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| Saturday, April 12, 2008 |
| Direct Marketing |
Direct marketing is a sub-discipline and type of marketing. There are two main definitional characteristics which distinguish it from other types of marketing or advertising. The first is that it attempts to send its messages directly to consumers, without the use of intervening media. This involves unsolicited commercial communication (spam, junk mail, etc.) with consumers or businesses. The second characteristic is that it is focused on driving purchases that can be attributed to a specific "call-to-action." This aspect of direct marketing involves an emphasis on trackable, measurable positive (but not negative) responses from consumers (known simply as "response" in the industry) regardless of medium.
If the advert in the medium asks the prospect to take a specific action, for instance call a free phone number or visit a website, then the effort is considered to be direct response advertising.
Contents
* 1 History
* 2 Benefits and drawbacks
* 3 Channels
o 3.1 Direct Marketing v Mainstream Marketing
o 3.2 Direct mail
o 3.3 Telemarketing
o 3.4 Email Marketing
o 3.5 Broadcast faxing
o 3.6 Couponing
o 3.7 Direct response television marketing
o 3.8 Direct selling
* 4 See also
* 5 References
* 6 External links
History
The term direct marketing is believed to have been first used in 1961 in a speech by Lester Wunderman, who pioneered direct marketing techniques with brands such as American Express and Columbia Records.[citation needed] The term junk mail, referring to unsolicited commercial ads delivered via post office or directly deposited in consumers' mail boxes, can be traced back to 1954. The term spam, meaning "unsolicited commercial email", can be traced back to March 31, 1993, although in its first few months it merely referred to inadvertently posting a message so many times on UseNet that the repetitions effectively drowned out the normal flow of conversation.
Although Wunderman may have been the first to use the term direct marketing, the practice of mail order selling (direct marketing via mail) essentially began in the U.S. upon invention of the typewriter in 1867.[citation needed]
The first mail-order catalog was produced by Aaron Montgomery Ward in 1872.[citation needed] The Direct Mail Advertising Association, predecessor of the present-day Direct Marketing Association, was first established in 1917.[citation needed] Third class bulk mail postage rates were established in 1928.[citation needed]
Direct marketing's history in Europe can be traced to the 15th century. Upon Gutenberg's invention of movable type, the first trade catalogs from printer-publishers appeared sometime around 1450.[citation needed]
Benefits and drawbacks
Direct marketing is attractive to many marketers, because in many cases its positive effect (but not negative results) can be measured directly. For example, if a marketer sends out one million solicitations by mail, and ten thousand customers can be tracked as having responded to the promotion, the marketer can say with some confidence that the campaign led directly to the responses. The number of recipients who are offended by the junk mail/spam, however, is not easily measured. By contrast, measurement of other media must often be indirect, since there is no direct response from a consumer. Measurement of results, a fundamental element in successful direct marketing, is explored in greater detail elsewhere in this article. Yet since the start of the Internet-age the challenges of Chief Marketing Executives (CMOs) are tracking direct marketing responses and measuring results.[citation needed]
While many marketers like this form of marketing, some direct marketing efforts using particular media have been criticized for generating unwanted solicitations. For example, direct mail that is irrelevant to the recipient is considered junk mail, and unwanted email messages are considered spam. Consumers are demanding an end to direct marketing,[citation needed] which some advertising agencies are able to provide by using variable data printing and targeted mailing lists.
Channels
Direct marketers also use media such as door hangers, package inserts, magazines, newspapers, radio, television, email, internet banner ads, pay-per-click ads, billboards, transit ads. And according to Ad Age, "In 2005, U.S. agencies generated more revenue from marketing services than from traditional advertising and media."[citation needed]
Direct Marketing v Mainstream Marketing
Why Marketers need to be Different to be Direct By Clint Bratton, Director Plus Marketing, Sydney Australia
Marketers are under intense pressure to drive sales results from marketing activity. To deliver the result, marketers are turning to direct marketing, a variation on their core trade. But do the skills of traditional marketers translate into Direct Marketing success? I believe the answer is a resounding no. What’s more, the discipline of Direct Marketing is, unfortunately, suffering at the hands of the uneducated. The reason lies behind a formulaic approach to targeting and segmentation, frequency of message and a failure to explore the creative boundaries and personalisation that only direct marketing can offer.
TARGETING & SEGMENTATION
Introductory marketing teaches us to make several assumptions and generalisations on the market. Top on that list, it is vital for a brand to narrow its target audience down to a set of demographic qualities based on age, sex, income etc. Even a brand like Coca-Cola, which has near universal appeal, targets their product toward youth. Beyond the target market there will be a number of market segments, again defined by geo-demographic characteristics. In traditional marketing, defining a market and its segments will build a picture of an audience which impacts on both the creative employed and the media buying strategy.
Do these methods of targeting and segmentation translate into Direct Marketing? In fact, they’re surprisingly unimportant. What’s important is that communications are relevant and are therefore based on real customer knowledge rather than generalisations. A unique creative approach for each customer tends to be cost-prohibitive and unrealistic (yes, in some niche business-to-business exercises it may be feasible). Some broad segmentation should be applied to drive the bulk of the creative outcome. These segments must work alongside copy change-outs to complete the communication. But this is a secondary concern.
