o understand direct marketers, an old,
albeit revised fable might be the best
place to start. The story goes that three
agency heads set out to climb a
mountain, its summit representing
customer loyalty to a brand. Along the way, the
agency heads learn new insights about reaching the
summit, such as the value of customer data, of
individually targeted campaigns, of rewarding a
customer for their business. As they learn each new
insight, they get closer to the mountain’s summit
and cracking the secret of how to secure brand
loyalty. But when they finally reach the top, they’re
not alone. A direct marketer, who has been sitting at
the summit for some time, greets them by saying:
“Well, what took you so long?”
While direct marketing may live in the so-called
unfashionable section of marketing
communications, today’s brands – particularly in the
current land grab for consumer loyalty – are turning
to practices that fit snugly within the direct
marketer’s job description: measurability,
accountability, data mining and one-to-one
communication. The industry is also generating
impressive amounts of revenue – call centres raked
in $45 billion last year, while according to Australia
Post, the direct mail industry grew by 9% in 2007-
08 to 780 million articles, following 6% growth the
previous year.
Essentially, the times are ripe for direct
marketing. It’s no secret that amid the economic
downturn and shrinking marketing budgets, clients
are looking for a clear and measurable ROI on
marketing spend. Paul Marshall, executive director
of Salmat’s digital division (Salmat DigitalForce),
says anecdotal evidence points to marketers
“pulling money from less measurable media and
campaigns” and switching to “channels that will give
them a call-to-action, a response and an ROI.”
Jeff Sanders, managing director of Rapp Collins
Sydney, agrees. “Advertising is in a precarious place
at the moment because a lot of it is wallpaper and
not cutting through,” he says. “What (clients) are
finding is if you have an up-to-date database where
you know exactly who the consumer is, what you’ve
bought and what you’ve done, you’ve got a better
chance of selling to them at a better price than you
do with just mass marketing.”
While advertising agencies have learned the hard
way that detailed customer insight pays off, Joseph
Jaffe, president of United States-based strategic
consultancy Crayon and headline speaker at the July
8-9 ADMA Forum, believes direct marketing has the
advantage, given data mining sits naturally within
the discipline. “Direct marketing has a headstart in
leading the rest of the various communication
disciplines, insofar that it does naturally what the
rest do unnaturally – data incorporation. Testing.
Optimisation. Accountability. It’s all second nature
to direct marketing,” says Jaffe.
“The challenge will be if the direct marketing
industry stops innovating or doesn’t innovate fast
enough, allowing it to be overtaken or overhauled by
competitive approaches.”
But this doesn’t mean life is a bed of roses for
direct marketing agencies. The industry faces a
number of formidable challenges moving ahead, the
biggest being the impact of digital media on brand
communication.
The good news is that the vast array of
communication tools currently available – from
social media to mobile and web content – is a
treasure trove for direct marketers. Iain Good,
managing director of OgilvyOne, describes digital
campaigns as “direct marketing on steroids”.
“Previously you would hope direct marketing was
consistent with the brand thinking. Now, it is the
brand because it is the best expression of the brand
that a consumer can experience,” says Good. An
example is Nissan’s recent direct mail campaign for
its 370Z product, developed by digital agency
Whybin\TBWA\Tequila. Cardboard steering wheels
with AR codes were mailed out, allowing potential
buyers to experience the car by holding the wheel up
to a webcam and controlling a 3D version of the
Nissan 370Z on their screen.
However, Jaffe cautions that although some
brands are playing in a hybrid world of digital and
traditional direct mail, there are many direct
marketing agencies that still need to make digital
communication a priority. “Right now, the direct
marketing world excels in the physical world,
although this is not as effective as in past years, is
still finding its feet in the digital world and is just
getting started in the virtual one,” says Jaffe. “While
I’d advocate stepping up efforts in the latter two, I’d
also strongly advise not to throw out the baby with
the bathwater, for example, embrace new
approaches without discarding or abandoning the
best of the incumbent best practices.”
Jaffe’s caution to integrate digital with
traditional direct marketing practices highlights a
crucial issue for Australian direct marketing
agencies. With close to 50 years separating the rise
of direct marketing from the current surge in digital
media, it’s no surprise a rift exists between
traditional direct marketing and digital direct
marketing. Salmat DigitalForce’s Marshall believes
traditional direct marketers, who come from an
industry based solely on the three pillars of direct
mail, telemarketing and email, didn’t “read up on the
web fast enough” when the digital wave took hold
and so lag behind their digital counterparts.
On the other hand, Marshall says there are too
many digital people who are poor marketers, or
“plenty of people out there who can do code and
make the stuff look cool, but don’t think in a
marketing sense.”
This divide translates into a lack of skills on
either side of the fence. OgilvyOne’s Good says
there is a generation of practitioners proficient in
digital communication, yet lacking the ability to
generate effective responses from consumers with
a campaign. “They might be able to create beautiful
language and beautiful pictures, but do they
understand the power of the offer, or targeting at
the right time at the right place?” he says.
Douglas Nicol, partner at The Works Sydney,
agrees that digital and traditional direct marketing
currently exist as two distinct groups. “You’ve got
people who have grown up very typically, doing
direct mail and maybe a bit of direct response TV.
They are very different animals from those who are
younger and have grown up doing search engine
marketing, mobile marketing and email campaigns.
There aren’t that many people who can do both well,”
he says. However, Nicol argues that both practices
must be linked in order to best reach consumers.
Recent campaigns have made efforts to integrate
direct mail with digital activity. Austar’s most recent
direct mail campaign – developed by Rapp Sydney –
used direct mail to lead sports channel subscribers
to a microsite, where they could enter an Ashes
2009 competition, watch great sporting moments
and personalise a sports shirt.
