What is Direct Marketing

Consumer Protection Act

In terms of the Consumer Protection Act Direct marketing is defined as a...:

‘... means to approach a person, either in person or by mail or electronic communication, for the direct or indirect purpose of –
    (a) promoting or offering to supply, in the ordinary course of business, any goods or services to the person; or
    (b) requesting the person to make a donation of any kind for any reason.’

Wikipedia

Wikipedia has a more comprehensive description of direct marketing. This description is sourced from Wikipedia, and is very USA-centric. Nevertheless it provides a useful overview of Direct Marketing

Direct marketing is a form of advertising which allows businesses and nonprofit organizations to communicate directly to customers through a variety of media including cell phone text messaging, email, websites, online adverts, database marketing, fliers, catalog distribution, promotional letters and targeted television, newspaper and magazine advertisements as well as outdoor advertising. Among practitioners, it is also known as direct response.

Direct marketing focuses on the customer, data and testing. Hence, besides the actual communication, a direct marketing campaign will incorporate actionable segments and use pre- and post-campaign analytics to measure results. Characteristics that distinguish direct marketing from other types of marketing are:

  • A database of names (prospects, customers, businesses, etc.), often with certain other relevant information such as contact number/address, demographic information, purchase habits/history, and company history, is used to develop a target market with common interests, traits or characteristics. Generating such a database is often considered part of the direct marketing campaign.
  • Marketing messages are addressed directly to this list of customers and/or prospects. Addressability comes in a variety of forms including email addresses, phone numbers, fax numbers, postal addresses, and web browser cookies[how?].
  • Direct marketing seeks to drive a specific "call to action." For example, an advertisement may ask the prospect to call a free phone number, mail in a response or order, or click on a link to a website.
  • Direct marketing emphasizes traceable, measurable responses. It also emphasizes maximizing response rates by testing while minimizing advertising expenses when engaging prospective customers, regardless of the medium used.
  • Direct marketing is practiced by businesses of all sizes. A direct advertising campaign aims to deliver a good return on investment by showing how many potential customers responded to a clear call to action. This is in contrast to general advertising, which eschews calls for action in favor of messages that build prospects’ emotional awareness or engagement with a brand.


Popularity 

A 2010 study by the Direct Marketing Association reports that in 2010, marketers—commercial and nonprofit—spent $153.3 billion on direct marketing, which accounted for 54.2% of all ad expenditures in the United States. Measured against total US sales, these advertising expenditures generated approximately $1.798 trillion in incremental sales. In 2010, direct marketing accounted for 8.3% of total US gross domestic product. In 2010, there were 1.4 million direct marketing employees in the US. Their collective sales efforts directly supported 8.4 million other jobs, accounting for a total of 9.8 million US jobs.

History 

Mail order pioneer Aaron Montgomery Ward believed that using the technique of selling products directly to the customer at appealing prices could, if executed effectively and efficiently, revolutionize the market industry and therefore be used as a model for marketing products and creating customer loyalty. The term "direct marketing" was coined long after Montgomery Ward's time.

In 1872, Ward produced the first mail-order catalog for his Montgomery Ward mail order business. By buying goods and then reselling them directly to customers, Ward was consequently removing the middlemen at the general store and, to the benefit of the customer, drastically lowering the prices. The United States Direct Mail Advertising Association, predecessor of the present-day Direct Marketing Association, was first established in 1917. 

In 1967, Lester Wunderman identified, named, and defined the term "direct marketing". Wunderman—considered by many to be the father of contemporary direct marketing—is behind the creation of the toll-free 1-800 number and numerous loyalty marketing programs including the Columbia Record Club, the magazine subscription card, and the American Express Customer Rewards program.

Benefits 

Direct marketing is attractive to many marketers because its positive results can be measured directly. For example, if a marketer sends out 1,000 solicitations by mail and 100 respond to the promotion, the marketer can say with confidence that campaign led directly to 10% direct responses. This metric is known as the 'response rate,' and it is one of many clearly quantifiable success metrics employed by direct marketers. In contrast, general advertising uses indirect measurements, such as awareness or engagement, since there is no direct response from a consumer. Measurement of results is a fundamental element in successful direct marketing.

One of the other significant benefits of Direct Marketing is, it enables promoting products or services that might not have a strong brand. Products or service with a sound value proposition, matched with an attractive offer, supported with effective communication, delivered through a suitable direct marketing channel and targeting the relevant customer segment can result in very effective cost of acquisition albeit the brand might be relatively unknown. Relative to other channels of distribution (say retailing) Direct Marketing as a practice principally relies on the proposition, offer, communication, choice of channel and the target customer and so less dependent on the brand strength.

