DIRECT MARKETING

Application: Market Communication, Sales

The Concept

Direct marketing is the practice of communicating to intended buyers through personalized written or digital messages, as opposed to “above-the-line” broadcast advertising. The most common form of modern direct marketing is, of course, via the web. This is so routine that it is easy to forget that direct marketing is a broad category of work with some common principles. It can range from a letter with a printed insert to elaborate creative campaigns, such as sending multi-media messages complete with the MP3 or DVD equipment on which to play them. It includes: database marketing, direct mail, catalogue marketing, telemarketing, direct and response marketing. It can be used with consumers and businesses; it is also used in international marketing campaigns.

Direct communication requires an accurate and up-to-date database of contacts (something harder to achieve than might be imagined), a relevant offer, clear written technique, and a concise message. It is most effective when part of a relationship with customers (see relationship marketing) or when the customer has given permission to be contacted in this way. This, though, is an act of trust. Most people detest direct mail, whether physical or email. It irritates and frustrates them to receive unwanted mailers, however attractive. By giving a supplier permission to mail to them, the customer is acting on trust that the marketer will take the trouble to filter out unwanted communications and make their offers relevant. Yet, this is not always achieved, even by leading firms, due to inadequate attention given to systems and planning.

Direct communication is well known in consumer markets but is also used extensively in business-to business marketing. For instance, firms routinely invite customers to hospitality events and to seminars on technical subjects. They also send research reports or other material. Some use very effective internet-based communication. More than one merchant bank, for example, sends an internet-based newsletter on mergers and acquisition activity in their clients’ industries. These are widely appreciated by people at all levels in their customers’ organizations, even chief executives, because they are timely, relevant, and give valuable insight.

Email is so much the norm at the time of writing that a printed or mailed piece can stand out from the crowd. One professional membership organization, Europe’s “Managing Partner Forum” was planning a conference for busy leaders. This event needed to be high profile and stimulate debate. Rather than the usual email invitation, the organizers printed and posted a high quality card, similar to those used on important social occasions like weddings. Attendance at the event was, perhaps surprisingly, up by nearly 100%. One of the attendees, the managing partner of a large professional partnership, said that the invitation stood out from others and stayed on his desk until he dealt with it; effective retro marketing in a modern age.

Marketers should ensure that direct marketing activities are as effective and well planned as any other aspect of marketing communication. If not, they will be very costly in terms of data manipulation, design, and management time. Worse, it can undermine the prestige of the firm in the minds of customers and cause dissatisfaction. Even leading firms have sent out poorly written communication, or written to dead people still caught on their poorly managed database, or inundated their customers with so much communication that they became annoyed. Most leading firms now invest in a client database with a campaign management facility. The data in this system should be seen as an asset of the firm. It needs to be kept up-to-date by internal disciplines (ensuring that sales staff keep records current) and by a, perhaps six-monthly, check with customers. It also needs to comply with local data protection laws.

History, Context, Criticism, and Development

As with other aspects of marketing, direct marketing has a long history. For instance, Fred Gye had a big win on the British lottery and then fulfilled his dream, setting up in business as a tea merchant. He advertised himself as part of the product, emphasized quality (“Not Bohea”, a product used to adulterate better teas), and branded every order over 0.25 lb, which was sent in a sealed pack with the wrapper of his shop. Quality, price, and seal were stamped on it. He soon had 500 agents in principal towns. Interestingly, this successful direct marketing business was established in the mid 1700s.

There were similar business leaders using direct marketing techniques around that time. History does not seem to record, for instance, whether, one morning in 1771, the 1,000 German aristocrats who received an unsolicited sample with a circular letter from British potter Josiah Wedgwood were astonished. It would be fascinating to know whether the language seemed strange to them, how it was packaged, and whether Josiah’s designs appealed to the Germanic taste of their families. We do know, however, that the huge risk (a princely £20 per package, at a total cost of £20,000; nearly £2 million at current prices) elicited a fast response which quickly paid back and that, within two years, all but three of those that had purchased had paid in full. A factor in this success was Josiah’s long-running after care package. It included a “satisfaction or money back” guarantee, free shipping, and the willingness to replace any broken item without question. Amongst the first recorded examples of service support to product purchase, it was one of the distinctive components of his approach and contributed to the success of this 300-year-old premium brand.

