need to view it as an investment in donor retention.
So what we’re going to do for the next couple of slides, the next couple of slides look the same. But they’re real-world examples of what we call net file change. So you can see here that the green boxes are the number of new donors that an organization has acquired each year.
The number in the purple box is the number of reactivated or renewed donors. And then the red box to the right is the number of lapsed donors. And then off to the far right there, there’s an arrow. And the next three slides that show either the net gain or loss, right? So if you take the 2,681 donors that this organization lost.
And you add up all of the new people in the reactivated. Basically their file was pretty flat, right? They’ve only grown by 84 donors. It’s hard for an organization like this to increase its top line revenue when the donor file isn’t growing. So if dollars follow donors, it’s unlikely that this organization will see revenue increases in the next year.
So when new donor acquisition only makes up for the lapsing donors, any revenue growth has to come from existing donors making more gifts or larger gifts, the other two ways of making money that we talked about. So for an organization like this, if their number of active donors is basically flat, how can they raise more money from the same number of donors?
Gina: Exactly. And it’s important that you retain, acquire, and reactivate enough donors to offset the attrition and continue to grow the house file in order to increase gross revenue. And this could be an example of rapid growth due to disaster giving. And two things we do know about this type of donor is that they typically give out of emotion, and they often have a very low retention rate.
So while many disaster, even COVID donors will lapse once the emergency passes. It is possible to convert some of them, but will it be enough to offset attrition in the years to come after the disaster? Most likely not, which is why it is important to continue including acquisition in your revenue growth strategy.
Debbie: So this second example, here is an example of an organization that had much more growth than the first example. They had 983 net new donors, as opposed to only 84 net new donors in the previous example. The other thing that you’ll see is that the ratio of new to reactivated donors is pretty much the same.
So they’re growing both from new donors as well as reactivated. You really want to shoot for a ratio like this so that neither new donor acquisition nor reactivation is solely responsible for making up for donor churn. This is really a nice balance. This is the type of thing that you want to be shooting for so that you’re not putting too much pressure on either part of your program. Not the acquisition part and not the renewal part of the program.
Gina: And a steady strategic plan forms the backbone of a non-profit’s database growth. It is important to have a healthy mix of growth from each segment in order to continually grow revenue.
Debbie: In our last example this is really that example of rapid file growth. So you can see here 2,400 net gain in terms of total donors, but there’s really an imbalance between the new versus the reactivated. I think this is really a good example of what Gina was referring to earlier. So if you are a food bank, this might be what your file looks like right now with that big influx of new donors giving around COVID.
If you happen to be a public media station, you might also be seeing a version of this. Especially, if you are a TV station, you might be experiencing an influx of passport donors, right? And what you may find if you’re a public media station, is that while your new donor counts are increasing, your revenue per donor is either flat or declining, because those passport donors aren’t upgrading the way that a more mission-oriented donor would. So in a situation like that, you need more mission-oriented donors to offset that influx of new passport donors, and your file looks like that. You’re still going to need to invest in acquisition.
Gina: Exactly. So this is an example of when a disaster or a pandemic as we all witnessed last year occurs, and an organization receives an influx of new donors. We know that retaining disaster donors, once the crisis has passed, can prove to be a challenge. Initial results from 2020 new COVID-19 donors are showing a 20% retention rate, meaning that 80% of these one-time donors will just not give a second gift.
Joe: So the biggest issue, obviously with this type of imbalance, is that not that it’s a problem this year, but that it will create a problem for you next year. So with those lower retention rates you’re going to continue to put pressure on yourself to continue to acquire new donors year over year. We’ll get into this in a future webinar in our series, but obviously with new donor retention rates being significantly lower than the retention for reactivated audiences if too much of that net file growth has made up solely of new donors, you could very quickly find yourself in an endless cycle where you need to recruit an even greater number of new donors next year, and the year after that, and the year after that and on just to simply overcome that natural, unexpected attrition from the donor file.
Liz: And one thing to keep in mind that this past year has been a COVID year. Unusual, never happened before. So most traditional metrics are not going to apply to these COVID slash disaster donor s as we’re calling them.
