Sunday, January 18, 2009

Is Direct Marketing Still Relevant?

Recently, the following question was posted on LinkedIn's "Questions and Answers", "Is direct marketing still relevant?"

On January 5th, Marketing Executives Networking Group, MENG, released their second annual marketing trends study providing some relevant information answering this question. Advertising Age wrote an article about the study's findings.

MENG consists of senior level marketing executives who at one time in their career were at the Vice President Level (or higher). Consequently, these executives, due to their career level, are in charge of and handling the strategic direction of their organization. Therefore, their collective marketing insight is relevant. The study was sent to over 1800 members resulting in approximately 600 responses collected.

Let's keep in mind my definition of direct marketing. In an earlier post entitled, "A Marketing Database Your Central Nervous System" I defined direct marketing from the late Bob Stone's and Ron Jacobs' book "Successful Direct Marketing Methods" (7th Ed). If we accept their definition of direct marketing, we see several direct marketing capabilities within the study's findings. The survey's findings, in part, were revealing.

  1. Customer Satisfaction and Customer Retention are the two most important and relevant to marketing executives.
  2. Other important marketing concepts include, Marketing ROI, Brand Loyalty, Segmentation, Quality, SEO, Competitive Intelligence and Data Mining.
  • Customer Retention: this plays to the strength of database and relationship marketing. Capturing customer information on past purchasing aids database marketers make more intelligent decisions in the areas of merchandising marketing. It also improves future marketing programs by identifying the customers' LTV and value to the organization thereby directing financial resources for the highest ROI.
  • Marketing ROI: direct marketing is a 100% quantifiable advertising channel. By replicating your roll out with the exact same components of your test, marketers can predict with a high degree of certainty the response and ROI. This is the heart of direct marketing.
  • Segmentation: Direct Marketing emphasizes quality over quantity. The key objective is to achieve the highest top line sales at the highest ROI. Segmenting your database enables direct marketers to carefully select those customers/prospects most likely to respond to any given promotion.
  • Data Mining: As any database marketing professional knows, the customer database is the heart of the any company. I discussed this at length in an earlier post called, "A Marketing Database Your Central Nervous System". "Data Mining" is the art of identifying underlying trends and patterns within a customer database. This can take the form of predictive models, customer profiling to name two examples. The database marketer's objectives are multi-faceted:
  1. Identify customers with similar purchasing patterns. This enables marketers to tailor specific campaigns, message, or merchandise based on the information gleaned from the data.
  2. Identify new marketing opportunities. Mining a customer database can reveal new markets to penetrate. For example, as Director of Database Marketing, data mining I performed on a B-T-B customer database revealed additional SIC's the company could target in general advertising and mailing lists.
  3. Customer profiling improves on and offline advertising channels. Increased customer knowledge can reveal where to direct advertising placement or conversely where existing advertising should be pruned or eliminated. Based on simple frequency counts, marketers can identify geographic areas where more merchandise should be allocated or increasing advertising expenditures.
In this Internet age, traditional direct marketing (i.e. off line channels) are now (or should be) intertwined with online marketing. SEM, SEO, Email Marketing, Social Media are new communication channels. However, at their root, each of them, like traditional off line direct mail, TV Direct Response, Infomercials, Package Inserts, CO-OP fall under the definition of direct response marketing. We are still offering direct response marketing services so the same financial metrics are still required. We still must test, calculate ROI, profitability and determine response rates (i.e. click through, conversion rate) to determine success.

In these difficult economic conditions we are facing, direct marketing is more relevant today than ever before. Only direct marketing provides marketers the ability to analyze with small carefully selected test panels before committing significant financial resources. And only direct response marketing provides the analytical ability to predict with a high degree of certainty future response rates and ROI.


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StanleyMarcusMalone said...

Correct. Insisting that pure direct marketing can get you good ROI while more than half of your target market rely on the internet is wishful thinking.

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EBM Direct Marketing Services LLC said...

Stanley, I appreciate your comments. I think I may have been misinterpreted. Direct Marketing includes any form of marketing that triggers a response, can be tracked analyzed and stored in a database.
Certainly, many forms of internet marketing meet this definition. That was really my viewpoint in this post. Thank you for your comments.