The Internet has made it easier for marketing managers to measure the results of a campaign. This is often achieved by using a specific website landing page directly relating to the promotional material. A call to action will ask the customer to visit the landing page, and the effectiveness of the campaign can be measured by taking the number of promotional messages distributed and dividing it into the number of responses. Another way to measure the results is to compare the projected sales or generated leads for a given term with the actual sales or leads after a direct advertising campaign.

Challenges and solutions 

While many marketers recognize the financial benefits of increasing targeted awareness, some direct marketing efforts using particular media have been criticized for generating poor quality leads, either due to poor message strategy or because of poorly compiled demographic databases. This poses a problem for marketers and consumers alike, as advertisers do not wish to waste money on communicating with consumers not interested in their products.

Success of any Direct Marketing campaign, in terms of number of times the desired response may vary between the best vs. the worst of the following parameters, depends on:

  • List or targeting (best targeting may yield up to 6 times the response, as compared with the worst targeting)
  • Offer (best offer may yield up to 3 times the response, as compared with the worst offer)
  • Timing (best timing for the campaign may yield up to 2 times the response, as compared with the worst timing)
  • Ease of response (best/multiple ways offered to respond may yield up to 1.35 times the response, as compared with not-so-friendly response mechanism/s)
  • Creativity (most creative messaging may yield up to 1.2 times the response, as compared to the least creative messaging)
  • Media employed. The medium/media used to deliver a message can have a significant impact on responses. It is difficult to truly personalize a DRTV or radio message. One can even attempt to send a personalized message via email or text message, but a high quality direct mail envelope and letter will typically have a better chance of generated a response in this scenario.

In sum, choosing the best of all the above parameters may yield up to 58 times more response, as compared to choosing the worst of the above parameters. Addressing these helps assuage the concerns of the marketers.

Some of these concerns have been addressed by direct marketers by the use of individual "opt-out" lists, variable printing, and better-targeted list practices. Additionally, in order to avoid unwanted mailings, members of the marketing industry have established preference services that give customers more control over the marketing communications they receive in the mail.

The term "junk mail," referring to unsolicited commercial ads delivered via post office or directly deposited in consumers' mail boxes, can be traced back to 1954. The term "spam," meaning "unsolicited commercial e-mail," can be traced back to March 31, 1993, although in its first few months it merely referred to inadvertently posting a message so many times on UseNet that the repetitions effectively drowned out the normal flow of conversation.

To address the concerns of unwanted emails or spam, in 2003, The US Congress enacted the Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM) Act to curb unwanted email messages. Can-Spam gives recipients the ability to stop unwanted emails, and set out tough penalties for violations. Additionally, ISPs and email service providers have developed increasingly effective Email Filtering programs. These filters can interfere with the delivery of email marketing campaigns, even if the person has subscribed to receive them,[10] as legitimate email marketing can possess the same hallmarks as spam. There are a range of email service providers that provide services for legitimate opt-in emailers to avoid being classified as spam.

Consumers have expressed concerns about the privacy and environmental implications of direct marketing. In response to consumer demand and increasing business pressure to increase the effectiveness of reaching the right customer with direct marketing, companies specialize in targeted direct advertising to great effect, reducing advertising budget waste and increasing the effectiveness of delivering a marketing message with better geo-demography information, delivering the advertising message to only the customers interested in the product, service, or event on offer. Additionally, members of the advertising industry have been working to adopt stricter codes regarding online targeted advertising.

Channels 

Any medium that can be used to deliver a communication to a customer can be employed in direct marketing, including:

Email marketing 

Sending marketing messages through email or email marketing is one of the most widely used direct-marketing methods. One reason for email marketing's popularity is that it is relatively inexpensive to design, test, and send an email message. It also allows marketers to deliver messages around the clock, and to accurately measure responses.

Online tools 

With the expansion of digital technology and tools, direct marketing is increasingly taking place through online channels. Most online advertising is delivered to a focused group of customers and has a trackable response.

Display Ads are interactive ads that appear on the Web next to content on Web pages or Web services. Formats include static banners, pop ups, videos, and floating units. Customers can click on the ad to respond directly to the message or to find more detailed information. According to research by eMarketer, expenditures on online display ads rose 24.5% between 2010 and 2011.
Search: 49% of US spending on Internet ads goes to search, in which advertisers pay for prominent placement among listings in search engines whenever a potential customer enters a relevant search term, allowing ads to be delivered to customers based upon their already-indicated search criteria.This paid placement industry generates more than $10 billion for search companies. Marketers also use search engine optimization to drive traffic to their sites.
Social Media Sites, such as Facebook and Twitter, also provide opportunities for direct marketers to communicate directly with customers by creating content to which customers can respond.