In theory, this cross-over should pay off. A 2008
Australia Post survey, which involved 1004 phone
interviews, found 62% of respondents were more
likely to respond or remember something if it is
communicated through mail and email. Interestingly,
60% preferred to be approached by mail first then
email, while less than 25% wanted to be contacted
by email, followed by mail.
Camilla Cook, digital strategist at Wunderman,
believes digital and traditional direct marketing can,
and should, work together. “It’s just digital has grown
up quickly in its own right and there hasn’t been time
for the two industries to talk properly. Young people
on the agency side don’t have long-term direct
marketing experience. Both need to eat some
humble pie,” she says.
Nicol adds: “A client that’s proficient in both
(digital and traditional direct marketing) will be
testing what happens if they send direct mail and
follow it up by email. What does that do to the
response rate? Or what if they do a seasonal email
and follow it up with direct mail? What’s working
best?” says Nicol. “People tend to think, what’s the
best way to work within the world of direct mail,
and then separately in email. They don’t think about
how you weave it together in a way that gets the
best results.”
Another dilemma direct marketers face is
communicating to consumers who are inundated
with media choice and numerous brand messages.
Marshall believes some Australian retailers have
gone overboard when it comes to using email
addresses and mobile numbers to reach consumers .
Already there is negative sentiment towards
marketers in the telemarketing world, with the
Australian Government recently widening the scope
of the Do Not Call register to allow business and fax
numbers to be registered alongside home numbers.
Marshall also foresees a customer backlash in the
online space. “Click-through rates will decline and
un-subscribers will go through the roof,” he predicts.
“At the moment, grabbing an email address and
sending stuff is paying dividends. You’re mad not to
do it, but you’re almost poisoning the future. At
some point in time, consumers are going to bow out
of this.”
And according to Rapp Collins’ Sanders, the use
of social media as a sales tool has yet to be proven,
given the sense of ownership consumers have over
sites such as Facebook and Twitter. “As a social
movement it’s interesting. As a commercial thing,
the moment Ashton Kutcher says ‘go down to
Starbucks and get your grande caramel latte’ no one
will look at him anymore,” says Sanders.
Communicating to consumers without
bombarding them with commercial messages then
becomes the challenge. As brands race to stake
their claim on consumer mobile numbers, email
addresses, even old-fashioned home addresses, an
obvious question emerges: how many one-to-one
relationships do consumers actually want with
retailers? And do Australians welcome brands that
try to befriend them, or view them with a certain
degree of cynicism?
Relevance seems to be a key quality here. In
Australia Post’s 2008 survey, more than three
quarters of those questioned agreed with the
statement: “I don’t care who sends information to
me, as long as it’s relevant”. In his book Join the
Conversation (published in 2007), Jaffe says
marketers should avoid manipulating or trying to
control consumers, but rather listen to the
consumer, respond to their issues and join – on
invitation only – in a conversation with them. “Great
direct marketing,” says Jaffe, “(is) permission based,
relevant, utilitarian, adding tangible and real value
and transparent.”
Transparency is also important to consumers.
Brands who hide behind an alter ego online risk
being pilloried in the media when discovered, not to
mention companies that pretend to be members of
the public advocating products on a social media
site. Nicol says brands should never participate in
conversations under pretence.
“There’s a real need for ethics around how we
engage consumers online. The danger is we screw up
that opportunity by not being honest or authentic
with the consumer,” he says.
Another key factor in effective consumer
communication is developing individual
conversations, as implemented by major companies
such as Priceline. The personal care retailer upped
investment in its club card scheme this year from
20% to 30% of the brand’s marketing budget.
Priceline marketing director Amanda Connors says
purchases from members of the scheme – which
provides detailed information on individual
customer shopping habits and enables one-to-one
communication via any channel – accounts for 40%
of Priceline’s sales, with the most recent club card
campaign resulting in a 60% lift in sales. “Direct
marketing is becoming more and more relevant,
where share of dollar is harder to get and holding on
to your loyal customers is really hard. I know that
we’re increasing DM spend in our marketing budget,
the focus being our loyalty program. It’s now 30% of
our marketing budget. Over time, I hope that it will
be more,” says Connor.
Individual communication is also hitting the next
phase online, moving from behavioural targeting
(using someone’s web browsing history, such as
what pages they visit, to determine which banner
ads to show them) to individually tailoring sites for
individual people. It’s quite exciting,” says Salmat
DigitalForce’s Marshall. “The next phase which
retailers are putting in place now is in real time,
tailoring the content of a site so one consumer will
get a completely different view from the next
person that comes along, based on how other
people have reacted to that website or email.So a
site dynamically changes content according to the
last 10 people who viewed that content and how
they reacted to it.”
However, Wunderman’s Cook says marketers
should not be daunted by the complex array of
solutions pigeonholed for the future. Although most
online display advertisers take advantage of simple
viewer tracking solutions such as Double Click and
Eyeblaster, not many direct marketers incorporate
these technologies into campaigns. “Too may people
think it can’t be done,” she says. “People are going
for expensive, technological solutions before trying
makeshift, simple solutions. Even email is
appallingly untargeted. Or think of an ad service
solution like Eyeblaster or Double Click. If someone
has been to a website, you can show them a
different banner. You can run basic prompts in your
website using Eyeblaster. These things aren’t
utilised enough,” says Cook.
Regardless of where technological capabilities
go in the future, it’s clear direct marketers have all
the tools to engage with customers in today’s media
environment along with tried and tested disciplines,
such as data incorporation, testing and
accountability. Adapting them to suit the brand is
the current challenge.