Even the act of segmentation is different in Direct Marketing because it is developed from hard customer information rather than market research. To segment a database, data-mining techniques that account for combinations of every possible information variable are used (including transactional data), rather than a broad geo-demographic profile. But the segmentation is just the beginning, the driver for the message platform and tone & manner.
PERSONALISATION & RELEVANCE Direct Marketing talks to individuals, not markets. This is where traditional targeting methods fail when they’re bolted on to Direct Marketing. Instead of broad segmentation it is critical we appreciate that each customer is unique. So we must utilise every piece of information to make the message more relevant and effective.
For a start, it is proven that simple personalisation (such as prominent placement of name and address), will significantly increase response rates. Using transactional data and linking your message with a customer’s known behaviour is more powerful again – it shows you understand the customer and that you’re adapting your product or service offering for their needs.
Building a tailored approach makes for multiple copy versions within a single segment execution. But the additional effort and expense is worthwhile for its immediate impact and response, as well as the long-term benefit to the brand.
Using the available data to better personalise and add relevance to the communication should be a key distinction in personalised marketing efforts versus mass market communications. It will also make for better targeting as there will be situations where a relevant link cannot be made and some customer groups may be eliminated from the distribution. It makes the customer feel like you’re delivering them a service. While all direct communications make a noise, those that communicate service are the messages people absorb. They make the recipient feel like more than just another customer. The communication has considered the individual and they feel privileged to receive your message. Just as important, the restricted and more responsive audience will result in decreased costs, improved ROI and protection of the brand.
ADVERTISING VERSUS CUSTOMER SERVICE Customer service is what finally differentiates direct communications from Traditional Advertising. In direct, the media is the property of the recipient so it’s important there’s something in it for them. An ‘ad in an envelope’ (or worse still, an ad in an email or text message) becomes an annoyance. If you address something specifically to an individual, they expect that communication is about them rather than some irrelevant chest-thumping about your product or brand. Far too often the traditional marketer’s view of integration is to put a stamp on their ad. Or thoughtlessly email or SMS the body copy to all their customers.
This hurts the entire Direct Marketing medium because consumers become tired of irrelevant messages intruding into their private space.
The best customer service messages hit customers at the right time in their relationship. By contrast, traditional advertisers bring a ‘campaign mentality’ to Direct Marketing. Following this thinking, all customers receive communications at the same time. The truth is relevance is more easily created with triggered messages driven by customer behaviour. Reputable direct marketers are acutely aware of this and explore database activities that promote a new product or service while also delivering a service message to customers.
Electronic communications that are activity driven are particularly useful for time-sensitive service messages. It can actually add to customer convenience to receive email or text messages. And for the marketer the business opportunities are endless. Imagine if your insurance company could text message you in advance of a localised flood warning, or if your bank could email you to advise your credit card was approaching its credit limit. Customers are thankful for these communications; they provide a tangible benefit for engaging and opting to receive electronic communications.
Nothing compares to direct for delivering this information. Particularly in an electronic format because they are both directed to an individual and are time-critical. These newly formed channels supplement the existing communications mix and exist for the customer’s benefit. They are not simply substitutes for traditional messages in an effort to save marketing costs with no thought for what the customer would prefer.
CREATIVE EXECUTIONS The creative boundaries within Direct Marketing are yet to be reached and the majority of executions fail to explore the possibilities of the medium. This is a hangover from the frequency principle employed in traditional advertising and the false notion that direct executions are about the brand first and the message second.
With Direct Marketing the customer owns the message and will actively choose whether they take it in. The execution needs to immediately show the recipient that it’s a completely new message and to this end, the communication should be clearly distinct from previous contact. The message should retain consistency to the degree that it is obvious who it’s from, but the message must scream above the corporate branding. A template approach is often employed, meaning that visually the messages blur together with a degree of sameness rather than being received with impact. But designers are not Direct Marketers.
No other medium offers the creative freedom of direct mail. Yet most direct mail fails to engage the senses and is lost in a sea of white window DL envelopes. Customers receive mail from a number of places and to engage an audience the execution needs to stand apart. Mail offers unparalleled flexibility in terms of format - there are practically no size or shape constraints. Perhaps it’s because Traditional Advertisers and designers are used to fitting into standards dictated by a medium (press, billboard, TV) that they treat direct mail the same way. They see an A4 letter and a DLE insert as a starting canvas whereas the reality is an open book.
Creative freedom also suffers where marketers are guilty of trying to get their message to as many people as possible rather than improve the targeting. We all know Pareto’s Law or the 80/20 rule, yet too often the entire database is treated as equal. By focusing on just the top customers or prospects and delivering a stronger, non-standard creative execution the message can be made more compelling and results magnified. A smaller, targeted audience will result in more to spend on those that count. An improved per-unit budget allows things to be done differently, ensuring the communication is not just read but also remembered and acted on.
