Direct Marketing In the 21st Century

By: Bob Hemmings

 

The blossoming of direct into a full-blown sales medium during the 1900s is but a precursor to the dynamic future of direct.

At one point in time the advertising word, “direct” only meant direct mail. Advertising agencies considered direct mail to be collateral material. Because of this attitude, all advertising mail, sales promotion and point-of-purchase assignments were given to junior writers and trainees. Generally, management had a low opinion of direct mail and writers of direct mail.

Some direct mail instructors had a penchant for assigning percentages of relative importance to the three major elements of direct mail – namely:

1)    The List
2)    The Offer
3)    The Copy

The ranking took many forms and copy was always in the 10% to 20% low end of the spectrum. Copywriting was considered to be the least important element.

THE GREAT AWAKENING
Right after WWII came the great awakening, the epiphany, and the revolution. Frank Johnson and other talented, progressive and creative “Direct” thinkers like John Caples, Les Wunderman, Red Dembner, Joan Throckmorton, Walter Wientz, Max Sackheim and many others who deserve recognition, but are too numerous to mention, brought a new focus on the business of direct.

Direct became more than just mail, it evolved into “Direct Marketing,“ encompassing all media, and it emerged as a vital channel of distribution.

EXCITING CREATIVE
The brilliant and exciting copy produced by these men and women was so successful in selling books, records and magazines that it altered the opinion of management. Management began to recognize the true importance of direct marketing.

Today, direct marketing is an integral part of every major business and advertising agency. Smart, winning companies are creating new value for their customers through the use of strategically driven direct marketing. Skilled specialists in direct are staffing departments devoted to direct.

The Cinderella of the marketing world has come out of the scullery to a position of prominence.

NOTHING BUT THE BEST
In the fast-paced highly competitive environment in which we live and work, nothing but the very best strategic planning in direct will succeed. We are coming to better understand buying behavior and the motivations that move people. Marketers are customizing their products to meet the demands of the buyers. The buyers are setting prices they are willing to pay for products and services

TECHNOLOGY & TECHNIQUES
The introduction of the Internet and the development of databases have revolutionized the marketing process. Disciplined direct marketing thinking is helping marketers understand that product features, positioning, sales promotion, pricing, communications, and advertising can be modeled and optimized to meet the requirements of the consumer.

In the past, our aim was on the mass market. Today, we have the capability to target each individual customer or prospect.

The innovative technology and the techniques of the past century have catapulted direct marketing into a leadership position for the acquisition, development and retention of customers, which Management Guru Peter Drucker tells us, is the prime purpose of any business.

PROGRESS DEMANDS CHANGE
Change doesn’t mean progress, but progress demands change. In the late 1990s as direct marketers started to play tag with the new millennium, Grand Sachems of direct began to forecast the future. Looking into their crystal ball, these wise sages predicted sweeping changes in technology and techniques as we crossed the bar into the new millennium.

CHANGING RULES
Change is coming in many ways. Direct marketing as we knew it through the pre- and post-World War II era is now fundamentally different. The nature and the scope of our industry have changed dramatically. New entrants are recognizing the powerful potential of direct to produce a good return on investment. These new players are helping to change the rules of the game.

THE DATABASE
The most powerful tool in direct marketing today is the database. Tremendous advances in technology have made it possible for marketers to gather vital customer information electronically and to selectively target their customer communications. This enables businesses to keep track of customers – their purchases, preferences, what, when, why and how they buy. Armed with this vital information, marketers can operate more efficiently and do a more effective job of developing mutually beneficial customer relationships.

The future will be powered by dynamic changes in technology. This will not only change the nature of the industry, but also the scope as we reach into the future.

TIME AND MONEY
In today’s fast-paced society, energy is high cost. Time and money are interchangeable.  We spend time to save money or we spend money to save time. If this were not so, convenience stores would be out of business. We, as consumers, are constantly on the go. We get excited if we miss a panel in a revolving door. Direct marketing is a viable option for consumers in our high-energy economy.

AMERICANS TODAY
People today are concerned about the quality of their lives and are striving for self-fulfillment. In the 1990s 54.4% of the US population ordered merchandise and services direct, by mail or telephone. And, importantly, the majority of buyers were completely satisfied with their purchase. This might just be the reason why most, if not all, of the fortune 500 companies are channeling the lion’s share of their corporate advertising budgets into direct marketing.

HISTORY CONFIRMS
Changing socioeconomic environments and social upheavals have always impacted the marketplace. To progressive-minded direct marketers, men and women of vision, with skills to scan the periphery of the market and to keep their finger on the economic pulse, great shall be their reward.

