Direct marketing

A pile of advertising mail

Direct marketing is a form of advertising which allows businesses and nonprofit organizations to communicate directly to customers through a variety of media including cell phone text messaging, email, websites, online adverts, database marketing, fliers, catalog distribution, promotional letters and targeted television, newspaper and magazine advertisements as well as outdoor advertising. Among practitioners, it is also known as direct response.

The prevalence of direct marketing and the unwelcome nature of some communications has led to regulations and laws such as the CAN-SPAM Act, requiring that consumers be allowed to opt out.

Popularity

A 2010 study by the Direct Marketing Association reports that in 2010, marketers—commercial and nonprofit—spent $153.3 billion on direct marketing, which accounted for 54.2% of all ad expenditures in the United States. Measured against total US sales, these advertising expenditures generated approximately $1.798 trillion in incremental sales. In 2010, direct marketing accounted for 8.3% of total US gross domestic product. In 2010, there were 1.4 million direct marketing employees in the US. Their collective sales efforts directly supported 8.4 million other jobs, accounting for a total of 9.8 million US jobs.[1]

History

18th century English entrepreneur and potter Josiah Wedgwood is credited as the inventor of modern marketing, including direct mail.[2]

Meeting the demands of the consumer revolution and growth in wealth of the middle classes that helped drive the Industrial Revolution in Britain, the 18th century entrepreneur and pottery manufacturer Josiah Wedgwood pioneered many of the marketing strategies used today, including direct marketing.[2][3]

In the 19th century, Aaron Montgomery Ward believed that using the technique of selling products directly to the customer at appealing prices could, if executed effectively and efficiently, revolutionize the market industry and therefore be used as a model for marketing products and creating customer loyalty.[4] The term "direct marketing" was coined long after Montgomery Ward's time.

In 1872, Ward produced the first mail-order catalog for his Montgomery Ward mail order business. By buying goods and then reselling them directly to customers, Ward was consequently removing the middlemen at the general store and, to the benefit of the customer, drastically lowering the prices.[4] The Direct Mail Advertising Association, predecessor of the present-day Direct Marketing Association, was first established in 1917.[5] Third class bulk mail postage rates were established in 1928.[6]

In 1967, Lester Wunderman identified, named, and defined the term "direct marketing". Wunderman—considered to be the father of contemporary direct marketing—is behind the creation of the toll-free 1-800 number[4] and numerous loyalty marketing programs including the Columbia Record Club, the magazine subscription card, and the American Express Customer Rewards program.[7]

Benefits

Direct marketing is attractive to many marketers because its positive results can be measured directly. For example, if a marketer sends out 1,000 solicitations by mail and 100 respond to the promotion, the marketer can say with confidence that campaign led directly to 10% direct responses. This metric is known as the 'response rate,' and it is one of many clearly quantifiable success metrics employed by direct marketers. In contrast, general advertising uses indirect measurements, such as awareness or engagement, since there is no direct response from a consumer. Measurement of results is a fundamental element in successful direct marketing.

One of the other significant benefits of Direct Marketing is, it enables promoting products or services that might not have a strong brand. Products or service with a sound value proposition, matched with an attractive offer, supported with effective communication, delivered through a suitable direct marketing channel and targeting the relevant customer segment can result in very effective cost of acquisition albeit the brand might be relatively unknown. Relative to other channels of distribution (say retailing) Direct Marketing as a practice principally relies on the proposition, offer, communication, choice of channel and the target customer and so less dependent on the brand strength.

The Internet has made it easier for marketing managers to measure the results of a campaign. This is often achieved by using a specific website landing page directly relating to the promotional material. A call to action will ask the customer to visit the landing page, and the effectiveness of the campaign can be measured by taking the number of promotional messages distributed and dividing it into the number of responses. Another way to measure the results is to compare the projected sales or generated leads for a given term with the actual sales or leads after a direct advertising campaign.

Challenges and solutions

While many marketers recognize the financial benefits of increasing targeted awareness, some direct marketing efforts using particular media have been criticized for generating poor quality leads, either due to poor message strategy or because of poorly compiled demographic databases. This poses a problem for marketers and consumers alike, as advertisers do not wish to waste money on communicating with consumers not interested in their products.

