Live From NCDM: Top DM Execs Face The Future

A panel on the future of database marketing started with a blunt question. “What the hell is going on with this economy?” asked Forrester Research senior analyst Dave Frankland.

Michael Iaccarino, president and CEO of Epsilon, jumped in, calling direct marketing a “recession-resilient business.”

Iaccarino said general agencies are getting hurt, but assured the audience that data-based programs, loyalty programs and points-based programs — all of which his company provides – are doing “quite well.” He did acknowledge that two verticals – retain and financial services – are “in compression”, but he asserted that he is seeing new opportunities in the database and direct marketing spaces.

David Williams, president and CEO of Merkle, added non-profits to the list of struggling industries. But he added a cautious note. “We talk about accountable marketing being more resilient in this kind of environment, but we haven’t seen this environment in decades.” That said, a couple of his company’s clients are seeing this as a time to build market share.

Tim Suther, senior VP of digital marketing services, observed that for consumers, who can take advantage of price transparency through online channels, “life is good.” But all those choices have added complexity to the marketers’ jobs. Compounding matters, their ability to execute campaigns based on these additional complexities is hampered by scarce talent, money, or even raw headcount.

Suther is intrigued by the possibility that the principles of database marketing may apply to other media. He noted an Ernst & Young survey that suggested brands are overvalued by $4 trillion.

Who’s doing well? Those in the addressable media space, Suther said. Marketers who are able to leverage access to prospects provided through publishers are seeing four times the orders per thousand they had been getting.

Other institutions doing well are those engaging in loyalty marketing. “With acquisition, there’s no ROI during the first year,” Iaccarino said. “Acquisition is a long-term play. But with e-mail, marketers can reach out to their customer files and send offers cost-effectively.

Williams noted a move toward subscription-style models and understanding the transition from acquisition to retention. Suther chimed in that he’d seen an emphasis around lifecycle and key events, and ensuring that relevant messaging was delivered at relevant times through relevant channels.

Hand-in-hand with the move away from prospecting is a reduced emphasis on testing. “Raw innovation budgets disappeared overnight,” Williams said, adding that testing had been “operationalized” into marketers’ existing programs.

Suther added that while the big budgets for testing may no longer exist, there are opportunities in the digital and social networking spaces. And Iaccarino noted that e-mail has replaced direct mail for cross- and upsell activities. But while that medium is fast and cheap, there is less emphasis on testing and more on “saturation of the brand.” The focus has been on justifying the cost of databases, rather than determining the effectiveness of new approaches.

Frankland asked whether the role of agencies is changing, and the direct marketers on his panel rushed to maintain their exclusivity.

“We are in an evolutionary state,” Williams said. “I’m not saying the big general agencies are dead… [but] brand agencies should focus on brand issues, the universal message.” For many brand agencies, the customer side is the weaker side and the brand message trumps the focus on customers, he added.

Given that the brand agencies don’t necessarily have the competency to perform the targeting and measurement DM agencies do, “our job is to integrate with them,” Williams added.

Fragmented, and highly targeted media are going to give rise to increased collaborative relationships between advertisers and publishers, Suther said. And the ability to highly target and version messages is going to challenge the traditional agency of record model.

Frankland, Iacccarino, Williams and Suther spoke at a keynote panel during the National Center for Database Marketing conference. The conference runs through Wednesday