Content Wraps• Saatchi, Zenith and Toyota partnered with

The CW Network, D.C. Comics, and Warner-Brothers Studios to develop a customized experience

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Product Placement

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C3 Retention RatesAny Surprises?

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Creative Execution Assignment

Kate will send out schedule

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Direct-ResponseMarketing

Advertising Principles and Practices

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Who am I?

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Hand Out

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Advertising and DR

• Art vs. Science

• Soft measures vs. hard measures

• Stickiness vs. awareness building (hand out #2)

• Now starting to blend, esp with growth of digital.

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What is direct marketing?

• Connecting sellers and customers to deal with each other directly rather than using an intermediary, like a wholesaler or retailer.

• Designed to elicit an immediate response.

• Emphasis on tested methods and an iterative process to develop strategy.

• Database, database, database!15-13

Case Study

• Meredith Corporation

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The Gecko Goes Direct• Gecko, Caveman, celebrity

testimonials

• Their share of premiums grew from 4.6–6.9% from 2001 to 2006.

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Visit the Site

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Direct Marketing Industry

Advantages of Direct Marketing

• Can be personalized to be more persuasive.

• Results are measurable; ROI is more easily known.

• Relevant customer information can be collected to produce more useful databases and selective reach, reducing waste.

• Convenient to purchase; not restricted to a location.

• The marketer controls product until delivery.

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Consumers are reluctant to purchase a product they can’t touch or feel.

Annoyances associated with direct marketing (junk mail, telemarketers).

Customer privacy, data sharing, and identity theft issues.

Tension between building long-term brand image and driving short-term sales. 15-18

Disadvantages of Direct Disadvantages of Direct MarketingMarketing

1. Setting objectives and making strategic decisions (research helps advertisers target, segment, prospect, and set objectives).

2. The communication of an offer (the message) by the seller through the appropriate medium.

3. Response, or customer ordering.

4. Fulfillment, or filling orders and handling exchanges and returns.

5. Maintenance of the company’s database and customer service (relationship building). 15-19

Steps in the Steps in the Direct Marketing ProcessDirect Marketing Process

The Direct-The Direct-Marketing Marketing

ProcessProcess

15-10Prentice Hall, © 2009

Objectives/Strategy• Provide product information

• Create sales

• Retain and strengthen customer relationships

• Develop leads

• Generate traffic

• Test offers 15-21

Targeting

• Identifies who is to receive the offer.• Important because the Cost Per Thousand is very

high.

• Current customers are the best prospects.• Order products, visit a dealer, return a response card,

visit a website

• Three criteria (RFM) predict who is most likely to buy again:• Recency—they purchased recently• Frequency—they purchase often• Monetary—they spend a lot of money

• Profiling• For acquiring new customers, a targeting strategy is

to profile current customers and look for potential customers with similar profiles.

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Measurement and Evaluation

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Principle: Because direct-marketing messages are constantly

being measured, it is easier to learn what works and modify succeeding campaigns based on results than

with advertising.

Branded Content-Absolut

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Using Databases Marketers use databases to:

Keep track of customers Identify prospects Segment groups into customers and

prospects, to send relevant offers to each group

E.g., Carnival Cruise Lines segments customers into new customers, returning passengers, and frequent cruisers. Each group gets a different “Sail and Sign”

card, each with different perks and privileges

Direct marketers use the same strategy when sending offers to customers or prospects. Better customers get more premium quality

pieces than lower-usage customers who get a more modest piece.15-25

A Circular Process

• Primary database objectives: 1. Record names of customers2. Store and measure ad results3. Store and measure purchasing

performance4. Vehicle for continuing direct

communication

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Principle: A reliable database of customer and prospect contact

information lies at the heart of effective direct marketing.

Database Management Process

1. Collection Point• Completed warranty card, contest entry, trade show card

2. Data Entry• Entered into computer and merged with other information

3. Data Assessment• Determine relevant level of detail

4. Data Clustering• Create clusters of characteristics and behaviors for segmenting or targeting

5. Data Application• Apply to marketing strategy or problem (e.g., send coupons)

6. Data Sharing• Manufacturer shares info with retailers

7. Data Refinement• Corrections, updates, additions, deletions

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Database Management Process

Prentice Hall, © 2009

Lists• Customer and prospect information including addresses,

phones, emails.