Chris: Yeah, on the digital side of things, direct mail and digital are different in a lot of ways, but a lot of ways they’re similar too, especially the principles that we just went over about stagnation, attrition, churn, and revenue decreases that can come as a result of not having a buttoned-up acquisition strategy to deal with those kinds of changes. Now on the digital side, it’s important to remember that there were fewer barriers to entry as far as testing goes. So rather than a really large Herculean effort and then measurement over the course of time in judging against prior years, a little bit of a slower pace overall direct mail, digital you can launch ads for a couple of weeks and react in real time to that data, scale with performance or choose to shut it off.
So you have more opportunities to test over time into an acquisition strategy. Now, if you stop testing acquisition and you stop running it in some sort of a seasonal or evergreen fashion, changes to technology and user behavior and user preferences could make it such that same strategy won’t work when you go back and test it the next time. I don’t have to tell you all how many changes there have been to digital ads in the last year at least, not to mention the last five, but changing ad formats rules, legal frameworks, privacy considerations, these make continual testing in digital really important.
It’s no different for acquisition. Now of course, you also want to recruit good new digital donors who are used to getting digital communications, either in the form of ads or were in the form of emails. So acquiring is important for your email program as well. And let’s not forget that if you’ve got a big, sophisticated digital program and you’ve got these amazing acquisition campaigns that are running pretty much year-round and recruiting new donors to your file, if you pause those, the machine learning is going to have to readapt for a new environment and react to new data points when you relaunch it. That’s not to say that you should always be evergreen, but it’s an additional consideration that’s perhaps unique to the digital space.
When to Invest in Acquisition
Now when to invest. Obviously, we’d always love to run always on evergreen acquisition. But many of the cases for digital acquisition overlap with direct mail acquisition. You want to look at the quality of your file if you’re experiencing significant attrition, or reductions in average gift, reductions in giving frequency, or lifetime value.
Certainly there are some considerations outside of your acquisition strategy, as far as user experience and the kinds of communication you make with individual segments of the file. But recruiting new digital donors can keep your file current and engaged. Of course, if the comparative quality of new digital donors is advantageous, or if they give higher gifts, or they give more frequently, you may consider that from a budgetary perspective when you’re allocating media budgets.
Additionally, looking over the past, understanding your true cost to acquire at the individual audience segment and channel level against their lifetime value is really important. And that’s where measurement becomes crucial. You need an analytics framework in place. That’s going to allow you to understand how much it costs to acquire these donors, how much they give over the course of time and how that compares to your other channels.
Now, of course objectives for the next year, we should have revenue targets and based on that historical cost per acquisition and all of the revenue numbers associated with those digital donors, and we should be trying to figure out how they’re different or unique so that we can scale in real time against the success we’re seeing.
Now, there are also market changes coming up. Google is going to phase out third party cookies sometime before 2022. And what that means is the way that ads are targeted and delivered and reported on it’s going to change. That doesn’t mean that it’s going to make advertising ineffective, it’s just going to change.
So you want to dedicate a little bit of testing budget to making sure that you’re super current on those platforms. Finally, I just want to note there are a few considerations for on the file versus off the file. You may already own segments who aren’t yet donors, just email names. So consider whether value is to upgrade someone who’s receiving your communication to someone who donates what’s the value of a lapsed donor compared to a new donor. Is the target cost per acquisition different.
And similarly off the file, there’s probably people who have heard of your organization who haven’t yet joined your file or made a gift. Where do they qualify? If they search for you by name, but they aren’t a donor yet? Is that really a new donor? So understanding all the data-driven reasons that you might acquire using good data about costs and revenue is always the best move.
And if you don’t have that measurement framework in place now, it’s time to start setting them out, creating one.
Now, obviously end of year is a great time to invest in just about everything when it comes to fundraising. We do see typically end of year conversion rates are much higher across the board. That’s because it’s giving season, that’s because there are tax deductible donations to be had. So reserving some budget for end of the year is always a good idea when it comes to acquisition.
