Posts Tagged ‘direct marketing’

July 30th, 2010

Data planning and qualitative research - mind the gap

I once attended a research debrief to report the results of a survey into the communication effects of a direct mail campaign. The survey asked if the target group had received the direct mail piece and what they thought of it. The survey results were not good. According to the research, hardly any of the respondents could recall seeing the DM pack and even fewer claimed to have responded. There was disappointment; it was a big mailing and a strong offer, surely someone must have seen it and been motivated to respond. But all was not lost. In reality, away from the results of the survey, the campaign had in fact been very successful. I knew that the campaign was in the process of beating all its response, conversion and sign-up targets.  From a hard data point of view this campaign was on track to become one of the most successful DM campaigns ever run by the client.

So why was the recall in the research so low and the actual response so high? I can think of three explanations:

First, we were targeting a large group of the population. It was possible that even though the hard data results were good, we were drawing our DM response from portions of the population that simply hadn’t been included in the sample.   If we had a 25% response then that was a record-breaker from a DM planning point of view, but it still meant that the vast majority of the target - 75% - hadn’t responded. Those that had engaged with the mailing were far more likely to recall it than those who had not. So if our sample happened to comprise of 85% or 90% of those who did not responsd, then the recall results would be much lower than the response actually experienced.

The second explanation is more intriguing. Could it be that even though 1 in 4 of the target had responded, those that did respond had failed to make the connection between the what they’d actually done and what the research was asking them? In this scenario the sample is accurate and reaching our 1 in 4 respondents, but those who had responded forgot that they had done so when asked in research. Had they failed to connect the research question to the campaign and to their response behaviour?

The third explanation is that some of the respondents deliberately disconnected their actual behaviour from the answers they gave in the research. In other words, they did respond, but they didn’t want to say so.  They were using the research as a communication channel to share a point of view along the lines of ‘I’m not going to tell you exactly what I did. What I am going to tell you is that I didn’t like being perceived to be in your target audience, or perceived to be the sort of person who would buy the sort of product you were offering’.

Whatever the explanation, this taught me an important lesson; market research and behavioural data can say very different things. Asking people what they did, or think they did, can be very different to what they actually did. If market research tells you something, take it as an indicator not a fact. If it’s something big, do more digging around the research before you act on it.  But if hard data tells you something, whether it’s good or bad, whether you like it or not, you can be sure that it reflects changes in actual behaviour, the ultimate measure of marketing success or failure.

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October 2nd, 2009

Direct Marketing: The sharp end of advertising

Came across an interesting post on adliterate entitled “In defence of DM“. It was neatly slotted amongst other tempting two-minute treats like “Don’t blame the creatives“, “Advertising is not a profession” (does that means it’s even lower than vice?) and “Planning’s mid-life crisis“. There’s quite a long list of people who cut their teeth at the sharp end of advertising  i.e. in direct marketing - where campaigns, budgets and people live or die by the results they deliver. It’s not a bad place to start;  I can look at almost any ad now and know whether or not it will engage its target audience. That’s a skill honed after sitting through meeting after meeting looking at creative work  - and the tangible results it delivered.

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May 11th, 2009

New Rules of Marketing and PR / Direct 2.0?

I spent the quieter moments of the weekend breezing through David Meerman Scott’s New Rules of Marketing and PR.  Before I read this book I was convinced that digital content and PR are going to be increasingly vital components of the modern marketing mix.  Now that view is further reinforced.  It’s a great read, dealing not only with the transition zone between old and new marketing but also offering clear sight of what lies ahead.

Scott argues that “the old rules of marketing and PR are ineffective in the digital world” and I broadly agree. To his credit, he rightly resists the temptation to make ill-informed and poorly thought-out “advertising doesn’t work” arguments. Unlike many web commentators, he recognises that mainstream media still has an important role to play for mainstream brands, and that niche media can still work well for niche brands. So,  if you’re a beer brand then it still makes sense to advertise on TV in football games. Or if you sell deck sealant, then Professional Deck Builder Magazine is probably still right for you.

There are a couple of areas where my experience differs from David Scott’s. One is in his view that “marketing meant advertising” and that “advertising was one way: company to consumer”.  It’s true that for some companies, marketing does mean advertising, but for many companies marketing also includes direct marketing. Moreover,  two-way dialogue has been the DNA of direct marketing for decades. Lester Wunderman and others pioneered the development of response-based customer dialogue over fifty years ago, albeit from within the restrictions of static print / direct mail.

Direct marketers have a suite of skills that is incredibly well suited to marketing in the Web 2.0 era. They collect behavioural data from customers and apply it to marketing decision making. They use data to understand customers, track purchase histories, segment databases and predict future customer behaviour. They build models which can predict how likely it is that consumers who purchase product A will go on to purchase products B, C and D.  They use customer data to establish when customers buy products and the length of the purchase cycle enabling them to identify the best time to talk to prospects. They learn how to identify valuable customers and build reward programs to strengthen the relationship between buyer and seller. Most importantly,  direct marketers focus on building relationships that turn first-time customers into long-term advocates.  Direct marketing has much to offer to the data-enabled world of Web 2.0.

Nigel Sharrocks, CEO of Aegis in Europe recognised all these points when he observed that “it only takes a moment’s reflection to see that direct is a highly effective training ground for Communications 2.0.”  Whilst dealing with deluges of customer data may unsettle advertising practitioners, working out what to do with data is, according to Sharrocks,  “second nature to direct people” who are also “highly unlikely to assume that every campaign must begin with a TV ad”.