Success of any Direct Marketing campaign, in terms of number of times the desired response may vary between the best vs. the worst of the following parameters, depends on:

In sum, choosing the best of all the above parameters may yield up to 58 times more response, as compared to choosing the worst of the above parameters. Addressing these helps assuage the concerns of the marketers.

Some of these concerns have been addressed by direct marketers by the use of individual "opt-out" lists, variable printing, and better-targeted list practices. Additionally, in order to avoid unwanted mailings, members of the marketing industry have established preference services that give customers more control over the marketing communications they receive in the mail.

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.[8] The term "spam," meaning "unsolicited commercial e-mail," can be traced back to March 31, 1993,[9] 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.

To address the concerns of unwanted emails or spam, in 2003, The US Congress enacted the Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM) Act to curb unwanted email messages. Can-Spam gives recipients the ability to stop unwanted emails, and set out tough penalties for violations.[10] Additionally, ISPs and email service providers have developed increasingly effective Email Filtering programs. These filters can interfere with the delivery of email marketing campaigns, even if the person has subscribed to receive them,[11] as legitimate email marketing can possess the same hallmarks as spam. There are a range of email service providers that provide services for legitimate opt-in emailers to avoid being classified as spam.

Consumers have expressed concerns about the privacy and environmental implications of direct marketing. In response to consumer demand and increasing business pressure to increase the effectiveness of reaching the right customer with direct marketing, companies specialize in targeted direct advertising to great effect, reducing advertising budget waste and increasing the effectiveness of delivering a marketing message with better geo-demography information, delivering the advertising message to only the customers interested in the product, service, or event on offer. Additionally, members of the advertising industry have been working to adopt stricter codes regarding online targeted advertising.[12]

Channels

Any medium that can be used to deliver a communication to a customer can be employed in direct marketing, including:

Email marketing

Sending marketing messages through email or email marketing is one of the most widely used direct-marketing methods. One reason for email marketing's popularity is that it is relatively inexpensive to design, test, and send an email message. It also allows marketers to deliver messages around the clock, and to accurately measure responses.

Online tools

With the expansion of digital technology and tools, direct marketing is increasingly taking place through online channels. Most online advertising is delivered to a focused group of customers and has a trackable response.

Mobile

Through mobile marketing, marketers engage with prospective customers and donors in an interactive manner through a mobile device or network, such as a cellphone, smartphone, or tablet. Types of mobile marketing messages include: SMS (short message service)—marketing communications are sent in the form of text messages, also known as texting. MMS (multi-media message service)—marketing communications are sent in the form of media messages.

In October 2013, the Federal Telephone Consumers Protection Act made it illegal to contact an individual via cell phone without prior express written consent for all telephone calls using an automatic telephone dialing system or a prerecorded voice to deliver a telemarketing message to wireless numbers and residential lines. An existing business relationship does not provide an exception to this requirement.

Mobile Applications: Smartphone-based mobile apps contain several types of messages. Push Notifications are direct messages sent to a user either automatically or as part of a campaign. They include transactional, marketing, geo-based, and more. Rich Push Notifications are full HTML Push Notifications. Mobile apps also contain Interactive ads that appear inside the mobile application or app; Location-Based Marketing: marketing messages delivered directly to a mobile device based on the user's location; QR Codes (quick-response barcodes): This is a type of 2D barcode with an encoded link that can be accessed from a smartphone. This technology is increasingly being used for everything from special offers to product information. Mobile Banner Ads: Like standard banner ads for desktop Web pages but smaller to fit on mobile screens and run on the mobile content network

Telemarketing

Another common form of direct marketing is telemarketing, in which marketers contact customers by phone. The primary benefit to businesses is increased lead generation, which helps businesses increase sales volume and customer base. The most successful telemarketing service providers focus on generating more "qualified" leads that have a higher probability of getting converted into actual sales.

