DIRECT MARKETING

Direct marketing is a sub-discipline of marketing focused on driving purchases that can be attributed to a specific "call-to-action". Direct marketing is distinguished from other marketing efforts by its emphasis on trackable, measurable results (known as "response" in the industry) regardless of medium.

Direct marketers use a variety of media including catalogs, postcards, statement inserts, card packs, magazines and other mail. Direct marketers also use media such as door hangers, package inserts, magazines, newspapers, radio, television, email, internet banner ads, pay-per-click ads, billboards, transit ads, etc. If the ad in the medium asks the prospect to take a specific action--call an 800 number, visit a website, return a response card, place an order, complete a survey, etc.--then the effort is considered to be direct marketing.

The term is believed to have been first used in 1961 in a speech by Lester Wunderman, who pioneered direct marketing techniques with brands such as American Express and Columbia Records. Although Wunderman may have been the first to use the term "direct marketing", the practice of "mail order selling" (direct marketing via mail) essentially began in the U.S. upon invention of the typewriter in 1867. The first mail-order catalog was produced by Aaron Montgomery Ward in 1872. The Direct Mail Advertising Association, predecessor of the present-day Direct Marketing Association, was first established in 1917. Third class bulk mail postage rates were established in 1928.

Direct marketing's history in Europe can be traced to the 15th century. Upon Gutenberg's invention of moveable type, the first trade catalogs from printer-publishers appeared sometime around 1450.

Direct marketing is attractive to many marketers, because in many cases its effectiveness can be measured directly. For example, if a marketer sends out one million solicitations by mail, and ten thousand customers can be tracked as having responded to the promotion, the marketer can say with some confidence that the campaign led directly to the responses. By contrast, measurement of other media must often be indirect, since there is no direct response from a consumer. Measurement of results, a fundamental element in successful direct marketing, is explored in greater detail elsewhere in this article.

While many marketers like this form of marketing, some direct marketing efforts using particular media have sometimes been criticized for generating unwanted solicitations. For example, direct mail that is irrelevant to the recipient is considered "junk mail", and unwanted email messages are considered "spam".

Direct marketing channels

Any medium that can be used to deliver a communication to a customer can be employed in direct marketing.

Direct mail

Probably the most commonly used medium for direct marketing is direct mail, in which marketing communications are sent to customers using the postal service. 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.

Direct mail permits the marketer to design marketing pieces in many different formats. Indeed, there is an entire subsector of the industry that produces specialized papers, printing, envelopes, and other materials for direct mail marketing. Some of the common formats, include:

·         Catalogs: Multi-page, bound promotions, usually featuring a selection of products for sale.

·         Self-mailers: Pieces usually created from a single sheet that has been printed and folded. For instance, a common practice is to print a page-length advertisement or promotion on one side of a sheet of paper. This is then folded in half or in thirds, with the promotional message to the inside. The two outside surfaces are then used for the address of the recipient and some "teaser" message designed to persuade the customer to open the piece.

·         Poly-bag packages: Large (often 9x12 or bigger) full-color packages sealed in a clear plastic outer wrap. The contents show through the poly-bag, giving the potential for maximum initial impact. Poly-bag packages can be extremely effective, but also quite expensive.

·         Postcards: Simple, two-sided pieces, with a promotional message on one side and the customer's address on the other.

·         Envelope mailers: Mailings in which the marketing material is placed inside an envelope. This permits the marketer to include more than one insert. When more than one advertiser is included, this is often called "marriage mail". Valpak is one of the largest examples of a marriage mail service.

·         Snap Mailers: Mailers that fold and seal with pressure. The sides detach and the mailer is opened to reveal the message.

·         Dimensional Mailers: Mailers that have some dimension to them, like a small box.

·         Intelligent Documents: Programmable mail pieces built dynamically from database information, and printed digitally for faster production.

Advantages and Disadvantages of Direct Mail

Advantages include the following:

·         Targeting - Historically, the most important aspect of direct mail was its ability to precisely target previous customers. If a suitable list was available, it also did a good job of targeting prospects.

·         Personalization - Direct mail can address the customer personally and be tailored to their needs based on previous transactions and gathered data.

·         Optimization - Because of its direct accountability, direct mail can be tested to find the best list; the best offer; the best timing (and many other factors). Then the winning tests can be rolled out to a wider audience for optimal results.

·         Analysis - The bulk mailing is large enough to allow statistical analyses. For example the results can be analysed to see in detail the performance of individual offers in say a squinch report which shows sales per square inch. With suitable media or source codes, the performance of lists can be captured. These enable better selection of offers and lists for future mailings.