Mobile 

Through mobile marketing, marketers engage with prospective customers and donors in an interactive manner through a mobile device or network, such as a cellphone, smartphone, or tablet. Types of mobile marketing messages include: SMS (short message service)—marketing communications are sent in the form of text messages, also known as texting. MMS (multi-media message service)—marketing communications are sent in the form of media messages.

In October 2013, the Federal Telephone Consumers Protection Act made it illegal to contact an individual via cell phone without prior express written consent for all telephone calls using an automatic telephone dialing system or a prerecorded voice to deliver a telemarketing message to wireless numbers and residential lines. An existing business relationship does not provide an exception to this requirement.

Mobile Applications: Smartphone-based mobile apps contain several types of messages. Push Notifications are direct messages sent to a user either automatically or as part of a campaign. They include transactional, marketing, geo-based, and more. Rich Push Notifications are full HTML Push Notifications. Mobile apps also contain Interactive ads that appear inside the mobile application or app; Location-Based Marketing: marketing messages delivered directly to a mobile device based on the user's location; QR Codes (quick-response barcodes): This is a type of 2D barcode with an encoded link that can be accessed from a smartphone. This technology is increasingly being used for everything from special offers to product information. Mobile Banner Ads: Like standard banner ads for desktop Web pages but smaller to fit on mobile screens and run on the mobile content network

Telemarketing 

Another common form of direct marketing is telemarketing, in which marketers contact customers by phone. The primary benefit to businesses is increased lead generation, which helps businesses increase sales volume and customer base. The most successful telemarketing service providers focus on generating more "qualified" leads that have a higher probability of getting converted into actual sales.

In the United States, the National Do Not Call Registry was created in 2003 to offer consumers a choice whether to receive telemarketing calls at home. The FTC created the National Do Not Call Registry after a comprehensive review of the Telemarketing Sales Rule (TSR). The do-not-call provisions of the TSR cover any plan, program, or campaign to sell goods or services through interstate phone calls.

The 2012 modification, which went into effect on October 16, 2013, stated that prior express written consent will be required for all autodialed and/or pre-recorded calls/texts sent/made to cell phone; and for pre-recorded calls made to residential land lines for marketing purposes.

Further, a consumer who does not wish to receive further prerecorded telemarketing calls can "opt out" of receiving such calls by dialing a telephone number (required to be provided in the prerecorded message) to register his or her do-not-call request. The provisions do not cover calls from political organizations or charities.

Canada has its own National Do Not Call List (DNCL). In other countries it is voluntary, such as the New Zealand Name Removal Service.

Voicemail marketing 

Voicemail marketing emerged from the market prevalence of personal voice mailboxes, and business voicemail systems. Voicemail marketing presented a cost effective means by which to reach people directly, by voice. Abuse of consumer marketing applications of voicemail marketing resulted in an abundance of "voice-spam," and prompted many jurisdictions to pass laws regulating consumer voicemail marketing. More recently, businesses have utilized guided voicemail (an application where pre-recorded voicemails are guided by live callers) to accomplish personalized business-to-business marketing formerly reserved for telemarketing. Because guided voicemail is used to contact only businesses, it is exempt from Do Not Call regulations in place for other forms of voicemail marketing.

Voice-mail courier is a similar form of voice-mail marketing with both business-to-business and business-to-consumer applications.

Broadcast faxing 

Broadcast faxing, in which faxes are sent to multiple recipients, is now less common than in the past.This is partly due to laws in the United States and elsewhere which regulate its use for consumer marketing. In 2005, President Bush signed into law S.714, the Junk Fax Prevention Act of 2005 (JFPA), which allows marketers to send commercial faxes to those with whom they have an established business relationship (EBR), but imposes some new requirements. These requirements include providing an opt-out notice on the first page of faxes and establishing a system to accept opt-outs at any time of the day. Roughly 2% of direct marketers use fax, mostly for business-to-business marketing campaigns.

Couponing 

Couponing is used in print and digital media to elicit a response from the reader. An example is a coupon which the reader receives through the mail and takes to a store's check-out counter to receive a discount.

Digital Coupons: Manufacturers and retailers make coupons available online for electronic orders that can be downloaded and printed. Digital coupons are available on company websites, social media outlets, texts, and email alerts. There are an increasing number of mobile phone applications offering digital coupons for direct use.

Daily Deal Sites offer local and online deals each day, and are becoming increasingly popular. Customers sign up to receive notice of discounts and offers, which are sent daily by email. Purchases are often made using a special coupon code or promotional code. The largest of these sites, Groupon, has over 83 million subscribers.