In the United States, the National Do Not Call Registry was created in 2003 to offer consumers a choice whether to receive telemarketing calls at home. The FTC created the National Do Not Call Registry after a comprehensive review of the Telemarketing Sales Rule (TSR).[15] The do-not-call provisions of the TSR cover any plan, program, or campaign to sell goods or services through interstate phone calls.

The 2012 modification, which went into effect on October 16, 2013, stated that prior express written consent will be required for all autodialed and/or pre-recorded calls/texts sent/made to cell phone; and for pre-recorded calls made to residential land lines for marketing purposes.

Further, a consumer who does not wish to receive further prerecorded telemarketing calls can "opt out" of receiving such calls by dialing a telephone number (required to be provided in the prerecorded message) to register his or her do-not-call request. The provisions do not cover calls from political organizations or charities.[16]

Canada has its own National Do Not Call List (DNCL). In other countries it is voluntary, such as the New Zealand Name Removal Service.

Voicemail marketing

Voicemail marketing emerged from the market prevalence of personal voice mailboxes, and business voicemail systems. Voicemail marketing presented a cost effective means by which to reach people directly, by voice. Abuse of consumer marketing applications of voicemail marketing resulted in an abundance of "voice-spam", and prompted many jurisdictions to pass laws regulating consumer voicemail marketing. More recently, businesses have utilized guided voicemail (an application where pre-recorded voicemails are guided by live callers) to accomplish personalized business-to-business marketing formerly reserved for telemarketing. Because guided voicemail is used to contact only businesses, it is exempt from Do Not Call regulations in place for other forms of voicemail marketing.

Voice-mail courier is a similar form of voice-mail marketing with both business-to-business and business-to-consumer applications.

Broadcast faxing

Broadcast faxing, in which faxes are sent to multiple recipients, is now less common than in the past. This is partly due to laws in the United States and elsewhere which regulate its use for consumer marketing. In 2005, President Bush signed into law S.714, the Junk Fax Prevention Act of 2005 (JFPA), which allows marketers to send commercial faxes to those with whom they have an established business relationship (EBR), but imposes some new requirements. These requirements include providing an opt-out notice on the first page of faxes and establishing a system to accept opt-outs at any time of the day. Roughly 2% of direct marketers use fax, mostly for business-to-business marketing campaigns.[17]

Couponing

Couponing is used in print and digital media to elicit a response from the reader. An example is a coupon which the reader receives through the mail and takes to a store's check-out counter to receive a discount.

Digital Coupons: Manufacturers and retailers make coupons available online for electronic orders that can be downloaded and printed. Digital coupons are available on company websites, social media outlets, texts, and email alerts. There are an increasing number of mobile phone applications offering digital coupons for direct use.

Daily Deal Sites offer local and online deals each day, and are becoming increasingly popular. Customers sign up to receive notice of discounts and offers, which are sent daily by email. Purchases are often made using a special coupon code or promotional code. The largest of these sites, Groupon, has over 83 million subscribers.[18]

Direct response marketing

Direct Response Marketing is designed to generate an immediate response from consumers, where each consumer response (and purchase) can be measured, and attributed to individual advertisements.[19] This form of marketing is differentiated from other marketing approaches, primarily because there are no intermediaries such as retailers between the buyer and seller, and therefore the buyer must contact the seller directly to purchase products or services. Direct-response marketing is delivered through a wide variety of media, including DRTV, radio, mail, print advertising, telemarketing, catalogues, and the Internet.

Direct response mail order

Mail order in which customers respond by mailing a completed order form to the marketer. Mail order direct response has become more successful in recent years due to internet exposure.[20]

Direct response television

Direct marketing via television (commonly referred to as DRTV) has two basic forms: long form (usually half-hour or hour-long segments that explain a product in detail and are commonly referred to as infomercials) and short form, which refers to typical 30-second or 60-second commercials that ask viewers for an immediate response (typically to call a phone number on screen or go to a website). 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 allows marketers to reasonably conclude that the calls are due to a particular campaign, and enables them to obtain customers' phone numbers as targets for telemarketing. One of the most famous DRTV commercials was for Ginsu Knives by Ginsu Products, Inc. of RI. Several aspects of ad, such as its use of adding items to the offer and the guarantee of satisfaction were much copied, and came to be considered part of the formula for success with short-form direct-response TV ads (DRTV).

