Early direct marketers—catalog companies, direct mailers, and telemarketers— gathered customer names and sold goods mainly by mail and telephone. Today, however, spurred by the surge in internet usage and buying and by rapid advances in digital technologies—from smartphones, tablets, and other digital devices to the spate of online social and ­mobile media—direct marketing has undergone a dramatic transformation.

In previous chapters, we discussed directmarketing asdirect distribution—as marketing channels that contain no intermediaries. We also included direct and digital marketing elementsof the promotion mix—as an approach for engaging consumers directly and creating brand community. In actuality, direct marketing is both of these things and much more.

Most companies still use direct marketing as a supplementary channel or medium. Thus, most department stores, such as Sears or Macy’s, sell the majority of their merchandise off their store shelves, but they also sell through direct mail, online catalogs, and social media pages. Pepsi’s Mountain Dew brand markets heavily through mass-media advertising and its retail partners’ channels. However, it also supplements these channels with a heavy dose of direct marketing. Mountain Dew’s marketing mix consists of 55 percent television advertising and 45 percent digital. It uses its several brand websites and a long list of social media to engage its digitally connected customer community in everything from designing their own Mountain Dew lifestyle pages to deciding which limited-edition flavors should be launched or retired. Through such direct interactions, Mountain Dew has created one of the most passionately loyal fan bases of any brand, which in turn has made it the nation’s fourth-largest soft drink brand.2

However, for many companies today, direct and digital marketing are more than just supplementary channels or advertising media—they constitute a complete model for doing business. Firms employing this direct model use it as the only approach. Companies such as Amazon, Google, Facebook, eBay, Netflix, GEICO, and Priceline.com have successfully built their entire approach to the marketplace around direct and digital marketing. For example, Priceline.com, the online travel company, sells its services exclusively through online, mobile, and social media channels. Priceline.com and other online travel agency competitors such as Expedia and Orbitz have pretty much driven traditional offline travel agencies to extinction.3

Direct and digital marketing have become the fastest-growing form of marketing. According to one source, U.S. companies will spend an estimated $163 billion on direct and digital marketing this year, up more than 6 percent over the previous year. Direct marketing continues to become more internet-based, and digital direct marketing is claiming a surging share of marketing spending and sales. For example, U.S. marketers will spend an estimated $60 billion on digital advertising last year, up 20 percent over the previous year. Total digital advertising spending—including online display and search advertising, social media, mobile, video, email, and other—now accounts for the largest share of media spending, overtaking even television spending. And as consumers spend more and more time on their tablets and smartphones, ad spending on mobile advertising is exploding. Last year alone, mobile ad spending grew by 66 percent, and by 2019 it will account for an expected 29 percent of total U.S. ad spending.4

For buyers, direct and digital marketing are convenient, easy, and private. They give ­buyers anywhere, anytime access to an almost unlimited assortment of goods and a wealth of product and buying information. For example, on its website and mobile app, Amazon.com offers more information than most of us can digest, ranging from top 10 product lists, extensive product descriptions, and expert and user product reviews to recommendations based on customers’ previous searches and purchases.

Through direct marketing, buyers can interact with sellers by phone or on the seller’s website or mobile app to create exactly the configuration of information, products, or services they want and then order them on the spot. Finally, for consumers who want it, digital marketing through online, mobile, and social media provides a sense of brand engagement and community—a place to share brand information and experiences with other brand fans.

For sellers, direct marketing often provides a low-cost, efficient, speedy alternative for reaching their markets. Today’s direct marketers can target small groups or individual customers. Because of the one-to-one nature of direct marketing, companies can interact with customers by phone or online, learn more about their needs, and personalize products and services to specific customer tastes. In turn, customers can ask questions and volunteer feedback.

Direct and digital marketing also offer sellers greater flexibility. They let marketers make ongoing adjustments to prices and programs or to create immediate, timely, and personal engagement and offers. For example, home-improvement retailer Lowe’s issues timely stop-motion Vine “Fix in Six” videos showing seasonal do-it-yourself tips for anything from keeping squirrels away from a spring vegetable garden to storing Christmas lights after the holidays.

Especially in today’s digital environment, direct marketing provides opportunities for real-time marketing that links brands to important moments and trending events in customers’ lives. It is a powerful tool for moving customers through the buying process and for building customer engagement, community, and personalized relationships. For example, in some locations, Dunkin’ Donuts engages people who search “coffee near me” on their phones using Google Maps or Google Search with mobile ads that say, “Find the fastest coffee.” Clicking on the ad brings up a map and wait times at nearby Dunkin’ Donuts locations. And brands ranging from Chipotle or Starbucks to the Red Cross use Twitter to communicate with consumers in real time about important promotions, events, and other news and announcements.