But acquire ahead of end of year too. If you can, stock the email file with all those great new donors who are going to give again either solicited through email or another ad ahead of end of year, lots of good acquisition opportunities in September, October, November. Now we also know that matches.
Things like premiums, there’s all kinds of ways to incentivize users to give, and that will increase conversion rates. So consider using some of those time tested tools. Additionally, remember that the more accurate you’re targeting is, the less attrition you will have, the better donors you’re recruiting the people who feel your mission most are involved in it, somehow those people are going to stay on file longer and be better donors. Additionally, just ahead of end of year, it’s always a good idea to run some ads, to create some buzz so that people maybe heard of you in October and November, maybe they didn’t convert just yet. They didn’t join the file, but maybe they’ll search for you after being served in another ad as part of end of year. Campaigns really go in this awareness, action, and then retention kind of model. So thinking of that awareness component ahead of really high conversion rate times of year, like end of year, is a great idea. Now, finally, acquisition is not always a return on ad spend positive, even though we want it to be. Typically, it costs a little bit more to acquire a new donor than the total value of their first gift.
So if I spend a hundred bucks to recruit a new donor and they give me 60 bucks as their first gift, I’m out 40 bucks. Folks, that’s why we track lifetime value. That’s why we have to know how long did it take them to get to second gift. And when they made that second gift, am I now return on ad spend or return on investment positive?
Now during end of year, you might just be return on ad spend, but don’t be lulled into thinking that will be the case year-round.
Gina: Hey Chris, we had a question asked about what is email program damage.
Chris: Absolutely. Typically when you have a an email program that relies on some segment of owned audiences, emails that are on your file there can be the same kinds of problems as there wouldn’t be in a direct mail program or an advertising program which is just your classic attrition, churn, folks dropping off file.
And so the reason you want to acquire against that email list is just the same as the reason you want to acquire against your direct mail list.
Now, overall we just want to know that we have a lovely client called Be The Match and they do very important work. They’re the National Bone Marrow Registry. So if you are impacted by blood cancer, blood disease, these are the people who help you find a matching donor. And chances are that everybody listening to this webinar has either heard of them or been offered the chance to join their registry by submitting a cheek swab and seeing if you can be a match for somebody that’s a seeking patient.
Now, one of the problems that they brought to us was we weren’t seeing as much recurring revenue from a file as we wanted. We wanted a bigger list of digital donors who contribute reliably. Additionally, whereas typically a really well-known brand, Be the Match has a lot of people searching for them all the time, which is of course no different for them.
We thought, great. We’ll meet those users in search with a donate ask. And the case for giving is so good, and there’s so much brand awareness, that we’ll raise a lot of money and fund this program. What we found was a lot of people Googling Be the Match were actually, or even Be The Match and Donate, they were Googling to join the registry. They wanted to donate their blood or saliva to see if they can become a match. So there was actually a branding challenge.
There were, a lot of people searching for the keywords that we cared about, but it was hard to recruit against them because they didn’t typically fall into our ideal donor profile. What we ended up doing was putting together an awesome program that drove a lot of acquisition through Facebook, using lookalike audience modeling, usually using a first party data to target people who are interested in this kind of mission and predisposed to give. And we’re able to acquire a large number of donors.
And over time, what we saw was changing behavior in search. Now on the next slide, you’ll be able to see a little bit more detail. Effectively, we’re able to recruit enough donors that we have a sea change in donor behavior and started to be able to make more money in search? We ever had before.
Now we have learned recently that this is more connected to whether or not we have display and paid social ads in market than we initially thought, but that’s also really good data. Having paid social ads in market creating search volume and then recruiting donors based on that buzz is a really great way to grow a program.
I think we can flip to the next slide here where you’ll just see some examples of those ads. So we used a blend of first party data targeting through Facebook, that’s people on their Facebook profile taking actions that we can target against being interested in other cancer causes or other medical charities slash organizations.
We also uploaded files of our best donor segments. So having Facebook go look and find similar people in order to target them. And by doing a lot of good audience-level sort of segmentation and testing, we’re able to identify changing user preferences and meet them with either new creative or different kinds of delivery or matches.