THE INTERNET
Let us back up to the year to 1994. This was the year Netscape introduced its first commercial browser called Navigator. This browser changed the nature of the Internet.

At this same time, AOL offered the Internet as one of the benefits of membership. Prior to this, AOL offered only a propriety service featuring only its own kinds of activities.

The Internet had been reserved for the province of the academic and scientific community. A great brouhaha erupted because these special interest groups did not want the masses to corrupt their Internet. They were certain the entrance of the masses into the Internet would result in pornography, trivia, trash, and clutter to their beloved Internet.

The Internet was originally created by the US as a communications system of last resort. Now, after a shaky start, it is fulfilling its mission in more sweeping ways than its founders ever anticipated, or could have imagined.

Certainly, from a direct marketing perspective, the Internet has changed our professional and personal lives. Not since the introduction of television and the morphing of lists into databases have there been such a catalyst of change in our industry.

Today the Internet is about how we learn, how we play, how we work and just about how we do everything in our lives. The significance of the Internet, in the years to come, will have a greater effect and influence on our lives than television.

First and foremost, the Internet has catapulted the consumer into a position of control. Caveat Emptor, let the buyer beware, has done a 180-degree flip to Caveat Vendor, let the vendor beware.

CHANGING CLIMATE
This switch is changing the climate in which advertising agencies, including direct advertising agencies, operate. New Internet technology and changing consumer habits are forcing agencies and clients to think outside the box. Consumers are changing. They want facts on which to make buying decisions, not broad generalities. Showmanship advertising is giving way to salesmanship. Not the big, loud-mouthed circus barker pitchman, but the kind of salesmanship that provides the customer with helpful information to make a wise purchase decision. Good salesmanship is to become a trusted “Purchase Advisor.”

As the use and influence of the Internet continues to rise, agencies and their clients will be challenged to offer new services and new solutions to meet the needs and the demands of consumers. Integrated multimedia is the thrust of the future; to succeed requires skillful strategies that bundles digital media with conventional media. To do this requires the blending of direct, general advertising, publicity, public relations, point of purchase and digital.

EMAIL
Since the inception of the Internet, email has become a fixture in people’s lives. It is the ultimate medium through which people use computers. The Internet has become the most important source of information for Internet users. It is the first place everyone goes to gatherer information. Email has become a personal information medium. It is the glue that keeps people together – it delivers news, shares stories, transports documents, photos and video clips. Email is the mainstay of most, if not all, businesses.

But there are problems. What you send into cyberspace may return many years later to haunt you. The reliability of the Internet is under constant attack. Email is particularly troubled because its dependability and trustworthiness is challenged daily by spam, viruses, phishing attacks, cyber safecrackers breaking into online accounts, identity theft and a host of other problems. Much of the abuse today is due, in part, to the lack of security, identity and control.  Much is being done to correct these deficiencies and the future will certainly provide satisfactory solutions.

The ubiquitous email is fast becoming difficult to use in marketing to consumers. The sheer volume and clutter is diminishing the consumers’ appetite for receiving email. Today, the average delivery rate of email is in the area of 88%. The future challenge is getting the email in front of customers at the right time.

SEARCH ENGINES
Search engines are an Internet accessible search service that enables a person to search for information on the Internet. Simply type in a keyword and the result is a list of documents or files that contain one or more of these keywords in their titles, description or text. The leading search engines today are Google, Yahoo and MSN.
This search world continues to change daily before our eyes and these changes have far-reaching effects for advertisers, advertising agencies and the connected online world. Seeking to diversify its revenue base, search engines are offering advertisers marketing analysis tools. This move will help advertisers boost results, but also will infringe on services provided by advertising agencies.

SAVVY MARKETERS
Research shows that search engine users prefer organic links to sponsored links. Savvy marketers know the best links are organic. Organic links are the non-sponsored free listings that appear in major search engines in response to keywords. These organic listings are retrieved from databases by search engine spiders that crawl the web. Proprietary search algorithms then rank the information. Usually, this is based on relevant content, HTML coding and quality links.

To the advertising world, search engines provide a new and uniquely different media. The typical “Advertisy” and “Salesy” sock and stop showmanship tactics are not working. There are two reasons why they are not working: number one, consumers are satiated with irrelevant clutter and are not responding to this hype; number two, the major search engines have put the shackles on advertisers by dictating the verbiage that can be used. The Internet medium is requiring advertising to be free of unsubstantiated claims and free offers with caveats.