For many years direct marketers argued that they could make better use of a marketing £ or $ than an ad agency, in much the same way that web marketing specialists do now.  In my view the best return can be achieved by merging the best of web marketing - and particularly content marketing - with the best of direct marketing. Direct marketing can provide a robust platform upon which highly effective content marketing projects can be built.  To me, direct marketing and Web 2.0 communications are two things that fit together extremely well - like yin and yang, steak and chips or bread and butter.   Perhaps it’s time we started talking about Direct Marketing 2.0.

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July 27th, 2008

Can direct marketing live without the electoral roll?

There’s a lot of noise around the new recommendations about restructuring or even banning the use of the electoral roll. The government seems to think that the commercial exploitation of the UK’s voter roll has now gone far enough. This is probably driven by a number of factors ranging from privacy and data security issues through to green considerations. There’s no doubting the fact that data security is rising up the agenda as more and more seems to get lost, and from the green perspective, the DM industry uses vast amounts of paper which for the most part (around 95%) ends up either in the bin or recycling boxes.

In return, the DM industry is having to argue that it needs the electoral roll to produce targeted advertising and to clean and validate mailing lists. The industry is also drawing attention to the fact the local authorities earn income from the sale of electoral roll data.

I find myself torn two ways. As a direct marketer I relish the ability to reach highly targeted individuals with a relevant and timely piece of communication. But on the other hand, I can’t help feeling a sense of shame at being associated with an industry that pushes thousands of tons of unwanted paper through peoples’ letter boxes.

I think the reality is that DM is overused as an acquisition medium. And it’s not as though the direct marketing industry is short of communication channels for acquisition marketing. Alongside print and broadcast, digital media now offers direct marketers a communication channel that has all the right characteristics and none of the negatives: it is highly targetable, it puts consumers in control - they get the information they want when they want it and finally, online direct marketing has to be greener than paper based direct marketing. I sense that the government understands these factors and finds itself having to try ever harder to push a recalcitrant body in a new direction.

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June 26th, 2008

What’s the future for call centres?

For many years, even decades, call centres have been the primary recipient of response to consumer advertising campaigns. Throughout the 1990’s call centres were able to grow on the back of a strong growth in response-seeking advertising and marketing. In the last decades of the last millennium there was significant investment in call centres, technology and people.

However, as we entered the new millennium, the internet emerged as an alternative recipient of response. Now, as broadband penetration has increased to critical mass, online interactivity has become the norm and many companies are driving huge volumes of response to the internet. These developments open up a debate about the future of call centres with their significant costs in terms of buildings, communications, technology and people. Marketers are asking: What is the future of the call centre?

I found some interesting research on this topic from Forrester. Forrester asked 176 large US firms (turnover of $500m+) to forecast how the saw the way they interact with customers changing over the next two years.

The big gainers are web and email, whilst the big loser is call centres. 96% predicted a significant increase in the use of the web and 80% saw a significant increase in the use of email. Virtually no companies saw a reduction in these online interaction channels. At the other end of the spectrum 28% saw either a small or significant reduction in the use of call centres whilst only 17% saw significant growth prospects. Phone self service was tabled for a 69% increase suggesting that whilst these firms recognise that there are many consumers who still want to interact by phone, they are not necessarily prepared to pay for that to be a live conversation.

It looks as through live call centres are in for a tough time; they’ve lost their historical monopoly on non-retail interaction with the consumer. Companies are going to see very tempting cost savings in online interaction so they’re likely to encourage and invest in it. I think they’ll always be a role for live call centres, though much reduced and focused into the type of high value conversations that justify their relatively high costs. Live conversations are likely to be increasingly reserved for high value products, high value relationships and high value customers.

Forrester

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September 28th, 2007

Can direct marketing work for FMCG products?

I read this week that Warburton’s bread is seeking a lead DM agency. Even as one of direct marketing’s staunchest advocates, I found myself asking why an FMCG brand like Warburton’s would hire a DM agency.

Is it because bread is a high ticket item worthy of high levels of individual level communication investment? Nope; at around 70p, a Warburton’s loaf costs about the same as a fully costed unit of direct mail. Is it because Warburton’s bread is a highly complex product that requires the type of detailed explanation that only DM or online can deliver? Nope; surely bread is one of the simplest things in life requiring the least explanation. So is it because retail buyers have become so enamoured with direct mail effectiveness that they’re now more likely to stock product because it’s supported by a DM push rather than a 600 rating TV campaign? I doubt it.

I think the real reason is because many marketers on the client side feel pressured to show they are using more ‘cost effective’ techniques like DM. But there’s a problem for FMCG marketers; DM as a discipline has not shown beyond doubt that it can make a positive net profit ROI contribution to low cost FMCG products.

In my view the relationship between DM and FMCG is a case of square pegs and round holes. Here’s why. If the loaf costs 70p and a fully costed unit of DM costs around the same, then given a 10% net profit margin on the loaf, each piece of DM would have to drive at least 10 directly attributable incremental loaf sales to recoup its cost. Sales of more than 10 loaves would be necessary before the DM campaign began delivering a positive net profit ROI. By comparison to DM’s 70p per unit, each person who sees a Warburton’s TV ad will cost the advertiser around 0.7p, yes, less than 1p to reach. And just one exposure can be sufficient to drive a change in consumer behaviour.

There are some interesting arguments around nurturing high value FMCG customer segments, i.e. large portions of profit may come from small numbers of buyers, but for each of these there are equally compelling counter arguments, most notably the Double Jeopardy theory of market share versus brand loyalty.

All this leaves us with the rather cold reality that the economics of DM cannot be reconciled profitably with the economics of FMCG products and markets.

So, if I were chewing my pencil at Warburton’s I’d do two things. First, I’d centralise all the DM and sales promotion spend (and agency fees) into TV advertising. Second, I’d give BBH the following brief: “Make Warburton’s the most talked about bread in the country”. Bread has waited for thousands of years to be made special. The space is there for the taking and TV is the one medium that can deliver it.

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