Strategically planned junk mail: Direct marketing targets profitable audiences
April 27, 2005
With new technology, a more competitive environment, fragmented media and a change in American culture, mass marketing has met its worst nightmare and best friend at the same time — direct marketing.
Stephen Cohen, vice president for public relations for Innova Ideas and Services, 304 Main St., said direct marketing is an attempt to sell goods and services directly to customers through direct mailings, telemarketing and e-mail instead of conventional mass media methods such as TV and radio.
“It’s following the 80/20 rule,” said Thomas DeCarlo, associate professor of marketing. “Eighty percent of your profits come from only 20 percent of your customers, so promoting to everyone is pointless when some don’t care and won’t even give you a return on investment.”
The first step to implementing direct marketing is to do a thorough background analysis of the company and its target market in order to create an integrated marketing communications plan, said Al Essman, creative director of Essman & Associates of Des Moines.
Direct marketing also provides more specific accountability than mass marketing.
Managers and corporate executives want to see exactly how much money will be spent, where it will be spent and how much money they will make from it.
There are certain costs associated with direct marketing that are not associated with mass advertising .
Catherine Knebel, account manager for U-T Direct of San Diego, Calif., said most of her clients already have a database with customer information, including demographics and purchasing behavior.
But if they do not, she said they will buy the right data from companies like Equifax and Claritas, who in return sells it to their clients for roughly $40 per thousand contacts.
Essman said the price might be higher.
“A basic list might be about $100 to $150 per thousand names,” Essman said.
Either way, if a company has not been keeping track of its customers over the past few years, the costs could be heavy.
For marketers, the evolution from mass to direct marketing is a fundamental change caused by a shift in the American culture to a more diverse and competitive environment.
“American life has become more complicated over the decades; we have way more media choices especially through TV with cable, satellite radio, and now with the invention of TiVo to skip and delete commercials entirely,” Essman said.
People are segmented into hundreds of different demographics, which means customizing each product to fit a particular group is key, Knebel said.
“People are a lot busier nowadays and don’t have enough time to watch TV and listen to the radio. So, as a marketer, you only have a couple seconds to catch their attention,” Knebel said.
A recent survey co-conducted by Tivoli Partners, an advertising agency based out of Charlotte, S.C., and Interactive Marketing and Research Organization, a New York-based group of researchers who evaluate the Internet, highlighted the most important trends.
The study revealed seventy-two percent of advertising and marketing executives from the financial, retail and service industries have increased their use of e-mail marketing.
“For those marketers using online banners or sponsorships, 63 percent have increased spending in the Internet,” according to Tivoli Partners’ 2005 research results.
With any good business practice, there is always at least one concern with the usage of the customer’s data, DeCarlo said — safety, security and privacy.
“Good companies don’t abuse the information collected, but there’s always a chance,” he said.
Most people may regard junk mail as annoying and intrusive in the home.
But according to the Direct Marketing Association, more than half of all adults said they prefer to receive advertising and promotional material through the mail.
“I don’t think direct marketing is that intrusive,” said Carole Custer, director of university marketing.
“It is more of an invitation to the customer and it is usually from a company or organization that that person is familiar with.”