To the consumer, search engines are a way of gathering reliable information on which they can base wise and educated buying decisions. Consumers and businesses want specifics, not generalities, facts, not fantasies.

So far, the commercial Internet has not yet become a full-blown and proven medium of advertising. It is now in the beta-testing stage and will have to prove itself. The Internet carries banner ads but advertisers are pushing search engines to carry skyscrapers and pop-up ads, and search engines are balking at this because they want to preserve the purity of the Internet and advertising that is too blatant and intrusive poses a risk.

RICH MEDIA
Rich media offers advertisers more opportunities to engage consumers with high quality television and interaction. Rich media is a broad term that includes animated and video ads, and merchandising can be done within the ads themselves. This offers greater possibilities for the advertiser and the website. Traditionally, advertising pulled consumers into the marketer’s site. Now, with the capability to merchandise and give product demonstrations within rich media ads, advertisers can push parts of the site out to people within the ads themselves. With this, the viewer can spend time interacting while staying on the same page as the ad appears. Consumers should welcome this because it is more appealing and less intrusive.

RSS
New techniques are popping into view with daily regularity. RSS (Really Simple Syndication) is a format based on extensible markup language (XML) that is designed to share information across websites. RSS is a means to syndicate content, including weblogs, better known as blogs 

RSS enables Internet users to pull the information they want from websites to their desktops, portals or mobile devices. Consumers can get the information they want, when they want it, from whom they want and the best part is, they can do this without revealing their email address. This provides secure, measurable, 100% deliverable communications.

RSS is the technology that drives blogs, and blogs represent an interesting and innovative way to deliver mass-market advertising. When used with good thought and consideration, a blog can be a great device for giving a company a personality. It is estimated that a new blog emerges about every second covering everything from what they had for lunch, to their hobbies, to politics and the Darwin theory. Clutter?

Most of the computer manufacturers are building RSS into their operating systems. Web portals are building RSS into their next generation operating systems. RSS is also at the heart of a nascent discovery called “pod-casting.” This lets consumers download audio files automatically and then play them on portable units like Apple’s iPod.

Marketers are suddenly finding that one of the quickest and highest impact ways to improve their online presence is by adding RSS.
 
CONSUMERS ARE IN CONTROL
Consumers are in control of today’s marketing and advertising. They have the power to block all advertising. It all started with TV remote control that gave people somewhere else to go during the commercials. Then came the VCRs so people could scan through the commercials. Now we have PVRs and DVRs and TiVo. A sad commentary on how people view the value of advertising in the enrichment of their lives.

The Internet and Search Engine Marketing have given the consumer huge shopping choices and a newfound freedom of choice. This now has a firm grip on the consumer psyche, and consumers are not going to give up this freedom. Consumers, definitely, are in control, and business and media are going to have to give consumers what they want, when they want it and how they want it – content on demand will be the driving force.

In the very near future, the majority of homes will have broadband Internet access. Laptop computers and technologies such as 3G, WiMax and WiFi will be ubiquitous. Everything will be digital, even the homes we live in will be fully digital.

WIFI
The Internet will be available through cell phones; every area will have WiFi, which will make access to the Internet immediate and on demand. TV will be available on the Internet and the Internet will be available on the TV set as well as on cell phones. In the future the screen will rein supreme – the television screen, the computer screen, the cell phone screen and the iPod screen.

VOIP
Voice over Internet protocol (VoIP) allows users to make telephone calls using a broadband Internet connection rather than regular or analog lines. To do this requires the purchase or lease of capital equipment or to use the services of a hosted provider.

ON-DEMAND ACCESS
Video, news, advertising and information are now, or soon will be, available to consumers on-demand. From studios to satellite operators to manufacturers of goods and services, new interactive business models are now being devised for the digital age.

The big question is: Who will pay for it?  Or will it be free? General opinion is that new interactive business models for advertising on demand will pay the freight.  

TAMING THE SPEED OF LIGHT
Internet communication currently is sent over telephone lines, copper wires and fiber optics. Exciting new technology is taming the speed of light. Now, with this new nascent chip technology, more data can be stored and transmitted while using less power. IBM researchers report they have developed a method to use light as an effective data carrier. This means copper wires could be abandoned for cables that transmit data on the back of light waves. In the future, this would not only save power it would also speed the flow of information around the web.

Light zips along at a clip of 186,282 miles per second. This should satisfy the consumers’ desire for instantaneous communication

INSTANT COMMUNICATION
Instant communication is certainly the thrust of the future. This means the content, offer and the creative presentation is critical. It also means advertisers must deliver content online and offline that is targeted, relevant, credible and timely. Plus, they must insure their ads make a lasting impression on the consumer and deliver the vital “What’s In It For Me.” Instantaneous response will require the services of communicators who can “Think Fast”-- Men and women who have a nimble mind and the skill to harness the power of words, and who are master persuaders.