All kinds of things like that, that contributed to a program that recruited almost 200 new donors over a three month period within our target cost per acquisition, which of course we reverse engineered using the data that we need to make these kinds of decisions. And we nearly recouped all of our money, 84.54% return on ad spend which was very strong.
So this is an example of what tactical data-driven acquisition can look like on the digital side.
Debbie: Okay. We want to talk a little bit about how do you start to develop your budget for the coming fiscal year? When I talk to prospects usually about what their approach is, oftentimes what I hear is I just planned to do what I did last year and then maybe I’ll fudge the response rate or the average gift a little bit to get me where my boss needs my budget to be.
So the first thing I’m going to say is, do not copy and paste last year’s budget. The problem with that is that you really have no idea if those 90,000 or however many pieces of direct mail acquisition will be enough to make up for the donor churn, what you need to do instead, is you really need to start by identifying four key things.
How many donors do you think will lapse during the course of the year? How many will you ultimately retain? How many new donors do you need from all channels? Just to stay flat. So to keep the water level exactly the same in the bucket, like that first example where they only had 84 net new donors in the year.
And then once you know how many it’s going to take to just stay flat, how much growth are you shooting for and how many additional new donors do you need to achieve your desired level of growth? And once you know those four things, then and only then should you start to build your spreadsheet in Excel, which probably looks something like this.
My recommendation is when you do get to Excel and you do start building out the budget, is that you do so by campaign rather than activity. So what I mean by that is if you start to build a direct mail budget in this way. So in March, this is what we’re going to be doing. We’re going to be doing some acquisition, going back to some lapsed, people going back to some active donors. If you build your budget in this way by campaign, rather than by, Hey, here’s all I’m going to do an acquisition for the whole year. What it allows you to do is show like you see here and share with your CFO or COO, yes, we do have that stuff in red that every CFO they lose their mind when they see the stuff in the far right column that’s in red, but that there are other activities that make up for the net revenue loss.
And that the campaign as a whole is going to generate positive net revenue. We really just want to arm you with information and possibly some tricks that you can use to make sure that you are able to do that adequate amount of acquisition that you need to grow your program. So it’s really about how you present the data in a way that makes the strongest case.
Gina: Each audience segment has a job to do. A typical campaign is made up of these three audience segments. First are the active donors. This segment will drive a majority of the net revenue. Second are lapsed donors. However you define lapsed, whether it’s 13 to 36 months or even further into 48 or to 68 months.
But anyway, they may generate positive net revenue or break even, or even yield a slight loss again, depending on how deeply you determine and go back to it or recognize lapsed donors. The top is the new donor acquisition, and this is an investment in the future. In most cases, this will generate a net loss, but typically they’ll pay for themselves maybe in two years.
Liz: And if your organization isn’t doing any, or perhaps only a limited new donor acquisition, or if there are threats of actually cutting acquisition in the new fiscal year, it’s helpful to show the decision team how the active donors help pay for this file building activity. My recommendation is that you develop cost and revenue projections for each campaign like Debbie alluded to and by audience segment to help make this case.
This is something that we regularly do for all of our clients. And one metric to really keep in mind is LTV or long-term value, which is basically a educated prediction on what a donor returned over their lifetime on your database will be.
Debbie: So lifetime value or long-term value sometimes also called donor value. Armed with a chart like this, you can help your management team understand when their investment in new donor acquisition is going to pay off. When they’re going to start to pay for themselves. The idea is that you want to use the cost to acquire to establish your investment tolerance in new donor acquisition.
So as an example, if your cost to acquire a new donor is $55. In this instance, the donors you acquired way back in FY16 paid for themselves in the very first year. Knowing that, if this is what my metrics look like, I would actually want to increase my investment in new donor acquisition for the future. A couple of minutes ago, Chris shared a digital example where the return on ad spend was about 85%. Those donors, depending upon when they acquired them and how much time there was left in the year, they would have reached break even in year one or by year two for sure.
So we really recommend that you create something like this and share this information with your management team. To be able to do that, you need to know your cost to acquire.