·         Accumulation - Responses (and non-responses) can be added to the database, allowing future mailings to be better targeted.

Disadvantages include:

·         Cost - The cost per thousand will be higher than almost any other form of mass promotion (although the wastage rate may be much lower).

·         Waste - Large quantities of paper are thrown away (see below).

·         Alienation - Some recipients resent direct marketing being "forced" upon them, and boycott companies that do so. Moreover, they may obtain Prohibitory Orders against companies whose direct marketing mail they find offensive.

Business-to-Business Mailings (B2B)

Business products and services have long used direct mail to promote themselves. Traditionally, this worked in one of two ways. As a direct sale, therefore precluding the use of a salesperson or a retail store, or as a method of generating leads for a salesforce. The former method was ideally used by products that were easy to sell, were familiar to the prospect and needed no demonstration. The latter method was used for large ticket items or for those that needed demonstration for example.

Direct mail

Typical junkmail.

Although bulk mail, junk mail, and admail are, strictly speaking, not synonyms, the terms are used in common parlance to refer to advertising circulars, free trial CDs, pre-approved credit card applications, and other unsolicited merchandising invitations delivered by mail to homes and businesses. The term "junk" is usually used when someone receives an item of mail that is not targeted or relevant to them. Bulk mailings are a particularly popular method of promotion for businesses operating in the financial services, home computer, and travel and tourism industries.

Advertisers often call it "targeted mailing", as mail is usually sent out following database analysis. For example a person who likes golf may receive direct mail for golf related products or perhaps for goods and services that are appropriate for golfers. The USPS prefers to call it "advertising mail" (admail for short), noting that some people might find offers of interest to them in it.

Some people respond positively to direct mail advertising and find useful goods and services on offer. Traditionally, this was more true in rural areas where people had to travel many miles to do their shopping and direct mail and mail order shopping was a major convenience. However, many people dislike it, in the same way as with telemarketers' calls and e-mail spam, and some jurisdictions like the US have laws requiring junk mailers to withhold their offerings from residents who opt out.

Many consumers, as well as environmental protection groups, are concerned about the environmental impact generated by junk mail.

·         Each year, 100 million trees are used to produce junk mail.

·         250,000 homes could be heated with one day's supply of junk mail.

·         Americans receive almost 4 million tons of junk mail every year.

·         The yearly production and disposal of junk mail consumes more energy than 2.8 million cars.

An organization called the Mailing Preference Service allows people in the United Kingdom to register with them for free and they will ensure those people's addresses are removed from 95% of mailing lists.

A similar service is provided by Junkbusters for removal from the USA's Direct Marketing Association members' and other mailing lists. In the United States, some junk mail can be avoided by registering with the Direct Marketing Association Mail Preference Service, similar to Do not call registries, though mailer participation is voluntary.

Unaddressed mail

Delivery of unaddressed items through letterboxes ("direct mail without the stamp") takes place in large numbers throughout Canada, the USA and EU. Deliveries are either made via the postal service, independent delivery companies or local newspaper publishers.

It is a lower-cost alternative to direct mail and therefore can produce a lower cost per response for the advertiser. It can be used as part of a mixed media campaign, e.g. with TV or Radio. It should be noted though that unaddressed mail is considered illegal by the United States Postal Service and can result in fines, but not imprisonment, of up to $5,000 for individuals and $10,000 for businesses. This includes items that are placed upon, supported by, attached to, hung from, or inserted into a mailbox.

In Australia, unsolicited unaddressed mail is called "junk mail", unsolicited addressed mail is comparatively rare.

Direct response

Direct response or direct-response advertising are both synonymous terms for direct marketing.

Legislation

In the United States, the United States Postal Service maintains that direct marketers pay the majority of the costs of mail. Bulk mail thereby subsidizes low cost stamps for letter, magazine, and book mailing. No such compensatory relationship exists with e-mail or faxes, which require the receiver to pay for bandwidth, storage space, or paper and toner, and some of the solutions to e-mail spam in the United States have involved instituting a freight cost on mass e-mail to make it productive. Such solutions have not been universally lauded, as they leave the recipients of unsolicited e-mail with the problem of storage and bandwidth consumption and would increase costs to companies that send only solicited mass mailings.

The United States telemarketing industry was affected by a national do-not-call list, which went into effect on October 1, 2003. Under the law, it is illegal for telemarketers to call anyone who has registered themselves on the list. After the list had operated for one year, over 62 million people had signed up. The telemarketing industry opposed the creation of the list, but most telemarketers have complied with the law and refrained from calling people who are on the list.

Canada have passed legislation to create a similar Do Not Call List. In other countries it is voluntary, such as the New Zealand Name Removal Service.