In 1872, American entrepreneur Montgomery Ward started to sell things through mail. His first attempt was a one-sheet mail listing items like cloth and glass. After twenty years his catalogue had grown to 1,000 pages and reached over three quarters of a million isolated American farming families. He was followed by Sears Roebuck. Its first catalogue was published in 1888 and was soon stuffed full of products like sewing machines, bicycles, fridges, dolls, and groceries. As its sales reached nearly a million dollars by the turn of the century, it put a very specific and successful form of marketing on the map. Like any form of direct marketing, it relied on: accurate address lists, a reliable reputation, and a degree of relationship with the customer. It has been estimated that, by that time (1900) there were almost 1,200 mail order businesses in America reaching around six million customers (Koehn, N.F., 2001). It is ridiculous not to regard this as direct marketing.

Later, of course, Reader’s Digest took to this method of communication and earned a reputation in the West as an addict of direct marketing. Founded in 1922, its history reflects some of the successes and failures of the direct marketing industry. It grew to a fantastically large business with sales in many different countries and, reputedly reaching in excess of forty million people. Yet its tone was conservative and traditional winning it a large following amongst an elderly segment of populations. This led to recent trouble with regulators and law-makers when its (direct marketing) claims were thought to mislead elderly audiences. Also, like many direct marketers, it was severely challenged by the internet which induced changes in both postal and reading habits. It had to file for Chapter 11 insolvency and, like many direct marketers, had to rethink the way it traded.

Towards the end of the “Madmen” period of notable broadcast advertising in America, Lestor Wunderman gained fame (he is credited with creating the term “direct marketing” and created a successful direct marketing agency as a result of his reputation) through a conflict with McCann Erickson over the account of Columbia Records. It was a vast mail order club and he had handled their account using direct mail techniques for a long time. They were considering using McCann’s advertising for late night awareness work. Wunderman proposed a test, which in fact was more like a duel. Two different campaigns were run in different areas. His used direct response techniques (a little gold box in magazines which viewers could find and send in for a prize). The results demonstrated that responses to Wonderman’s work were up 80% but only 19.5% for McCann’s (source: Gladwell, M., 2006). This prompted a rise in direct marketing and direct marketing agencies which created the impression that it came into its own around that time. It has, though, been successfully used for much longer than that.

Even the conceptual frameworks used today have been around a long time. One early marketing text book, for example, demonstrates the sophistication of direct marketing techniques nearly a hundred years ago. Direct Mail and Mail Order was published in the 1930s (Rittenberg, M., 1931). It was published as part of a series called A Library of Advertising, by the Incorporated Practitioners in Advertising in order to raise the skills of the profession. It differentiates the practice from broadcast advertising and defines “mail-order” as “selling direct to the consumer without the intervention of a personal salesman”. The book covers in detail different approaches (letters, booklets, and catalogues) and different techniques (like copy style, layout, and response mechanisms). It contains detailed and sophisticated graphs on the time-response decay effect of advertising, direct techniques, and combination of the two (it argues for the latter). It even addresses in detail a bugbear of modern marketers: the need for accurate, clean customer records. It takes up considerable space with nearly fifty “discovered principles of advertising”. In other words, it was attempting to codify extensive and long established practice. Although it is possible to be sniffy and pedantic about definition, it is clear that the principles of direct marketing are older and more established than many acknowledge today. Marketers of the mid 20th century adapted accumulated direct marketing experience to new technologies (like the computer) as much as today’s cohorts are adjusting to the internet and email.

Voices and Further Reading

• “The approximate total sales of ten of the leading mail-order houses in 1915 were $350,000,000. To this total Sears, Roebuck and Company alone contributed over $100,000,000 … A study of marketing methods requires a dispassionate consideration of selling by mail, with particular reference to the following questions: What is its extent? What is its nature? Is it legitimate? What is its competitive strength? … How can the manufacturer use it to his own best advantage?” Butler, R.S., 1917.
• Bird, D., Commonsense Direct and Digital Marketing. Kogan Page, 2007.
• “Today, however, with the trend towards more narrowly targeted or one-to-one marketing, many companies are adopting direct marketing, either as a primary marketing approach or as a supplement to other approaches … [DM] consists of direct communications with carefully targeted individual customers to obtain an immediate response and cultivate lasting customer relationships.” Kotler, P., 2005.
• “Direct mail was my first love – and secret weapon in the avalanche of new business acquisitions which made Ogilvy & Mather an instant success”. David Ogilvy quoted in Bird, ibid.
• Direct marketing is “… any advertising activity which creates and exploits a direct relationship between you and your prospect or customer as an individual.” Bird, ibid.
• McDonald, W.J., Direct Marketing: An Integrated Approach. McGraw-Hill, 1998.

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