What we talk about is your net cost to acquire. It’s a pretty simple calculation. And the example here, you’re going to take your total cost for the direct mail in this case, which is that 28,788 number.
You’re going to subtract the total revenue that was generated from all the gifts from that new donor segment, which was that 19 five that leaves you with a net loss of $9,240. You divide that net loss by the number of new donors that you acquired in this case $480, and that leaves you with your net cost to acquire, in this case, $19 and 25 cents.
Chris: You can definitely apply that same logic to digital acquisition, no question, but much of the time we’re lacking the framing data to do that, just because we haven’t set up a measurement framework that gives us this information. So typically before we started this process that I’m about to describe to really nail down what our true digital CPA is, we need to make sure that we’ve got something like a Google analytics and database coded URLs, you would be using subsources in source or potentially UTMs and conversion tracking, driven by pixels placed on the website, all tested and working correctly. Once we have that, we can run a test campaign with a target that we established.
If we have no data, use 200 bucks and work down. Can we get a donor for less than 200 bucks? So you run a test campaign, a smoke test, see how it does with your target audiences and maybe your, initial test campaign comes out above. Let’s say you’re at $208 for a new donor acquired. Now let’s run that campaign for a little longer and start optimizing.
Let’s start cutting out spend that’s not working at the audience level or the creative level and eventually let’s see if we can drill it down with a testing budget that we’ve all agreed that we can spend on this. And once we drive it down to somewhere around 175 bucks or so we can say, all right here’s our true cost to acquire, and then here’s our adjusted based on the revenue that we just acquired. And then finally take those audience learnings and definitions, and those creative learnings that you got, and apply them during a historically high converting rate time of year, like a tentpole campaign or end of year or something like that.
And make sure to measure the Delta between your off season CPA and your end-of-year CPA. Now you’ve got enough data that you can slice and dice your budget to address your acquisition needs, and also be able to project some kind of return.
It’s a really good idea to look at variable cost per acquisition across channels. And if you do your due diligence and you look into your data, you uncover all kinds of really interesting wins. So for one client, we do a lot of work in search. We do a lot of new donor acquisition, a lot of fundraising across Google and Bing, which is now called Microsoft Ads.
So we saw for a while, that there was some variability in our CPA. It was a little cheaper on Microsoft to acquire a new donor. And this is probably going to be true for a lot of y’all as well, because the people who use Microsoft search or Bing tend to be a little bit older, a little bit more wealthy falling to that target donor recruitment demographic area pretty nicely.
But so we said, okay, so it’s cheaper on Bing. Let’s use more of our budget and invest in Microsoft ads. Can we either fight more aggressively against competition? Can we expand in a new target geographies? Can we find new keywords to target and see if we can get even more people? What we discovered was that we couldn’t, try as we might, we couldn’t get overall volume up higher than Google through Bing. It appears there were just fewer people searching on Bing than there were in Google, which of course makes sense, given the Google’s market share dwarfs Bing’s. In the end, we said, all right if we can’t scale up in Microsoft, let’s try and scale up in Google.
And we spent a lot of time and research, which we might’ve spent thinking about both platforms if we hadn’t looked at Microsoft first, and we uncovered a way to get our CPA down to $76 and 32 cents, which is a 13% decrease. But we wouldn’t have arrived necessarily at this kind of, how do we scale, why do we scale, and what’s the measurable outcome, unless you started with a target CPA and looked very closely at not only just a channel, but individual platforms within that channel for target CPA variability.
Debbie: So before we move on to the slide, I think we want to launch our first poll.
So the question is, do you know your CTA or cost to acquire for direct mail versus digital? So if you can just select your answer, we will share the answers with the group in just a moment.
People are still voting, but we can tell you we’re gonna close the poll in just a second here. And so as you can see, the vast majority of people do not know their cost to acquire for direct mail versus digital. So if you’re in that, I don’t know group, then fear not, you are not alone. Thank you for joining this webinar, and now you will be armed with the tools to be able to create those calculations for your own program. And if you do know that then kudos to you. Nice job way to go.