• Can be purchased or rented from list brokers.

• Lists tied to demographics, psychographics, geography, hobbies, affiliations, postal routes .

• New lists are crated by merging and purging

• Three types of lists:• House lists: marketers own customers or members• Response lists: people who respond to some type of direct-

response offer• Compiled lists: specific categories such as new homebuyers,

graduating seniors, new mothers

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1. Advertisers

2. Agencies

3. Media Companies

4. Customers

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Four Key Players in Four Key Players in Direct-Response MarketingDirect-Response Marketing

Key Players: (1) Advertisers

• Companies whose primary business is selling products and services by mail or phone, or direct response advertising.

• Retail stores who use direct marketing as a supplement to other forms of marketing.

• Dell, GEICO

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Key Players: (2) Agencies• Advertising agencies—

department or separate direct-response company owned by the agency

• Direct marketing agencies—independent, full-service agencies specializing in direct response

• Service firms—printing, mailing, list brokering, data management

• Fulfillment houses—store/ship requested information/products

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Key Players: (3) Media Companies

• The media that deliver messages by phone, mail, or the Web

• Used to make an offer with a prospect• U.S. Postal Service

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Key Players: (4) Customers

• Dislike intrusiveness, but appreciate convenience

• Types of customers• Push-button shopper (phone)• Mouse-clicking shopper (computer)

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Tools of Direct Marketing1. Direct Mail

2. Catalogs

3. Telemarketing

4. Direct-Response Advertising

5. Web-based e-marketing

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• A print advertising message for a product or service, delivered by mail

• Most popular method

• Variable data use digital printing to highly personalize messages

• Uses bulk mail rates

• Response is 2–3%

• Fairly high CPM, but easy to calculate payout rate 15-36

The Tools of Direct Marketing: The Tools of Direct Marketing: (1) Direct Mail(1) Direct Mail

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Advantages

Tells a story

Engages attention

Personalizes message

Builds in feedback

Reaches the unreachable

Description

The medium offers a variety of formats and provides enough space to tell a complete sales story.

Because direct mail has little competition when it is received, it can engage the reader’s attention.

Because of the use of databases, it is not possible to personalize direct mail across a number of consumer characteristics, such as name, product usage, purchase history, and income.

Direct mail is particularly conducive to marketing research and can be modified until the message design matches the needs of the desired target audience.

Direct mail allows the marketer to reach audiences who are inaccessible by other media.

Table 15.1 Advantages of Direct Mail

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Advantages

Negative perceptions

Cost

Mailing list

Response rates

Vulnerability

Description

The main drawback of using direct mail is the widespread perception that it is junk mail. According to a Harris-Equifax Consumer Privacy Survey, about 46 % of the public see direct-mail offers as a nuisance, and 90% consider them an invasion of privacy.

Direct mail has a higher cost per thousand than mass media. A great deal of this high cost is a result of postage. (However, it reaches a more qualified prospect with less waste.) Another cost factor is the maintenance of the database.

To deliver an acceptable response rate, the quality of the mailing list is critical. It must be maintained and updated constantly.

Because of the changing nature of mailing lists, as well as the difficulty of keeping relevant data in the database, the response rate can be a slow as 2 or 3%. Even with that low response, however, database marketers can still make money.

Direct-mail delivery is vulnerable to natural disasters as well as catastrophes such as the 9/11 terrorist attacks.

Table 15.1 Disadvantages of Direct Mail

Creating Effective Direct Mail

• Get the attention of the targeted prospect as the envelope comes from the mailbox.

• Create a need for the product, show what it looks like, and demonstrate how it is used.

• Answer questions, as a good salesperson does, and reassure the buyer.

• Provide critical information about product use.

• Inspire confidence, minimize risk, and establish that the company is reputable.

• Make the sale by explaining how to buy, how to order, where to call, and how to pay for the purchase.

• Use an incentive to encourage a fast response.15-39

Writing Effective Letters• Attention

• Pictures and benefit-oriented headlines to grab attention or generate curiosity.

• Personalize • Use a name or, if not available, a topic (“Dear Cat

Lover”).

