But direct mail advertising gives you the ability to target your market with pinpoint accuracy. So the real question isn't whether or not direct mail is a good idea, but how much it's going to cost.

Direct mail is an especially attractive form of advertising for small businesses. Small business owners can't afford to waste their resources by advertising to people who will probably never purchase their products. The benefit of direct mail is that it allows small business owners to focus their advertising on individuals who are pre-conditioned to become satisfied customers. However, many small business owners shy away from direct mail because they perceive it to be cost-prohibitive.

The good news is that direct mail can be as inexpensive or as costly as you make it. As the campaign's scale and complexity increase, so do the costs. But even a small campaign can yield results. Here's what you need to know to design a direct mail campaign that fits within the parameters of your company's budget.

The Basics

In theory, all you need to launch a direct mail campaign is a list of names, a copy machine, and postage. Regardless of how simple or complex your campaign becomes, these are the minimal expenses you can expect to incur. Although you can minimize postage by taking advantage of the postal service's bulk rates and doing the copying yourself, a poorly-executed direct mail initiative can actually have a detrimental effect on your business. Unless you have the ability to mail a polished marketing piece to a select list of customers, you should consider enhancing your campaign with a little outside help.

Added Features

Your campaign's impact will be largely determined by the quality of your mailing list. Most businesses use list brokers to provide the names and addresses of people who fit the advertiser's target profile. A list of a thousand names can cost as much as $300, and since mailing lists are rented and not sold, this is a recurring cost that will need to be factored into subsequent mailing campaigns. If you are tempted to fold list names into your company's database – don't do it. List providers include a handful of fake names with each list, and they will know immediately if you use their names without permission.

Although the quality of your mailing list has the most significant impact, the quality of the piece itself also plays a role in the campaign's effectiveness. Graphic designers and full-color, high gloss ads can be expensive, but if you have the money you should create the highest quality mailing piece you can. However, if it comes down to a choice between a quality mailing list and a full-color mailing, choose a middle-of-the-road mailing and spend your money on getting it into the right hands.

Hidden Costs

You should also be aware of a few hidden costs associated with direct mail campaigns. For starters, you will need a mechanism to process the responses your campaign generates. Even though this can be an in-house employee, you will still need to factor the added time requirements into your budget. You may also want to consider building an analysis tool into your campaign so you can determine what works and what doesn't. This isn't an absolute necessity, but if you choose to do it, there may be an additional expense.