One of the things we wanted to talk about before we leave the budgeting discussion, is about the consequences of either putting a pause or a hiatus on new donor acquisition. Sometimes what we hear from upper management is they say, okay, here’s what we think we’re going to do. We understand that it’s important to grow the file.
Like I get that, but what we’re going to do is eliminate acquisition. And instead we’ll make up for it by mailing more lapsed names. So this is really like wrong thinking. And it’s not going to help you grow and it’s not gonna lead to really sound strategic decisions. This is faulty thinking for a few reasons.
Number one, your lapsed donor base is a finite universe of people. Think of it like a stagnating pool, especially the older, more deeply lapsed folks. The lapsed donor pool is going to shrink if you aren’t continually adding new names to your database. So that sort of lapsed stagnating pool is just getting smaller and smaller if there’s nobody new being added. And then it becomes even more expensive to continually prospect from that stagnating pool of lapsed names, than to invest in new donor acquisition. So we wanted to point this out because oftentimes folks are making the case for filling the holes in the leaky bucket, but that doesn’t always bring them to the desired outcome. It brings them most of the way down the road, but then they get stuck when they might be challenged by saying, Oh, we’ll just mail more lapsed. So we want to make sure that you understand why mailing more lapsed and stopping new donor acquisition isn’t the way to go.
Chris: Now we thought we would throw a few digital considerations into the ring because digital is new for many organizations. So when you’re thinking about digital acquisition, the first thing just to know about digital is that the primary value proposition is that it’s measurable. All these digital behaviors, what people do on the website, which has the engage with, how much they donate and when, where they live, all of this information is measurable in real time.
And since the reporting on your success, how much money you raise, et cetera, how many donors you acquired, and how many emails you recruited, is reported in real time as well, you can make game time decisions about whether or not to continue the campaign, how to scale the campaign, and where et cetera. So it’s very agile and there are very few barriers overall to testing just as long as you have a media budget. Now, donor preferences are highly variable. Remember that a Google donor and a Bing donor, even if they’re the same age, don’t behave the same way. The same is true for Facebook donors versus Instagram donors, et cetera.
And so that’s why we do tracking the individual audience segment level, measured against the platform or channel. Finally just note that overall digital donors are a little bit different by necessity based on many of the observations our agency has made when we look into these kinds of differences, digital donors tend to be a little younger.
They tend to be a little more urban and suburban. They tend to be a little more liberal politically, and in some cases they can exhibit higher levels of wealth than are traditionally represented in the direct mail game, just based on the studies that we see. Now they can also be newer to charitable and giving, overall.
And so there’s some education, some handholding, some terminology to consider in the email welcome series after recruiting digital donors, et cetera, that’s, unique to them. It should be because they’re, not the same people who are giving through direct mail, unless you’ve tagged them as flexible donors.
Maybe they’re on the direct mail list and the digital list. So account for them as well. Now, these are just a few of the specific data points that we have seen. This is from a specific buy where we’re advertising to a nice large chunk of people. And that representative data here is scale is a little bit lower than we’d want, but you can see that there’s a significant drop-off in this first age diagram here between the 70- to 79-year-old segment and the 80 to 89 and the 90 plus. That drop-off on the 90 plus side is pretty normal. We see that in direct mail as well. But the drop from 70 to 79 to 80 to 89 is what much more precipitous for digital.
There are definitely fewer 80 plus-year-olds represented in the digital donor category. In the net worth category, we’re also seeing pretty high wealth compared to the national average from the digital file. And then as I said earlier, just by location, political party, digital donors tend to be more suburban and urban, and they also tend to be more Democrat-leaning overall.
Now, how do you find new donors.
Digital acquisition employs a variety of targeting options. I talked a little bit about them at the top, where we talked about targeting Facebook users, for example, based on what kinds of behaviors they have on that platform and outside of it, things like how old they are, things like their political leanings, things like their charitable giving history.
These are targetable across many ad platforms. I also mentioned lookalike targeting, which is the idea that you’re going to upload a great segment of donors, like your mid-level donors, your sustainers, your recent donors, and use them to model a targeting list for Facebook, where Facebook’s going to say, okay, all these people have these commonalities.