The tired, old formula of assigning percentages of relative importance to the three major elements of direct mail, namely, the list, the offer, the copy has now become 100%, 100%, 100%.

To survive in today’s fast paced, highly charged, competitive market, nothing but the very best in all areas will succeed.

BROADBAND CHANGES EVERYTHING
At this point in time, the majority of homes are broadband homes. With broadband you are “always on” or have a direct connection and it is fast. Broadband is a very integrative technology. With the old dial-up, the user is on the Internet two or three times a day for 20 to 30 minutes at each sitting. But with broadband, the average user is on 20 to 40 times a day for just a few minutes at a time.  With broadband, it is faster and easier to use than going to the telephone or reading the newspaper.

With WiFi, one has the advantage of moving the wireless computer access to different parts of the home. It doesn’t displace anything. It fits into the rhythms of the day.

Broadband is the reason people have become so dependent on the Internet. People want the Internet in their homes, in their offices, in their homes and in their pockets. The Internet is the first place people go for information – the Internet is the most important source of information about life and living as well as about products and services.

The challenge for direct marketers will be to provide reliable, relevant, helpful and timely information on demand. Direct marketers need to soft-peddle the desire to sell their product or service. Marketers need to concentrate their thinking on designing and delivering a favorable and positive experience for the customer when the product is purchased and used.

REAL-LIFE
Real-Life experiences will be provided so customers can try out the product before the actual purchase. Bookstores like Barnes and Noble are providing comfortable surroundings for reading and relaxing.  They even provide the convenience of a coffee shop. Cabelas’ and other sporting goods companies are providing fishing pools with live fish so anglers can experience the joy of the rod and reel. Home Depot, Loews and other home improvement stores are providing professional assistance, ideas and displays to enhance the buying experience.

Today there are more products and services than there are customers. This puts the customer in control. The customer is King. The customer has more choices, more information and competitive price comparisons, thanks to the Internet. Consumers also have the power of chat rooms for word-of-mouth recommendations. It’s a tough world for suppliers. Their offers and promises are in a fish bowl for all to see and compare.

The more marketers know about their individual customer or prospect, the better opportunity they have for designing and customizing products and services – for individuals or for specialized segments of the market. A classic example today is Dell Computer. They encourage customers to specify features they want on their computers and then they deliver at a lower price than the general market.

GO DIRECT
On the evolutionary ladder, direct marketing is in its ascendancy. From a secondary status, direct has risen to “Top-Gun” position in communications.
General advertising and direct advertising are blending together into an integrated force for the sharing and communication of ideas and thoughts. The crisp, clear graphics, creative excellence and showmanship of general advertising is being blended with specific, segmented, targeted and solid sales techniques of direct. For professional direct marketing men and women, the future holds great promise and rewards of personal and financial satisfaction.

 
THE FUTURE FOR DIRECT
Change, dynamic and dramatic change is on the horizon. This writer has been in the business of direct since 1935. A post card could be mailed for 1 cent and first-class postage was just 2 cents. This was the year first-class postage was raised to 3 cents. Pessimists prophesized this increase would mean the end of direct mail. 70 years later we are facing another postage increase to take us over the 40-cent price for mailing a letter.

Today, direct is the Cinderella of the advertising world. Through the years, we have not only survived, we have prevailed.

Peter Drucker, one of the most enduring management thinkers of our time, observed that marketing is the whole business seen from the point of view of its final result, that is, from the customer’s point of view. Then he added, a business has two — and only two – basic functions:

1)    Marketing and
2)    Innovation

“The customer’s point of view” has always been the hallmark of direct marketing. Over the years, direct marketers have initiated many innovations that have propelled direct to a leadership position in the world of advertising.

So here we are, poised to open the door to the year 2007. The achievements of the past are certainly a prologue to our future. Change does not mean progress, but progress demands change. Here are some of the progressive changes that will accelerate the growth and stature of direct:

• Peter Drucker said, “The first task of any business is to decide what business it is in.” The question for direct marketers is, “what business are you in, direct mail, direct response, direct advertising?” No! As direct marketers you are in the business of developing customers for clients – the acquisition, development, and retention of profitable and satisfied customers.