Forms of direct response marketing on television include standard short form television commercials, infomercials and home shopping networks. Short-form direct-response commercials have time lengths ranging from 30 seconds to 2 minutes. Long form infomercials are typically 30 minutes long. An offshoot of the infomercial is the home shopping industry. In this medium, items can potentially be offered with reduced overhead.[21]

Direct response radio

In direct response radio, ads contain a call to action with a specific tracking mechanism. Often, this tracking mechanism is a "call now" prompt with a toll-free phone number or a unique Web URL. Results of the ad can be tracked in terms of calls, orders, customers, leads, sales, revenue, and profits that result from the airing of those ads.

Direct response magazines and newspapers

Magazine and newspaper ads often include a direct response call-to-action, such as a toll-free number, a coupon redeemable at a brick-and-mortar store, or a QR code that can be scanned by a mobile device—these methods are all forms of direct marketing, because they elicit a direct and measurable action from the customer.

Other direct response media

Other media, such as magazines, newspapers, radio, social media, search engine marketing and e-mail can be used to elicit the response. A survey of large corporations found e-mail to be one of the most effective forms of direct response.[22]

Direct mail

The term advertising, or direct mail, is used to refer to communications sent to potential customers or donors via the postal service and other delivery services. Direct mail is sent to customers based on criteria such as age, income, location, profession, buying pattern, etc. Direct mail includes advertising circulars, catalogs, free-trial CDs, pre-approved credit card applications, and other unsolicited merchandising invitations delivered by mail to homes and businesses. 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. In the US, marketers send over 90 billion pieces of direct mail per year.[23]

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).

Insert media

Another form of direct marketing, insert media are marketing materials that are inserted into other communications, such as a catalog, newspaper, magazine, package, or bill. Coop or shared mail, where marketing offers from several companies are delivered via a single envelope, is also considered insert media.

Out-of-home

Out-of-home direct marketing refers to a wide array of media designed to reach the consumer outside the home, including billboards, transit, bus shelters, bus benches, aerials, airports, in-flight, in-store, movies, college campus/high schools, hotels, shopping malls, sport facilities, stadiums, taxis—that contain a call-to-action for the customer to respond.

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, or through indirect means such as Tupperware parties.

Grassroots/community marketing

The door-to-door distribution[24]

Ethical conduct

The ICC Consolidated Code of Advertising and Marketing relates to all direct marketing activities in their entirety, whatever their form, medium or content. It sets the standards of ethical conduct to be followed by marketers, practitioners or other contractors providing services for direct marketing purposes or in the media.[25]

The offer

The fulfilment of any obligation arising from a direct marketing activity should be prompt and efficient.

Whenever an offer is made, all the commitments to be fulfilled by the marketer, the operator and the consumer should be made clear to consumers, either directly or by reference to sales conditions available to them at the time of the offer.

Presentation

When the presentation of an offer also features products not included in the offer, or where additional products need to be purchased to enable the consumer to use the product on offer, this should be made clear in the original offer.

High-pressure tactics which might be construed as harassment should be avoided, and, marketers should ensure that they respect local culture and tradition to avoid offensive questions.

Right of withdrawal

Where consumers have a right of withdrawal (the consumer’s right to resend any goods to the seller, or to cancel the order for services, within a certain time limit and thus annulling the sale), the marketer should inform them of the existence of this right, how to obtain further information about it, and how to exercise it. Where there is an offer to supply products to the consumer on the basis of "free examination", "free trial", "free approval" and the like, it should be made clear in the offer who will bear the cost of returning products and the procedure for returning them should be as simple as possible. Any time limit for the return should be clearly disclosed.

Identity of the marketer

The identity of the marketer and/or operator and details of where and how they may be contacted should be given in the offer, so as to enable the consumer to communicate directly and effectively with them. This information should be available as a permanent reference which the consumer can keep, i.e. via a separate document offline, an online document, email or SMS; it should not, for example, appear only on an order form which the consumer is required to return. At the time of delivery of the product, the marketer’s full name, address and telephone number should be supplied to the consumer.

