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Is direct marketing back in fashion?

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12th Oct 2009
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The marketer’s agenda is still being driven by recessionary cut backs but, at the same time, the rise of social media, the multitude of TV channels available and the vast number of brands vying for consumer attention means there is a huge amount of clutter for the marketer to break through if they want their message to be heard.

It was John Wanamaker who famously said, “Half the money I spend on advertising is wasted; the trouble is I don't know which half.” That was nearly 100 years ago, and it’s no easier for marketers now. In fact, Wanamaker was being pessimistic – last year, a study by Rex Briggs and Greg Stuart found that 47% of advertising is wasted.

Added to that are the recent findings from the Edelman Trust Barometer, which found that only 22% of the public trust advertising. Also, to reach 80% of 18-49 years olds via prime time TV spots, you’d need 117 60-second adverts – up from just three adverts 20 years ago.

These are challenging times, but there are still routes to creating high performance marketing and advertising. However, unlike in the good times when bigger and better creative can be relied upon to improve results, innovative marketing teams are now realising the true value of their data.

Data – the new black?

For generations, target audience insight has been the catalyst that enables successful marketing programs and their optimisation. To gain this insight and make it useful, the geeks of marketing need to become cool. Rather than being at the back of the line when it comes to campaign planning, data analysis – the discovery of customer behaviour patterns – needs to come first, forming the bedrock of any campaign. 

Optimising campaigns means ensuring activity is as tight as it can be around targeting the right consumer segment, via the right media, with the right offer, at the right time. This four-dimensional approach can be tricky. It will be most effective when all four elements are done simultaneously but it can be worked on incrementally, once the brand owner recognises that it all starts with data.

The right customer

Not all customers are created equal. This statement may scare people but for the marketer, it’s a fact of life - 30% of customers create up to 80% of the revenues for a typical company. A further 50% make some money, but the remaining 20% are probably losing money. This translates directly to how valuable leads are from a marketing campaign. So, if campaigns are being evaluated on the ‘hard data’ of click throughs to a website or even account acquisition, you may not be getting an accurate picture of the true success of a campaign and it’s impact on the bottom line.

The cold fact is that some customers are going to earn the company a lot more money, so if those key people can be targeted more effectively, marketing will make a bigger contribute to company revenue. Evaluation needs to include some consideration of the value a customer represents, both by their spend and their circle of influence, - the recommendations they will make the friends.

The right data can help identify the customers that are ripe to the message – the next consideration is how to target those people…

The right media channel

Research shows 42% of media consumption is now online, but only 11% of ad spend has moved to the internet. There is room for a lot more creativity, and success, when using online media as part of the channel mix.

But it’s not just a question of moving your spend online for a cheaper deal and faster ROI. If you’re looking for real value from a campaign, it’s important to have an understanding of how different media and the multitude of ‘impressions’ a consumer has before spending money influence their decision-making.

Most companies do see an uplift in searches for their products when undertaking a display campaign but, with no way to track this, may make a costly decision to suspend display ads. Too much emphasis has been placed on the last impression before the sale in recent years. To see real returns, the whole campaign, with its overlapping impressions, must be evaluated to fully understand which channels have the greatest influence on the target customer.

The right offer at the right time

Customer insight and a deeper understanding of multichannel marketing need to extend into the engagement with the customer itself. What are you offering them, and when? Even the basics, such as not targeting an existing customer with a new customer offer, are incredibly important when people’s budgets are tight and it doesn’t take much to alienate them to a brand.

Targeting at customer level is fast becoming a reality. In the US, digital addressable TV means companies can gain an understanding to a household level of what people watch and what they want. By combining data sets, it’s feasible to put different offers ‘on the red button’ for different families.

Obviously, this will require improved versioning of creative, but once companies get a taste of the returns it can bring and how important it is for the long-term ‘life’ of each customer, targeting at least at segment level will become a must.

Using data for ‘surround sound’ marketing

When it all comes together, the harmonious sound of a customer spending money will be heard. But if it doesn’t, the mis-matched tones can put a customer off and alienate them to your brand. With trust wearing thin and purse strings tight, it makes sense to ensure your ‘speakers’ are in tune with each other.

Improving personalisation is a vital lesson learnt in direct marketing some time ago – when marketers realised how impressive the response rates were when they addressed a letter to an individual, not ‘the occupier’. In the future, this lesson should be applied to all interactions with customers where possible, whatever the channel or offer.

Being ‘direct’ with the customer is a key factor in improving performance. When marketers can connect the dots between their data and take a full view of the customer and the way they interact with the brand, their planning can be much more accurate, and campaigns can really fly.

Tim Suther is SVP global multichannel marketing services at Acxiom

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By John Brodie JaywingDMG
13th Oct 2009 17:43

Marketers use (or would like to use) data to make decisions all of the time; decisions on the channels and media they use, the content, tone and timing of communication; the price and incentives offered (or not), the list is almost endless.  However, the question lies in the quality of that decision making; the number of factors considered at any one time and the ability to react to new information and change the course of a decision.  For some, it feels like a big hill to climb and traditionally marketing has been all about the creative – which turns out to be one of the least impactful aspects of direct marketing campaigns – so it’s not surprising that the geek has been considered uncool when many haven’t really fully understood what they can offer.  The best geek will tell you just what is material and what isn’t.  Another geek will help you use those findings to make better decisions.

With the opportunities afforded by the digital revolution (more interactions and more data), marketers are beginning to realise the geek is fundamental to making sense of it all; the sheer quantity of channels and the associated feedback (social media, reviews, web behaviour all provide previously unavailable information) is having an enormous impact on marketing decisions. Digital makes it possible for brands to listen, react and interact in real-time, but only if they can improve the speed of their decision making to include this to-the-minute feedback and insight.
 
Data-powered decision making isn’t confined to the realm of the geek, it has already grown to become part of the mainstream for an increasing number of marketers. Unfortunately, with the common misconception about the data dark ages continuing to prevail, it does little to help elevate the role of data in marketing.
 
The geeks are already cool, it’s just that some haven’t yet figured it out.

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By Neil Davey
14th Oct 2009 10:15

Many thanks for your comment John, you make some excellent points.

I'd argue that most marketers don't necessarily underestimate the importance of data, it's just that in many cases there are concerns over the quality of that data.

Unfortunately, if they don't have enough confidence in what the intelligence is telling them so that they'll use it to aid them, then its value is certainly limited.

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