So now I’m going to find other people on my platform that look like them, show them ads, and we can suppress our current files, so we know that anyone making a donation is not on our current file, and therefore is truly new. Now there’s also other kinds of targeting, which you might hear about. One is intent-based and this is really simple.
Every time you go to Google search and search for something like Thai food near me, you’re telling Google Hey, Google, I want Thai food, or at least I’m pretending to, for some reason, when I’m searching for it. Now you can target those search terms to show people ads and direct them to the right kind of content.
So chances are, there’s already some cohort of people searching for your organization by name, that you can recruit as donors in search. Additionally, sometimes even people that are searching for you by name because they want to give you money, 60 to 70% new-to-file or new-to-digital is what we’ve seen on our side.
So make sure that you’re measuring, even from your brand in search who’s new and who isn’t. And there are other search terms you can start to target. For example, if you’re a food bank, people Googling “donate local food bank”. They don’t know who you are, but it makes sense to show them an ad. If they’re searching for that.
Finally two basic kinds of targeting are also contextual, which is if somebody’s reading an auto magazine, great place to serve our car ad, this is the most basic simple kind of sort of Mad Men ad targeting, but it’s making a comeback because there’s so many different kinds of awesome content online that they’re sortable.
So if you want somebody who’s reading about, for example, the impacts of hunger in their specific Wisconsin community, there’s probably content about that. And they might be targetable based on reading that specific piece of content. Finally, everybody here has put something in their cart on Amazon, chosen not to buy it, and then been chased around the internet by ads reminding them to buy it.
This is simple, it’s called re-engagement or retargeting. And it’s a great way to make sure that you’re getting as much revenue as you can. Targeting people who abandoned a donation form without making a gift, those people are pretty good audience to target, and we find that sometimes they can account for the highest gift or at least highest conversion.
Now the final thing. I just want to mention here, you already know this instinctively, but I like to think of advertising as the intersection of prominence and relevance. You could show me the best baby food ad in the world, enormous covering my whole screen. And since I don’t have any children and at this moment, I’m not planning to in the near future, that ad just doesn’t mean anything to me.
I’m going to ignore it. But if you showed me an ad for something I’m really interested in a vacation to Peru, but it’s very small and in the corner of the screen, then maybe I’ll never see it at all, but if I did see it, I might’ve signed up for a trip right then and there. So what is the unique value that you can bring to your audience that’s going to get them to stop scrolling. Is there an image that’s impossibly cute or hard to look away from, because it calls up a serious problem or a scary situation that maybe your mission is to relieve. Additionally, it’s the same with a sale. If you’re looking at buying a vacuum cleaner, you might be most impressed by the one that’s from a reputable brand, but also 30% off a value proposition, maybe a premium, a hat or a t-shirt or the knowledge that your gift will be matched.
Eye-catching formats that include motion can stop people from scrolling. So videos, image, carousels, Jifs, or Gifs, depending on how you say that. These are all important in digital.
And we just wanted to mention also that it’s not just donor acquisition. After you test into a great new donor acquisition campaign, you can work on direct to sustainer acquisition campaigns as well as sustainer upgrade campaigns. And so we do encourage testing director-to-sustainer acquisition.
We’ve seen success with it. This campaign was a blend and the overall cost per acquisition was well within the target for a new donor, not just a sustainer. Although remember those monthly gifts tend to be lower because it’s happening every month. So return on ad spend in the near term was only 48%, but we expect that to grow because that gift compound’s monthly.
And so of course we’re watching and measuring that and seeing if, for example, people sign up and get the premium make one more gift and then drop off the list. That’s good data to have too, just to make sure that you’re driving your revenue goals.
Joe: So a lot of what we’ve spoken about up to this point has obviously focused on paid acquisition. So whether that’s a direct mail list buy, or a Facebook ad campaign or a paid search ad campaign, like Chris has just been speaking about, but it’s also incredibly important to remember that your website is going to play an enormous part in your acquisition puzzle. It impacts all of the traffic that you’re paying for from those ad campaigns or from anyone who receives the direct mail piece, but then decides to check you guys out online, plus all of the organic donor prospects who just happened to visit your website without ever having even received one of those paid promotions.