Respecting consumer wishes

Where consumers have indicated the wish not to receive direct marketing communications by signing on to a preference service, or in any other way, this should be respected. Marketers who are communicating with consumers internationally should, where possible ensure that they avail themselves of the appropriate preference service in the markets to which they are addressing their communications and respect consumers’ wishes not to receive such communications (see also General Provisions, article 19, data protection and privacy.[26] Where a system exists, enabling consumers to indicate a wish not to receive unaddressed mail (e.g. mailbox stickers), this should be respected.

Responsibility

Overall responsibility for all aspects of direct marketing activities, whatever their kind or content, rests with the marketer. However, responsibility also applies to other participants in direct marketing activities and that needs to be taken into account. As well as marketers, these may include: operators, telemarketers or data controllers, or their subcontractors, who contribute to the activity or communication; publishers, media-owners or contractors who publish, transmit or distribute the offer or any other communication.

See also

References

  1. ↑ The Power of Direct Marketing: ROI, Sales, Expenditures, and Employment in the US, 2009-2010 Edition
  2. 1 2 "They Broke It". New York Times. 12 January 2017.
  3. ↑ "Why the Industrial Revolution Happened Here". BBC. 13 January 2017.
  4. 1 2 3 Brandweek 50, no. 36. D1-D4 "The Next Generation of Direct Marketing." Academic Search Complete, EBSCOhost, 2009, p. 6.
  5. ↑ O'guinn, Thomas (2008). Advertising and Integrated Brand Promotion. Oxford Oxfordshire: Oxford University Press. p. 625. ISBN 978-0-324-56862-2.
  6. ↑ "Postal Services OPERATIONS". Retrieved 14 June 2015.
  7. ↑ "Marketing Legend Lester Wunderman Live on ‘The Alan Levy Show’". Retrieved 14 June 2015.
  8. ↑ Entry for junk, Online Etymology Dictionary. Retrieved February 19, 2008.
  9. ↑ Origin of the term "spam" to mean net abuse, Brad Templeton's website. Retrieved February 19, 2008.
  10. ↑ FCC: Spam, Unwanted Text Messages and Email
  11. ↑ What is a "Whitelist" and why do I want to work with a "Whitelisted" Mail Distributor?
  12. ↑ Edmund Lee. (7 June 2011). "More Advertisers Adopt Stricter Codes Around Digital Privacy". Retrieved 14 June 2015.
  13. ↑ "eMarketer Newsroom - Latest news, announcements, and media resources". eMarketer Newsroom. Retrieved 14 June 2015.
  14. ↑ DMA 2011 Statistical Fact Book, Chapter 4
  15. ↑ "Telemarketing Sales Rule". Retrieved 14 June 2015.
  16. ↑ FCC Report and Order, February 15, 2012 "Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991", CG Docket No. 02-278.
  17. ↑ DMA 2010 Response Rate Report
  18. ↑ Rusli, Evelyn M.; De La Merced, Michael J. "Groupon Plans I.P.O. With $30 Billion Valuation". The New York Times. Retrieved 9 June 2015.
  19. ↑ "Direct Response Advertising Glossary"; February 8, 2011.
  20. ↑ Huff, Priscilla. "Why the Internet is Causing Mail Order to Boom". Home Business Magazine. Retrieved 3 October 2012.
  21. ↑ Dickler, Jessica. "Home Shopping Networks Go High End". CNN Money. Retrieved 3 Oct 2012.
  22. ↑ Miller, Steve. "Study: E-Mail is The Most Effective Form of Direct Response". Adweek. Retrieved 3 Oct 2012.
  23. ↑ DMA 2011 Statistical Fact Book, Chapter 2, page 46
  24. ↑ citation needed
  25. ↑ "C16 – Use of telemarketing". International Chamber of Commerce. Retrieved 9 June 2015.
  26. ↑ "Article C14 – Respecting consumer wishes". International Chamber of Commerce. Retrieved 9 June 2015.
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