DNC’s Silver Lining

In the Brave New World in which marketers are being told by government who not to call and, likely soon, who not to e-mail, promotion marketers have found a silver lining. Some say such laws improve marketing efficiencies and effectiveness and set legitimate marketers apart from the scandalous.

“People registering their numbers probably won’t respond to an offer,” says Rajive Johri, executive VP, Chase Card Members Services in New York City. “That call would not prove productive anyway.”

Despite the fact that the number of registrants to the Federal Trade Commission’s national do-not-call registry now tops 53 million, millions of others are still willing to pick up the phone during the dinner hour.

“Even though the numbers sound large, it has to be seen in the context of how many [phone] numbers exist,” Johri says. “There are still lots of people who have not registered their numbers because they don’t mind receiving calls. In fact, some of them like receiving calls.”

And they’re buying too. In 2002, telemarketing drove $100.3 billion in sales, compared to $63.1 billion in 1996, according to the Direct Marketing Association (DMA).

Chase Card Member Services telemarkets to cross-sell its line of products to existing customers and as a follow up to the 450 million direct-mail pieces it sends to prospects each year.

Credit cards, which are one of Chase’s products, were purchased over the phone by 3.3 million Americans, or 5% of respondents to a survey conducted in May, the DMA reported.

The leading item purchased via telemarketing was telephone or long distance service, with 12% or 7.9 million adults making a purchase.

AT&T, which has 40 million residential customers, doesn’t see the registry as a hindrance to communicating with potential customers.

“We can reach customers is other ways,” spokesperson Mike Pruyn says.

Marketers say the do-not-call legislation — and other looming legislation, like that calling for a do-not-e-mail registry — could boost promotion spending. Companies cutting back on telemarketing or e-mail are likely to redirect marketing funds to other disciplines including promotion.

“Instead of telemarketing, we’ll be putting those dollars into direct mail, mass advertising and promotions,” Pruyn says. “We don’t see any significant downturn in our marketing ability as a result of the do-not-call list.”

AT&T came under fire last month when the Federal Communications Commission charged that the telecommunications company violated its telemarketing rules related to maintaining company-specific do-not-call lists. It was the FCC’s first major do-not-call enforcement action.

The commission charged that AT&T called 29 consumers on 78 separate occasions to sell its local or long-distance service after the consumers had requested not to be called by AT&T. The FCC proposed fining the telecommunications company $780,000, or $10,000 for each of the 78 violations.

“This puts telemarketers on notice that we will take all measures necessary to protect consumers who chose to be left alone in their homes,” FCC Chairman Michael K. Powell said in a statement.

The action is in violation of the FCC’s existing telemarketing rule requiring companies to maintain internal suppression lists of consumers who ask not to be called. The action is not related to the FTC’s do-not-call program.

AT&T said it has been cooperating over the past several months with the FCC in its investigation, which includes claims dating back to 2002.

“We are confident we can persuade the FCC in its fact-finding proceeding that there were not 78 do-not-call violations,” the company said in a statement.

AT&T came under the FCC’s scrutiny after the commission received more than 300 complaints in the prior months alleging violations. AT&T had 30 days to respond to the charge, an FCC spokesperson said.

E-mail under fire

Another piece of legislation that could impact marketers but has yet to become law is the Can-Spam Act, which the Senate approved in October. Numerous bills have been introduced to regulate e-mail solicitations but this bill includes calls for the creation of a national do-not-e-mail registry. Sen. Charles Schumer (D-NY) negotiated with the authors of the Act to have the do-not-e-mail language included.

“Americans scored their first victory today in an effort to take the Internet back from spammers,” Schumer said the day he announced the passage of the bill. “The vast majority of Americans say they want a do-not-spam registry, and today the Senate is granting them their wish.” The Senate voted 97-0 to approve the bill.

The agreement requires the FTC to deliver a plan to Congress for creating the registry within six months and authorizes it to implement the plan within nine months.

Schumer cited a survey that found that three in four Americans favor a no-spam registry. Another three in four consumers believe spam makes checking their e-mail a burden and they complain that they are often offended by some of the e-mail they receive.