Direct response marketing 

Direct Response Marketing is designed to generate an immediate response from consumers, where each consumer response (and purchase) can be measured, and attributed to individual advertisements. This form of marketing is differentiated from other marketing approaches, primarily because there are no intermediaries such as retailers between the buyer and seller, and therefore the buyer must contact the seller directly to purchase products or services. Direct-response marketing is delivered through a wide variety of media, including DRTV, radio, mail, print advertising, telemarketing, catalogues, and the Internet.

Direct response mail order 

Mail order in which customers respond by mailing a completed order form to the marketer. Mail order direct response has become more successful in recent years due to internet exposure.

Direct response television 

Direct marketing via television (commonly referred to as DRTV) has two basic forms: long form (usually half-hour or hour-long segments that explain a product in detail and are commonly referred to as infomercials) and short form, which refers to typical 30-second or 60-second commercials that ask viewers for an immediate response (typically to call a phone number on screen or go to a website). TV-response marketing—i.e. infomercials—can be considered a form of direct marketing, since responses are in the form of calls to telephone numbers given on-air. This allows marketers to reasonably conclude that the calls are due to a particular campaign, and enables them to obtain customers' phone numbers as targets for telemarketing. One of the most famous DRTV commercials was for Ginsu Knives by Ginsu Products, Inc. of RI. Several aspects of ad, such as its use of adding items to the offer and the guarantee of satisfaction were much copied, and came to be considered part of the formula for success with short-form direct-response TV ads (DRTV).

Forms of direct response marketing on television include standard short form television commercials, infomercials and home shopping networks. Short-form direct-response commercials have time lengths ranging from 30 seconds to 2 minutes. Long form infomercials are typically 30 minutes long. An offshoot of the infomercial is the home shopping industry. In this medium, items can potentially be offered with reduced overhead.

Direct response radio 

In direct response radio, ads contain a call to action with a specific tracking mechanism. Often, this tracking mechanism is a "call now" prompt with a toll-free phone number or a unique Web URL. Results of the ad can be tracked in terms of calls, orders, customers, leads, sales, revenue, and profits that result from the airing of those ads.

Direct response magazines and newspapers 

Magazine and newspaper ads often include a direct response call-to-action, such as a toll-free number, a coupon redeemable at a brick-and-mortar store, or a QR code that can be scanned by a mobile device—these methods are all forms of direct marketing, because they elicit a direct and measurable action from the customer.

Other direct response media 

Other media, such as magazines, newspapers, radio, social media, search engine marketing and e-mail can be used to elicit the response. A survey of large corporations found e-mail to be one of the most effective forms of direct response.[22]

Direct mail 

The term advertising, or direct mail, is used to refer to communications sent to potential customers or donors via the postal service and other delivery services. Direct mail is sent to customers based on criteria such as age, income, location, profession, buying pattern, etc. Direct mail includes advertising circulars, catalogs, free-trial CDs, pre-approved credit card applications, and other unsolicited merchandising invitations delivered by mail to homes and businesses. Bulk mailings are a particularly popular method of promotion for businesses operating in the financial services, home computer, and travel and tourism industries.

In many developed countries, direct mail represents such a significant amount of the total volume of mail that special rate classes have been established. In the United States and United Kingdom, for example, there are bulk mail rates that enable marketers to send mail at rates that are substantially lower than regular first-class rates. In order to qualify for these rates, marketers must format and sort the mail in particular ways—which reduces the handling (and therefore costs) required by the postal service. In the US, marketers send over 90 billion pieces of direct mail per year.

Advertisers often refine direct mail practices into targeted mailing, in which mail is sent out following database analysis to select recipients considered most likely to respond positively. For example, a person who has demonstrated an interest in golf may receive direct mail for golf-related products or perhaps for goods and services that are appropriate for golfers. This use of database analysis is a type of database marketing. The United States Postal Service calls this form of mail "advertising mail" (admail for short).

Insert media 

Another form of direct marketing, insert media are marketing materials that are inserted into other communications, such as a catalog, newspaper, magazine, package, or bill. Coop or shared mail, where marketing offers from several companies are delivered via a single envelope, is also considered insert media.

Out-of-home 

Out-of-home direct marketing refers to a wide array of media designed to reach the consumer outside the home, including billboards, transit, bus shelters, bus benches, aerials, airports, in-flight, in-store, movies, college campus/high schools, hotels, shopping malls, sport facilities, stadiums, taxis—that contain a call-to-action for the customer to respond.

Direct selling 

Direct selling is the sale of products by face-to-face contact with the customer, either by having salespeople approach potential customers in person, or through indirect means such as Tupperware parties.

Source: https://en.wikipedia.org/wiki/Direct_marketing

 

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