CONCLUSION Direct Marketing is not simply about creating awareness, it’s about delivering results, creating new customers and selling more to them. As shareholders and CEO’s demand a return on investment, it’s understandable that marketers are turning to Direct Marketing for answers. It’s here that they need to pause and note that Direct Marketing is a unique craft and counter-intuitive to Traditional Advertising thought processes. Until they rethink, the credibility of Direct Marketing will suffer through poor executions.
The potential of Direct Marketing is clear. Despite traditional thinking leading to sub-optimal planning and executions, many businesses have still generated positive returns from their Direct Marketing. But they have merely scratched the surface of what can be achieved. With the right assistance there remains potential to unlock increased returns and improve long-term customer satisfaction.
To make Direct Marketing work, marketers need to grasp the unique complexities of the media. The explosive growth and competition for the customer’s time will challenge marketers, demanding stronger executions to break through the clutter. All businesses looking to maximise a return from marketing should elicit the help of a true Direct Marketing specialist. Do this and these businesses will not only improve their success, they may profit where they had previously failed. Direct Marketing does work… in the right hands.
Direct mail
The most common form of direct marketing is direct mail,[citation needed] commonly called junk mail, send paper mail to all postal customers in an area or all customers on a list.
Typical junkmail.
Typical junkmail.
Any medium that can be used to deliver a communication to a customer can be employed in direct marketing. Probably the most commonly used medium for direct marketing is junk mail, in which marketing communications are sent to customers using the postal service. The term direct mail is used in the direct marketing industry to refer to junk mail, which may also be referred to as admail and may involve bulk mail.
Junk mail includes advertising circulars, catalogs, free trial CDs, pre-approved credit card applications, and other unsolicited merchandising invitations delivered by mail or to homes and businesses, or delivered to consumers' mailboxes by delivery services other than the Post Office. Bulk mailings are a particularly popular method of promotion for businesses operating in the financial services, home computer, and travel and tourism industries.
In many developed countries, direct mail represents such a significant amount of the total volume of mail that special rate classes have been established. In the United States and United Kingdom, for example, there are bulk mail rates that enable marketers to send mail at rates that are substantially lower than regular first-class rates. In order to qualify for these rates, marketers must format and sort the mail in particular ways - which reduces the handling (and therefore costs) required by the postal service.
Advertisers often refine direct mail practices into targeted mailing, in which mail is sent out following database analysis to select recipients considered most likely to respond positively. For example a person who has demonstrated an interest in golf may receive direct mail for golf related products or perhaps for goods and services that are appropriate for golfers. This use of database analysis is a type of database marketing. The United States Postal Service calls this form of mail "advertising mail" (admail for short).
Telemarketing
The second most common form of direct marketing is telemarketing,{[fact}} in which marketers contact consumers by phone. The unpopularity of cold call telemarketing (in which the consumer does not expect or invite the sales call) has led some US states and the US federal government to create "no-call lists" and legislation including heavy fines. Marketers call telephone numbers. This process may be outsourced to specialist call centres. The agents sit at computerised work-stations and try to sell the products of the clients.
In the US, a national do-not-call list went into effect on October 1, 2003. Under the law, it is illegal for telemarketers to call anyone who has registered themselves on the list. After the list had operated for one year, over 62 million people had signed up. telemarketing industry opposed the creation of the list, but most telemarketers have complied with the law and refrained from calling people who are on the list.[citation needed]
Canada has passed legislation to create a similar Do Not Call List. In other countries it is voluntary, such as the New Zealand Name Removal Service.
Email Marketing
Email Marketing may have passed telemarketing in frequency at this point,[citation needed] and is a third type of direct marketing. A major concern is spam.
Broadcast faxing
A fourth type of direct marketing, broadcast faxing, is now less common than the other forms.[citation needed] This is partly due to laws in the United States and elsewhere which make it illegal.[citation needed]
Couponing
Couponing is used in print media to elicit a response from the reader. An example is a coupon which the reader cuts out and presents to a super-store check-out counter to avail of a discount. Coupons in newspapers and magazines cannot be considered direct marketing, since the marketer incurs the cost of supporting a third-party medium (the newspaper or magazine); direct marketing aims to circumvent that balance, paring the costs down to solely delivering their unsolicited sales message to the consumer, without supporting the newspaper that the consumer seeks and welcomes.
Direct response television marketing
A related form of marketing is infomercials. They are typically called direct response marketing rather than direct marketing because they try to achieve a direct response via broadcast on a third party's medium, but viewers respond directly via telephone or internet.
TV-response marketing--i.e. infomercials--can be considered a form of direct marketing, since responses are in the form of calls to telephone numbers given on-air. This both allows marketers to reasonably conclude that the calls are due to a particular campaign, and allows the marketers to obtain customers' phone numbers as targets for telemarketing. Under the Federal Do-Not-Call List rules in the US, if the caller buys anything, the marketer would be exempt from Do-Not-Call List restrictions for a period of time due to having a prior business relationship with the caller. Major players are firms like QVC, Thane Direct, and Interwood Marketing Group then cross-sell, and up-sell to these respondents.
Direct selling
Direct selling is the sale of products by face-to-face contact with the customer, either by having salespeople approach potential customers in person, through indirect means such as Tupperware parties.Labels: Direct Marketing |
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