But many consumers do enjoy receiving and responding to e-mail promotions.

Some 45.8 million Americans made at least one purchase in the last 12 months after receiving a legitimate e-mail promotion for goods and services such as books, travel and clothing. The purchases generated at least $7.1 billion in sales, according to the DMA. In addition, nearly a quarter of these e-mail consumers, or about 11 million adult Americans, had made a purchase in response to a legitimate unsolicited commercial e-mail, according to the DMA.

Promotion marketers say the list, like the do-not-call registry, will enhance marketing efforts by weeding out prospects who aren’t interested anyway. Still, such registries may not be the answer to spam.

“The companies that are spamming are not going to respect the do-not-e-mail list,” says Glenn Bader, director of Internet and advanced technologies at food company Schwan’s Home Service, Inc., which has more than 2.5 million customer e-mail addresses in its database. “They’ll have to have some enforcement activity that will make a difference, even more than the list.”

The Promotion Marketing Association is working with government officials to ensure enacted laws are reasonable from the industry’s standpoint.

“Legitimate companies need to carry on commerce and there has to be a balance between reaching out to consumers in ways that are relevant to them and balancing that with what government is setting forth,” says Claire Rosenzweig, president of the PMA.

Hall Dickler Execs Move Practice to Manatt

Legal heavyweights Linda Goldstein and Jeffrey Edelstein led a defection of 10 staffers from Hall Dickler Kent Goldstein & Wood to Manatt, Phelps & Phillips following failed merger talks between the firms.

The 10 Hall Dickler workers moved to Manatt on Nov. 3, bringing much of Hall Dickler’s advertising, marketing and media practice with them. “The vast majority of Fortune 100 and 500 companies are coming with us,” Goldstein says. “We’ll be handling all their promotions, advertising, regulatory and NAD [notices from the FTC’s National Advertising Division] work and hope to expand services to them, including litigation and intellectual property work.”

Goldstein won’t name clients, but the staffers have handled work for ESPN, Toys ‘R’ Us, Yahoo, DreamWorks, Reader’s Digest, Energizer Holdings, Schick, MasterCard and promotion agencies.

A Hall Dickler committee including Goldstein approached Manatt about a merger in October, but Manatt was interested only in the advertising division. That fit Manatt’s expansion strategy of adding advertising to complement its entertainment, intellectual property and media practice as entertainment and marketing increasingly overlap. Conversely, Manatt’s base and larger size make it a good foundation to build the marketing practice, Goldstein says, who calls the shift “a merger.”

“The wisdom of the choice is best reflected by the fact that [Hall Dickler co-founder] Felix Kent chose to come, because he feels this is the best direction for the firm,” Goldstein says.

Goldstein, Kent and Edelstein were joined by partners Michael Barkow, William Heberer and Charulata Pagar, and associates Jennifer Deitch, Jennifer Koester, Julia Reytblat and Lindsay Schoen. All keep similar titles at Manatt.

Hall Dickler’s division had 12 lawyers before the exodus. Still, there are about 16 lawyers handling marketing business, contends partner Douglas Wood, who oversees the advertising practice with partner Elhanan Stone. “We still have all the expertise we’ve had” in advertising, promotion, trademark and litigation, Wood says. “It’s regrettable this happened, but it’s not a terrible blow to Hall Dickler, which keeps all its major ad agency clients.” The firm has 40 lawyers.

The migration significantly expands the New York office that Los Angeles-based Manatt acquired when it merged with health-care specialist firm Kalkines, Arky, Zall & Bernstein (with 42 lawyers) in January as part of its national expansion. Manatt now has 280 lawyers. Its clients include Toyota Motor Sales, Wal-Mart Stores, Wachovia Corp., Amtrak, Intuit, The Mills Corp., BellSouth Corp. and Dole Food Co.

“It was a very difficult decision, but the business is so much broader than what Hall Dickler has focused on,” Goldstein says. “In my first week, I’m already seeing synergy here: I’ve just been asked to work on a reality TV show.”