I read this week that Warburton’s bread is seeking a lead DM agency. Even as one of direct marketing’s staunchest advocates, I found myself asking why an FMCG brand like Warburton’s would hire a DM agency.

Is it because bread is a high ticket item worthy of high levels of individual level communication investment? Nope; at around 70p, a Warburton’s loaf costs about the same as a fully costed unit of direct mail. Is it because Warburton’s bread is a highly complex product that requires the type of detailed explanation that only DM or online can deliver? Nope; surely bread is one of the simplest things in life requiring the least explanation. So is it because retail buyers have become so enamoured with direct mail effectiveness that they’re now more likely to stock product because it’s supported by a DM push rather than a 600 rating TV campaign? I doubt it.

I think the real reason is because many marketers on the client side feel pressured to show they are using more ‘cost effective’ techniques like DM. But there’s a problem for FMCG marketers; DM as a discipline has not shown beyond doubt that it can make a positive net profit ROI contribution to low cost FMCG products.

In my view the relationship between DM and FMCG is a case of square pegs and round holes. Here’s why. If the loaf costs 70p and a fully costed unit of DM costs around the same, then given a 10% net profit margin on the loaf, each piece of DM would have to drive at least 10 directly attributable incremental loaf sales to recoup its cost. Sales of more than 10 loaves would be necessary before the DM campaign began delivering a positive net profit ROI. By comparison to DM’s 70p per unit, each person who sees a Warburton’s TV ad will cost the advertiser around 0.7p, yes, less than 1p to reach. And just one exposure can be sufficient to drive a change in consumer behaviour.

There are some interesting arguments around nurturing high value FMCG customer segments, i.e. large portions of profit may come from small numbers of buyers, but for each of these there are equally compelling counter arguments, most notably the Double Jeopardy theory of market share versus brand loyalty.

All this leaves us with the rather cold reality that the economics of DM cannot be reconciled profitably with the economics of FMCG products and markets.

So, if I were chewing my pencil at Warburton’s I’d do two things. First, I’d centralise all the DM and sales promotion spend (and agency fees) into TV advertising. Second, I’d give BBH the following brief: “Make Warburton’s the most talked about bread in the country”. Bread has waited for thousands of years to be made special. The space is there for the taking and TV is the one medium that can deliver it.