• Any organization that continues to do what made it successful in the past, without change, will eventually fail in the future.  The graveyard of business is filled with enterprises that failed to change or innovate. The classic example is buggy whip manufacturers who failed to switch from whips to power transmission belts. The advent of CDs destroyed the vinyl record industry almost overnight. The hand-held electric calculator put the slide rule industry out of business. 30 years ago, every engineer owned a slide rule, but today many engineers don’t even know what a slide rule is. As Drucker said, “any business that continues to focus on what made them successful in the past will eventually fail.”
  

• Mass marketing is out and customized marketing is in. Customers are concerned with service, quality and value. These are normal expectations. Direct marketers will be challenged to find product attributes that can be turned into solid selling points of differentiation.

• Customer retention will be the primary focus.  This means marketers will be responsible for acquiring the right kind of customers. Once acquired, direct marketers will be called upon to continually come up with  new customer benefits in the form of customer-centric offers and advantages to develop more business activity from its existing customers. This will require in-depth, innovative creative thinking.

• We are moving from transaction-oriented selling to building lasting and profitable relationships with loyal customers. Customer relationship marketing will take on a new dimension. The entire organization will be involved in providing a favorable customer experience — clerks, messengers, telephone operators — all echelons of a company will be responsible for contributing to building customer loyalty.

• Direct marketers are not going to be satisfied with the accepted “Norm” of response rates in the range of 1% to 2% for prospecting. Concentration is going to be on the wasted 98%. Nothing happens in our economy until marketing creates the “want” for products and services. Psychology plus relevant communications creates the want for goods and services.

• Market share will be replaced with customer share. Although this is not a new concept, it has been kept on the back burner for too long. Future direct marketers will focus on building customer share and Life Time Value (LTV). 

• Direct marketing will be a dialogue not a monologue. The word “Dialogue” is taken from the Greek word “Dio” meaning flow and “Logos” meaning useful information. Direct in the future will concentrate on two areas: 1) to make the sale and/or 2) to gather meaningful information to better sense and respond to customers and prospects.

• Mind over body. New software and scanning techniques can determine how the mind works. This automated crystal ball gazing can single out prospects likely to want a new product before they have even heard of it. This neuroimaging technology not only displays the structure of the brain but also how the brain functions. It can eavesdrop on the brain when it is in the process of thinking. Spooky? Scary? Yes! The name for this science is called Neuromarketing.

What will the power of predictive analytics do for direct marketers? It will minimize the risk and maximize the possibilities for success. For certain, it will maximize the invasion of privacy issues.

In the last 16 years, since 1990, technology has accelerated at a dizzying pace. In tandem, direct marketers have harnessed the technology and developed new customer-centric techniques for motivating people to purchase products and services.

When Netscape went public in 1995 it opened up the window of the Internet to the rest of the world. Brian Behlendorf’s discovery of fractal geometry made possible the presentation of pictures on the Internet. Today fiber-optic cables are connecting the world.

This has led American companies to Outsource knowledge work to other countries – namely China, India and Russia. The supply chain now covers the entire world. With work flow software, work can be done anyplace in the world.

This is changing the face of business. Yesterday’s vertical command and control is now connect and collaborate. Supply Chaining and In-sourcing are resulting in the delivery of goods at lower and lower prices Finally; In-Forming, Google, Yahoo, MSN and web search have put consumers in command.

What does the future hold?  Your imagination will light the fuse to what is possible in the future.
 

About the Author

Bob is a well-seasoned direct marketer. His first job was in the direct mail department of the Los Angeles Times Newspaper. On his very first day on the job First Class Postage was raised from 2 cents to 3 cents. So you can see, Bob is an “Ancient Marketer.” But he still possesses a large tank of energy and is filled with young ideas.

A journalism and marketing degree from the University of Southern California gave him a love for the power of words. Selling classified advertising on the telephone while attending USC gave him a solid respect for the power of salesmanship.

Bob coupled the power of words and salesmanship into a direct marketing career that spans the years form the 1930’s into the 21st century.

Over the years Bob has guided 5 direct marketing agencies and served an impressive array of customers. His direct marketing agencies have been Smith & Hemmings, Hemmings and Associates, Hemmings, Birkholm & Grizzard, Hemmings IV direct and finally, Bob Hemmings, Sales & Marketing.

For the last 27 years Bob has taught the DMA Basic Direct marketing Institute. In 1998 the Direct Marketing Educational Foundation honored Bob with the Edward N. Mayer, Jr. Award in recognition of his outstanding contribution to direct marketing,

At their 83rd annual convention the Direct Marketing Association inducted Bob into their “Hall of Fame”. This is an honor awarded to men and women who have added laurels to the profession of direct marketing.