• Lead in • A brief yet compelling or surprising statement—“Dear

Friend: I could really kick myself!”

• The Offer • Make it as early in the letter as possible.

• The Letter • Use testimonials or other specifics to describe benefits.

• The Closing • Repeat the offer, add incentives or guarantees, and

include a clear call to action.15-40

Issue: Trees, Water, and Waste

• Direct mail uses an estimated 100 million trees and 28 billion gallons of water per year

• Plus disposal and recycling costs; in Colorado, direct mail accounts for 340 million pounds of trash per year.

• Should direct mail be banned?• Would this infringe on advertisers’ rights

to commercial free speech?• What do you do if you’re an

environmentally responsible advertiser?

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• A multiple-page direct mail publication showing a variety of merchandise

• Increasing in number; even while marketers are refining databases, cutting back on no. of recipients

• Catalogs can drive e-commerce, Web site purchases

• Specialty catalogs are growing in number

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The Tools of Direct Marketing: The Tools of Direct Marketing: (2) Catalogs(2) Catalogs

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Advantages

Targeted

Engages attention

Complete information

Convenience

Description

Can be directed at specific market segments.

Employs high-quality design and photography (see Alsto’s cover).

Extensive product information and comparisons are provided.

Offer a variety of purchase options.

Table 15.2 Advantages and Disadvantages of Catalogs

Disadvantages

Negative perceptions

Costs

Response rate

Mailing list

Description

Catalogs are viewed as junk mail by many recipients.

The cost per thousand of catalogs is higher than mass media.

The response is relatively low at 3 to 4%.

Databases must be constantly maintained.

• Almost as persuasive as personal sales, but a lot less expensive.

• Inbound vs. outbound.

• Message must be simple, compelling, and short.

• Issues include intrusion, privacy, and fraud.• Predictive dialing can call

even unlisted numbers• Fraudulent behavior has

tarnished telemarketing’s image

• Do Not Call registry, “Privacy Manager,” and Caller ID15-44

The Tools of Direct Marketing: The Tools of Direct Marketing: (3) Telemarketing(3) Telemarketing

• Print Media• Ads in newspapers and

magazines feature a coupon, order form, address, toll-free number; ask for response.

• Broadcast Media• Radio provides targeted

audiences, especially mobile audiences.

• Cable is targeted to particular interests.

• TV uses infomercials and direct-response ads.

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The Tools of Direct Marketing: The Tools of Direct Marketing: (4) Direct-Response Advertising(4) Direct-Response Advertising

• Combines strengths of direct mail and telemarketing.

• Moves marketers closer to one-to-one marketing.

• Combines database information and email technology for highly personalized, low-cost messages to mass audience.

• Spam is an issue.

• Permission marketing gives recipients the choice to “opt in” or “opt out.” 15-46

The Tools of Direct Marketing: The Tools of Direct Marketing: (5) Internet(5) Internet

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Eddie Bauer Eddie Bauer

Visit the Site

• The Eddie Bauer Web site lets site visitors “try on” clothes in a virtual dressing room” and also sends email messages offering special prices based on customers’ past purchases.

Integrated Direct Marketing:

• A systematic way to get close to your best current and potential customers.

• Seeks to achieve precise, synchronized use of the right media, at the right time, with a measurable return on dollars spent.

• Direct mail with a reply card and an 800 number, followed by a phone call.

• Lifetime Customer Value (LCV) is an estimate of how much a purchase volume a customer or target market will generate over a length of time.

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Global Considerations• The use of databases, credit cards, toll-free

numbers and the Internet are driving direct marketing growth in Far Eastern and European countries.

• Direct marketing is especially important in countries where advertising is tightly regulated.

• Government postal regulations also limit the use of direct mail.

• Regulations, standards, and cultural meanings vary greatly from country to country.

• Creative messages, visuals, and words often don’t easily translate across cultures.

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Discussion Questions

Discussion Question 1• Most people hate telemarketing. Say you

work for the local campus environmental organization.

• How could you conduct a campus and community telemarketing effort that would not generate resistance?

• Apply your ideas to developing a telemarketing program to promote campus fund-raising for a good cause, such as a campus Habitat for Humanity project?

• Your primary targets are students, faculty, and staff.

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