Obviously while we’re speaking about advertising and list buys and all those sorts of things, it is really important to remember that having a well optimized website and donation form experience is a really a critical resource for donor acquisition. And not to mention, obviously for renewal and retention, which will come up in, in future webinars as well.
So here’s just a simple example that we have done recently with Human Rights Watch. So they had their old form here on the left hand side was their control donor experience for a number of years. But obviously we’ve gone through a number of tests with them to try and optimize and beat our controls, and we finally did with this new form focusing more on obviously impactful imagery, giving greater prominence to things like monthly giving, making things a little more mobile friendly, all these kinds of things go into really optimizing the donor experience overall, which is like I said, just a critical part of that donor acquisition journey.
And as an example here, their conversion rate, when they flipped from the old form to the new form, increased by almost 15% and their number of new monthly donors coming on file went up by about 165%. So these are the kinds of tweaks that you can make that have just enormous impacts overall on your program, for donor acquisition, donor retention, donor renewal as well.
Debbie: So I think one of the things that’s true is that donors don’t always respond in the way that you want them to. It’s frustrating, I know to everybody, but really it’s not the way it used to be. You used to be able send a donor, a direct mail piece. They would send back the direct mail reply form.
And the biggest challenge was calculating white mail. But those days, are over. Now there’s multiple channels if you are in public media or if you’re a nonprofit organization that is using over the air for DRTV there’s many more channels to consider as well.
So one of the things that we really try to talk about is that really a rising tide lifts all boats. So the idea is to make sure that you are maximizing all of your channels, but then, one of the things that we often do is a matchback. So this is a case, this is an example here from a major market, public media station where their initial direct mail acquisition results didn’t look to be that strong.
We were somewhat surprised. What they were seeing growth in other parts, of their program, overall things were improving, but the direct mail didn’t appear to be performing in the way that we expected it would be. So as a result, what we did is we did a match back to identify the direct mail donors who gave online.
And when we did,the matchback uncovered over $2,000 gifts that were previously unattributed to the mail that resulted in a lift of 107% or over $78,000 in additional revenue that was attributed to direct mail. It is an extra step, but it’s really important to make sure that you do dig deep so that you have really a better sense of what channels are inspiring the gift, and then through what mechanism is somebody actually making their gift? Often it can be two different things.
Chris: Now digitally, Google Analytics is typically an important component of measuring ads. One way that we track our ads is obviously through the placing of pixels and conversion events. But outside of that, just remember that anytime you’re clicking on a link, if it’s an ad, you can have a look at that link and learn about the campaign. You can see what the source or in this case a banner ad or the subsource was supposed to show on CNN is, and there’s two different kinds of tracking parameters that we typically add. One is the actual platform-generated ruminant URL or whichever platform you’re using. And then sometimes given that platform, there are sources and subsources that we can add that will help donors show up coded after they give it a gift. We’ll be able to tell if he came in through paid search or paid social or display.
Additionally, we might use UTM tracking because that passes data to Google Analytics, which is where we’re typically looking at all of the website behavior data. And we can evaluate the efficacy of campaigns on that platform as well. So just a brief note on URLs as you’re browsing the internet and you can investigate them to learn more about that campaign.
Debbie: Thanks, Chris and I want to thank everyone who attended today. I hope that through today’s webinar, you had a chance to think about what’s the right way to be budgeting for next year’s acquisition, what’s the best way and what are some of the arguments that you can use to make your case, how to calculate your cost to acquire both in direct mail and digital. And then once you do those activities, how do you make sure that you are attributing all of the revenue to all of those activities?
Again, like we’ve talked about there being three ways to make more money, today was a bit of a deep dive into way number one, more donors. We have two more webinars coming up. One on May 13th on renewal strategies, and then one later in July on retention. So be on the lookout for those, and thank you again for your time today, we really appreciate your time and attention. Have a great day. Thank you.