In advertising and marketing circles, a divide always has existed between image advertisers and direct marketers. The methods they use to increase market share are as different as a 30-second commercial and a 30-minute infomercial.
Traditional image advertising generates sales over an extended period, using brand image and product features as its drivers. Direct marketing goes after sales right now, using measurable and testable marketing techniques.
Multichannel marketers — many with strong direct response experience — are leading the way simply because they understand testing and the importance of accountable advertising.
Companies like Victoria’s Secret, Home Depot and others are shifting large portions of their budgets from traditional mass media outlets to channels that can be measured and tracked. Victoria’s Secret is using more banner ads, catalogs and mailings to boost both direct and retail sales. In a turn of events, its Web-based fashion show was such a hit it was turned into a television special.
Even traditional mass advertisers like Home Depot are testing products through direct response vehicles like mail and short-form infomercials. This measurable process is driven by return on investment and helps beef up the bottom line.
Today, advertising and direct marketing are melding into one cohesive unit. This promising marriage of approaches is the result of:
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Information overload.
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A shift from image advertising to more accountable types of advertising.
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The emergence of the Web as a marketing tool.
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Shrinking budgets.
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Consumer demand for relevancy.
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Emerging technology that allows for personalized communication.
At the forefront of this union are strong brands that employ the proven tenets of direct marketing: Amazon.com, Dell Computer, Victoria’s Secret, Yahoo!, every major automobile manufacturer, eBay, Google and more. Dell’s advertising, for example, enhances its brand while simultaneously spurring sales through aggressive pricing and Web site/microsite promotion. Has this game plan worked? Dell is a $60 billion company today. Do you remember when it competed head-to-head with Gateway? Do you even remember Gateway?
Why the Shift?
Current economic conditions have forced advertising and marketing firms to be more responsible to the clients they serve. These customers expect a positive return on investment for each dollar paid out, and insist that promotional investments deliver positive growth to their bottom line.
Gone are the days when millions were spent to achieve brand recognition, with little (if any) attention paid to both current and long-term sales.
Precipitating this trend is emerging technology that’s more direct response-oriented than image-based. Some examples: search engine marketing, the Web, microsites, e-mail, banner ads, text ads and links, as well as more traditional channels like direct mail, which has become more sophisticated with the merging of data and digital printing methods. This technology is enabling customized and better-targeted offers and messages.
Traditional advertisers have discovered that their marketing can be measured, tracked, analyzed and tested. Even as they engage in branding utilizing the latest techniques (think streaming video banner ads), these advertisers also incorporate long-established direct response marketing principles to help them gauge success. Direct branding shows them where and when to shift media dollars.
These savvy clients look to the advertising and marketing firms they hire to create campaigns and programs that will increase response. They understand and appreciate the importance of testing — and testing again.
Long-established image-based marketers are devoting more of their dollars to emerging technology. Brands such as Ford, Chrysler and Toyota, Target department stores, beverage and alcohol companies, financial services firms and others are bypassing old media in favor of the new to roll out their products.
The Mercury Mariner SUV is a case in point. Instead of using television, the vehicle was launched via a series of online videos and a microsite (Meettheluckyones.com). When traditional media is used, it often is in tandem with new technology, as in last year’s Super Bowl spot for Mitsubishi Motors’ Galant and the microsite Seewhathappens.com.
Power to the Consumer
One noted business magazine estimated that every individual in North America is bombarded with more than 3,000 media impressions every day. This information overload is causing consumers and business prospects to take greater charge over their buying decisions. Think about the last time you made a major purchase. You likely did some background research at a certain point online using a tool like Google.
As we assume greater control over what and how we buy, we rely more on the Web to decide whether a firm deserves our business. We look at online reviews and see if others are happy with similar purchases.
Because we can’t process all the daily media messages that are sent, we pay attention to those that are relevant to us. We determine relevancy by the words we use to search, paid listings, banner and text ads we click, Web sites we visit, e-mails and direct mail pieces we open, phone numbers we call, and ultimately, the purchases we make. Marketers don’t make the “relevancy” decision any longer.
Amazon understands the power of relevancy in marketing and suggests items of interest to customers based on their profiles and purchasing histories. Amazon also lets us customize our own pages on its site in hopes we’ll buy more from them. We define the relevancy, Amazon doesn’t.
An Opportunity
Just as Web sites represented an incredible direct marketing opportunity that was overtaken by the image-based advertisers, traditional advertisers are attempting to make all of the emerging technology space theirs as well.
This time, however, accountability will be paramount and the ability to test and learn will be mandatory. Fewer people today are reading “hard copy” newspapers. We are living in an over-communicated, more fragmented world. We now have TiVo, cable channels and satellite TV and radio, Internet radio, the ability to customize our own news on our desktops…and that’s just the beginning.
This fragmentation plays directly into direct marketer’s strengths, but we can’t forget that in direct branding, we also must position our brand for long-term viability — as Dell has, for example.
With fragmentation, the emergence of accountability, relevancy and consumer power also signals a dramatic shift in direct marketing and direct response thinking itself.
It used to be that in front-end direct mail testing, 40/40/20 (list/offer/creative) was the rule that determined success. Integrated direct marketing once involved adding telemarketing to direct mail or vice versa. That’s not the case today.
To brand in the direct world, DMers have to test several offers using different messages in various media to an ever-increasing number of segments. The combination makes test-matrix development more complicated than ever.
And direct marketing’s role will become more tied into marketing’s back end. As more people respond up front for additional information through emerging technology like clickthroughs and online forms, DM’s role will become direct branding. We will have to test offers, messages, timing and media — including e-mail and direct mail — by relevant data supplied by potential customers. Our job will be to measure how many requesters turned into paying customers by each segment, using the aforementioned testing methodology and other means.
This represents a major change, especially when you consider how little testing is done on the back end of traditional direct marketing. We tend to spend most of our time testing to get response, and very little time helping to differentiate the brand and close the sale.
Marketers today demand not only that response rates be measured, but that the value of each sale be calculated. So what’s the bottom line? With DM techniques, marketers can work harder than ever to enhance their brand while simultaneously increasing sales.
Grant A. Johnson is CEO of Johnson Direct in Brookfield, WI.
