Live From Germany: The New DM Boom

Posted on by Chief Marketer Staff

DIMA conference is now so big it has to move

German direct marketing is on a roll. Up to 40 billion deutsche marks ($22.2 billion U.S., by our figures) will be spent on DM media this year, depending on whose statistics you believe. And that’s only one sign of growth.

Another is that DIMA, the German direct marketing conference, is now so crowded that it has to move to a larger city. Next year’s conference will be in Dusseldorf, which offers twice the amount of exhibit space as Wiesbaden, the event’s longtime home.

And for those who doubt that German DMers are with it, consider the new slogan set for use in 2000: “One to One Solutions.”

“In 1990, the United States was five years ahead of us,” said Holger Albers, chairman of the national trade association Deutscher Direktmarketing Verband (DDV). “Now the gap is maybe one or two years.”

Some dare to say Germany is even more advanced than the United States – especially in customer relationship management (CRM).

“It’s actually bigger [in Germany],” said U.S. direct marketer Larry Light, CEO of Arcature LLC, who spoke at the DIMA conference. “That’s because it has smaller clusters of population.”

Light explained, “There are not as many customers, so you had better cherish each one.”

Companies now spend “a bigger part of their media budgets on relationship marketing,” added Franz-Josef Rensmann, managing director of OgilvyOne Worldwide, Frankfurt. In such markets as automotive, he suggested the percentage would be 20% to 30%, but much higher for mail order companies. However, for “fast-moving consumer goods,” it might only be about 5%.

The topic is now so hot that Germany has its own CRM publication, One to One, produced in Hamburg.

With or without CRM, DDV statistics show that DM is a growth industry: Big media spending is expected to reach 39 billion deutsche marks this year, up from 36 billion marks in 1998 and 23.3 billion in 1994. (The U.S. dollar is worth 1.8 deutsche marks.)

Deutsche Post, the German post office, suggests the figure is even higher – some 40 billion marks, compared with 37 billion in 1998.

There has been corresponding growth in telemarketing spending, although once again DDV and Deutsche Post report separate totals. For example, DDV puts the figure at 5.1 billion deutsche marks compared with 2.8 billion in 1994, whereas Deutsche Post says it was 4.6 billion marks. Roughly 39% of all companies used it in 1998 – the same percentage as 1997. Roughly 150,000 people are employed by the telemarketing business, a figure that DDV claims should hit 260,000 in 2001. Germany has some 1,500 call centers, while Europe itself has 18,000.

And what about direct mail? Of the money spent last year, 12 billion marks went to addressed mail, the largest category, which rose from 11.7 billion, said Deutsche Post’s Susanne Meier at DIMA.

However, addressed mail usage declined from 38% to 37% for all companies during the same years, as did spending on direct response magazine ads, Meier said.

Among “classic media with response elements,” 11.9 billion marks were spent on magazine ads, compared with 11 billion in 1997. Meier added that 3.8 billion marks went for unaddressed mail in 1998.

(Deutsche Post surveyed 3,000 companies, representing all types of German businesses. Meier explained that the sample is projectable on the entire universe of 822,000 German companies. Of all those firms, 64% were active in direct marketing in 1998, up from 29% in 1988 and 62% in 1997.)

The fastest growing medium is interactive, which went from a spending total of 1 billion marks in 1997 to 1.4 billion in 1998. The use of online media also rose dramatically, from 13% of all companies using it in 1997 to 21% in 1998.

This shift is also documented by consumer behavior. Germany has 8.4 million Internet users, roughly 10% of the total population, compared with 106 million in the United Kingdom, according to statistics provided by the DDV.

But German Webheads buy more. This year, DDV expects Germans to spend $290 million (U.S.) compared with $170 million (U.S.) for Britain and $85 million (U.S.) for France.

Need more proof? German companies are now rising up to compete with the likes of Amazon. com at home.

For example, Bucher.de and Bertelsmann.de are both on the Web, Rensmann said. And Germany will soon have its first auction site. Adore!, which was scheduled to debut Nov. 17. Adore! will act as a reseller of banner positions on sites with around 1 million page impressions a month, according to Mirko Karafiat, who works in new business development at the Munich firm.

The starting price is 7 marks per 1,000 contacts per site. The firm hopes to start with roughly 15 sites. The auction categories include business and finance, computer and Internet, youth, news and information, culture, tourism, and business to business.

Problems

Apart from regulatory issues, the biggest challenge for German direct marketers, as Rensmann sees it, is the way companies are organized. Many have product management structures in which firms are “not taking care of the customer’s needs.”

For DDV president Bernd Kracke, it is “the lack of qualified people. It’s a big bottleneck for potential growth.”

To counter this, DDV is sponsoring the first professorship of direct marketing at Siegan University in Germany; lobbying the German government to recognize database manager as an apprenticeship category (there are several marketing jobs for apprentices, but this would be the first for direct); changing DDV’s communications structure; and relaunching the DDV Web site with both Internet and intranet functions.

As for DIMA, it has clearly outgrown Wiesbaden, an ancient town known for its Roman-era mineral baths. This year there were 363 exhibitors, but 100 of them were turned down due to lack of space, said DDV spokesman Nils Hachen. The conference drew some 1,700; the exhibition hall 12,000.

DIMA may also have outgrown its original mission. Next year in Dusseldorf, it will build on this year’s “e-day” experiment. The conference will devote full days to individual DM disciplines, including call centers, mail order, CRM, fundraising, integrated marketing, databases and telecommunications, Kracke said. It will also partner with the Dutch DM association to create a more international flavor, and will team with other European countries in the future. DDV itself hopes to grow from 900 member companies to 1,000.

German DMers, long burdened with some of the toughest privacy laws in Europe, may be hit with an even more restrictive measure. With the dusting off of an old Green Party proposal, mailers could be required to print the source of the name and address on every mailing piece.

The proposal, part of a greater effort to normalize German data laws within the European Union’s data protection directive, must still go through several legislative stages before it could become law next year, said Holger Albers, chairman of Deutscher Direktmarketing Verband (DDV), the national trade association.

If the measure is passed, Albers predicted, it would result in a 33% drop in mail volume, the loss of 4.5 billion deutsche marks by businesses and the elimination of 100,000 jobs.

The measure also could lead to the printing of potentially embarrassing personal information on envelopes – for example, if the source were a sex-related list. As now written, the law states that the source must be visible on the envelope or on a sticker outside, according to the DDV.

DDV president Bernd Kracke said that, if passed, the law would create enormous logistical problems. Imagine, he said, “you mail 1 million pieces and use 200 lists and you have to connect addresses to the source.”

In addition, he argued that the new law will go even further than the EU data directive, which has no such requirement.

“German law already implies that an individual has the right to ask for the sources,” Kracke explained.

More

Related Posts

Chief Marketer Videos

by Chief Marketer Staff

In our latest Marketers on Fire LinkedIn Live, Anywhere Real Estate CMO Esther-Mireya Tejeda discusses consumer targeting strategies, the evolution of the CMO role and advice for aspiring C-suite marketers.

	
        

Call for entries now open



CALL FOR ENTRIES OPEN